A small cap biotechnology company was facing a shareholder vote to amend its certificate of incorporation to allow for officer exculpation provisions. There were two significant obstacles to passing this vote:
- The vote requirement to pass the proposal was 2/3’s of the outstanding shares voting in favor. While this vote requirement is mathematically possible, from a practical standpoint this threshold is rarely achieved.
- Complicating matters, Glass Lewis recommended voting against these proposals, so negative votes were present at the start of the solicitation from institutions that follow Glass Lewis recommendations.