Resources and Advisory Services
LinkedIn Share This Email

UPDATE: First Results From The First Second Universal Proxy Card!

In early October, we looked at the second proxy contest since universal proxy card (UPC) rules took effect (see below). It just finished, at the Apartment Investment & Management Co. (AIV) annual shareholder meeting (ASM) this past Friday, December 16. (The first proxy contest, at AIM ImmunoTech (further below) did not get to a shareholder vote.)

It looks like UPC had a material positive impact on the outcome for activist Land & Buildings (L&B). BoDs everywhere should think hard about what just happened.

At the ASM, shareholders voted on five candidates to fill three BoD seats, from a classified BoD of ten members. AIV nominated the three incumbents, while L&B nominated candidates for two of those three BoD seats.

Shareholders elected L&B nominee James Sullivan, along with AIV incumbents Jay Paul Leupp and R. Dary Stone. AIV incumbent Michael Stein and a second L&B nominee, Michelle Applebaum, lost to those three.

Look at the numbers

The actual vote is interesting and instructive (figures in millions of shares)

The three candidates with the most votes received a little more than two-thirds of the shares voted. The remaining two received a little less than one-third of the shares voted. Continuous voting under UPC predicted this outcome.

Between the L&B nominee (Sullivan) that won with the least number of shares among the three and the AIV nominee (Stein) that lost with the greater number of shares, it wasn't even close. Sullivan had more than twice the votes as Stein.

Tactics mattered

L&B specifically asked shareholders to vote against Stein and Stone, in addition to voting for its two nominees. It endorsed ("do not object to...") Leupp. This is also consistent with strategy under UPC. As the voting shows, Leupp received the most votes, and Stone (AIV) and Sullivan (L&B) received roughly similar support.

Proxy advisors influenced the outcome, or at least ISS did. ISS recommended votes for Sullivan of L&B and Leupp and Stone of AIV. Glass Lewis recommended votes for all three AIV nominees. Shareholders acted on the ISS advice, and split votes between L&B challengers and AIV incumbents. Of course, for the first time, UPC made splitting votes simple and easy. Shareholders thus elected by a wide margin the three candidates ISS recommended.

Turnout increased

Both the UPC and the circumstance of a proxy contest probably increased participation compared to 2021.

  • The proxy contest likely increased turnout. More shares attended the 2022 meeting compared to 2021 (135 million in 2022, 131 million in 2021).
  • UPC likely increased the total shares voted for directors. The 2022 election saw almost 10% more votes cast for directors compared to 2021. About 11 million broker non-votes in 2021 voted for directors in 2022, with beneficial owners casting these in the 2022 director election.

Thus, the director vote increased from around 119 million shares in the uncontested 2021 election to around 135 million shares in the 2022 election. In both years, AIV had about 152 million shares outstanding.

Above all, one activist candidate handily beat an incumbent in a targeted vote, with clever tactics available under UPC and clear support from ISS.

UPC indeed helped an activist to influence a BoD. Wise (or fearful) BoDs should pay close attention going forward.


A couple of weeks ago, we highlighted the first universal proxy card (UPC) to hit EDGAR under the new SEC rule. We now have another example, with some interesting tidbits for aficionados and proxy junkies, and also for anyone who seeks an edge in proxy contest voting.

This one concerns Apartment Investment & Management (AIM) in a proxy contest with Land & Buildings (L&B). Compared to the earlier one involving AIM ImmunoTech and a group of individuals (below), it seems more straightforward, although no less contentious. Coincidentally, both involve issuers with a symbol of "AIM"...

AIM filed its preliminary proxy statement last week. L&B filed theirs a couple of days later. Each will solicit proxies separately, on their own proxy card. We note a couple of interesting aspects of each.

First, the proxy cards recommend how shareholders vote, in addition to properly distinguishing between the AIM and L&B nominees. The SEC rule was largely silent as to how the proxy card (not the proxy materials) should set forth specific voting instructions. We expect to see more companies and activists to test the boundaries of what the SEC will allow them to put on a proxy card.

Second, both of the AIM and L&B proxy statements include a curious statement. AIM's appears in the Q&A section (p. 5), with a similar idea in the letter to shareholders:

If I want to vote for one or more of Land & Buildings’ nominees can I use the WHITE universal proxy card?

Yes, if you would like to elect some or all of Land & Buildings’ nominees, we strongly recommend you use the Company’s WHITE proxy card to do so.

L&B states (p. 17):

Any stockholder who wishes to vote for one of the Company’s nominees in addition to the Land & Buildings Nominees may do so on Land & Buildings’ BLUE universal proxy card. There is no need to use the Company’s white proxy card or voting instruction form, regardless of how you wish to vote.

[emphasis theirs in each excerpt]

Why would each acknowledge that shareholders might vote for the other's nominees, and suggest they could do so using their own proxy card? We'd think they would do everything it could to discourage this.

It appears each wants to receive as many proxy cards as it can. They can thus track which shareholders have already voted. If AIM receives proxy cards with votes for L&B nominees, and L&B for AIM nominees, then each can easily contact those shareholders, and attempt to persuade them to change their votes. Clever...

We'll monitor these situations, although we don't expect to post every time we see a new example, ok?


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.

LinkedIn Share This Email
You can find other useful resources at the TAI website, including our research on "Effective Activism", our white paper with the basics on activist investing, and our guides on exempt solicitationconsent solicitation, and special shareholder meetings.
Twitter  Linkedin  
For further information, or to discuss a specific turnaround situation, please contact:

Michael R. Levin