Quorums and business: An example
Although most high-profile quorum disputes have occurred in state legislatures, there have been a few examples of quorums becoming an issue at the corporate level. In September 2018, for example, activist investor Daniel Loeb notified Campbell Soup Company (CPB -1.73%) that he wanted to replace the entire board of directors with his own nominees. Although the company estimated 95% of U.S. homes had at least one Campbell product, the company had billions in debt, and Campbell's stock had lost more than a third of its value over the previous two years.
Descendants of John Dorrance, the chemist who developed the formula for condensed soup, opposed Loeb's plans. The family members, who owned about 40% of the company's stock, benefited from dividends they received from Campbell and feared Loeb's plans would reduce or eliminate them. Board members who opposed Loeb's nominees skipped a meeting, resulting in a lack of a quorum.
The delay didn't entirely thwart Loeb's hedge fund, but the activist investor wound up settling for much less than a total replacement of the Campbell board in late 2018. Instead, company directors agreed to expand the board from 12 to 14 members, with two of the new directors coming from Loeb's proposed slate. In addition, Loeb's hedge fund was given a voice in selecting a new Campbell CEO.
