Activist Investors Confront ‘Weaponized’ Board Nomination Bylaws

Corporate boards looking to slow the momentum of activist investors are triggering a series of legal showdowns over claims they’re wielding a new strategy for rigging proxy contexts.

Confronted by a tide of dissidents, sitting directors are increasingly deploying strict reporting requirements and deadlines onerous enough to “choke a horse,” in the words of one recent lawsuit, against those who nominate rivals. The tactic has led to a wave of court cases asking how far boards can push those advance-notice bylaws to keep activist nominees off shareholder ballots, including suits targeting Halliburton Co. and Peloton Interactive Inc.

“They’re being weaponized ...