It's The First Universal Proxy Card!

It's only a preliminary proxy statement, in a nutty, controversial, unique proxy contest. Still, we have our first concrete example of how a universal proxy card (UPC) looks in the wild, in a proxy contest at AIM ImmunoTech (AIM).

Individual shareholder Jonathan Thomas Jorgl, through the AIM Stockholder Full Value Committee (ASFVC), started a proxy contest at AIM this past spring. ASFVC seeks to elect two directors for a three-person BoD at the 2022 annual shareholder meeting. Alliance Advisors has the honor of soliciting proxies for ASFVC.

The activist situation is nothing short of crazy. Read the gory details in the Background to the Solicitation, Reasons for the Solicitation, and Information about the Participants sections in the ASFVC preliminary proxy statement.

Among other shenanigans, Jorgl and AIM have sued each other over the validity of the two activist nominations in Delaware and also in Florida, where AIM is domiciled. At an August hearing, the Delaware Chancery Court scheduled another hearing for October 5 (if you want to follow along), and also ordered AIM to not hold the ASM before October 31.

AIM filed its preliminary proxy statement first. It appears to want to begin to oppose the ASFVC thesis in case the Delaware court allows activist nominations. Notably, the AIM preliminary proxy does not include a UPC. Evidently it doesn't want to make life any easier for ASFVC than it has to.

Days later, ASFVC filed its preliminary proxy, including a UPC. It seems to think it will win in Delaware.

This week, AIM filed its definitive proxy statement, again without a UPC. It can start to solicit proxies, but of course will do that only for the incumbents. It scheduled the ASM for November 3, bring ya' popcorn.

Both ASFVC and AIM have complied with the UPC notice requirements:

• ASFVC notified AIM of its candidates by the 60-day deadline
• AIM notified ASFVC by the 50-day deadline
• AIM reserved its rights under its pending litigation, though, so complying with its 50-day notice obligation does not mean it thinks the ASFVC nominations are valid.

Why did AIM comply with the notice requirement, but not with the other terms of the UPC rule? We speculate it does not want to postpone the ASM for a couple of months if the nominations are valid, and it ends up needing to use UPC. It seems AIM also thinks it will win in Delaware, which is why we litigate, right?

Once ASFVC files a definitive proxy statement, it will also start to solicit proxies. Its proxy card will include AIM nominees under UPC, but the AIM proxy card will include only its incumbents. This situation has the potential to confuse shareholders even more than usual.

AIM did admit if Delaware allows ASFVC nominations, it will re-do the proxy solicitation:

• issue new UPC-compliant proxy cards
• throw out any old, non-UPC-compliant cards it already solicited
• bug everyone who already voted, to vote again.

So, that'll be fun.

Observations about this first proxy statement with a UPC:

• ASFVC has properly committed to soliciting 67% of the voting power (p. 17), and presumably did so in the notice to AIM, which is not public
• ASFVC will use its own proxy card (gold! - some habits are hard to break), so apparently will pursue both full mailing and notice-and-access, as the proxy statement includes the customary notice-and-access language (letter to shareholders)
• In a couple of places, the ASFVC proxy statement refers shareholders to the AIM proxy statement for information about AIM nominees (p. 11 and 16, and letter to shareholders)
• The ASFVC proxy card lists its two nominees first, then the three AIM incumbents, clearly distinguishing between them, and using similar font and presentation for both groups, so they're good here
• The ASFVC proxy card also lists "For" and "Withhold" options for each of the five nominees listed, as the rule prescribes.

Interestingly, ASFVC instructs shareholders to vote "For" its two nominees, and "Withhold" for the three AIM nominees. This could backfire.

ASFVC evidently decided to not target two specific individual AIM nominees. As we and others have noted, success under UPC will need to acknowledge the continuous nature of voting. It will rely in part on persuading shareholders to vote for specific activist candidates, and against specific incumbents. Instead, ASFVC seems to rely on shareholders voting for the ASFVC nominees only, and not worry about whether shareholders will also vote for AIM nominees.

The UPC (but not the proxy statement) does warn shareholders that a card with votes for more than three of the five nominees will be invalid. In this situation, too many shareholders may vote for more than three total candidates, or more likely all five. Then, shareholders that do support ASFVC won't have any of their votes count for anyone.

We'll watch this one closely.