Corporate Governance Shareholder Rights & Activism

Question 1

What is 'say on pay' as established by the Dodd-Frank Act?

Accepted Answer

A mandatory shareholder vote to approve executive compensation packages

Answer

Say on pay gives shareholders an advisory (non-binding) vote on the executive compensation packages disclosed in the proxy statement.

Question 2

What is proxy access in corporate governance?

Accepted Answer

A shareholder's right to include director nominees in the company's proxy materials

Answer

Proxy access allows qualifying shareholders to nominate director candidates and have them included in the company's proxy statement at the company's expense.

Question 3

Which type of shareholder resolution is binding on the board if approved?

Accepted Answer

Bylaw amendment

Answer

Shareholder-approved bylaw amendments are legally binding on the corporation and must be implemented by the board, unlike precatory resolutions which are advisory.

Question 4

What is an 'activist investor' in corporate governance?

Accepted Answer

A shareholder who acquires a significant stake and advocates for governance or strategic changes

Answer

Activist investors acquire meaningful ownership stakes and publicly or privately push for changes in governance, strategy, or capital allocation.

Question 5

Under SEC Rule 13D, a shareholder must file a Schedule 13D within how many days of acquiring beneficial ownership exceeding 5%?

Accepted Answer

10 calendar days

Answer

Under SEC Rule 13D, shareholders who cross the 5% beneficial ownership threshold must file a Schedule 13D within 10 calendar days.

Corporate Governance Practice Test

Corporate Governance Practice Test

Corporate Governance Shareholder Rights & Activism