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When The Best Offensive Strategy May Simply Be To Stay Home

While I enjoy studying and thinking about game theory problems, I find that it is often difficult (at least for me) to apply it to "real world" corporate situations.  Defining the game, the rules and strategies just seems so much more complicated than the usual games discussed in basic game theory texts.  However, I've always thought that corporate voting should be a fertile field for game theorists.

Thus, I took note recently of what seemed to be a novel, if not extreme case of a "just say no" strategy.  Apartment Trust of America, Inc. is a Maryland corporation that describes itself as being in the business of acquiring, holding and managing apartment communities.  According to ATA's proxy statement, the corporation has scheduled its annual meeting of stockholders for tomorrow for, among other things, the purpose of electing five directors.

It turns out that another real estate company, Sovereign Capital Management Group, Inc., is unhappy with the management of ATA and last week announced that it had formed a committee to prevent the re-election of ATA's directors.  Rather than proposing its own slate, Sovereign is pursuing a strategy of preventing the formation of a quorum.  According to these supplemental materials filed by ATA, Sovereign has issued a letter urging ATA's stockholders to "block the Board’s attempt to re-elect themselves" by preventing the formation of a quorum. [ATA states that its quorum is 50% of the outstanding shares, rather than a majority.]  If Sovereign is successful, its victory may only be symbolic because according to ATA's proxy materials directors serve until their successors are elected and qualified.

What a difference a single iota can make!

Sovereign's letter is included in ATA's supplemental materials.  The letter mentions "allegations of tortuous interference".  I assume that Sovereign meant "tortious", meaning wrongful, not tortuous, meaning full of twists and turns.  Both "tortious" and "tortuous" are derived from the same Latin word, torquere, which means to turn or twist.

What a difference an i (or iota in Greek) makes!  In the fourth century, Christians were bitterly divided over the letter iota in the word that they used to describe the nature of Jesus.  The Council of Nicea (325) adopted the Greek word homoousios (ὁμοούσιος) meaning of one substance while the followers of Bishop Arius of Alexandria adopted the word homoiousios (ὁμοιούσιος) meaning of similar substance.  In The Decline and Fall of the Roman Empire, Edward Gibbon described the result as follows:

[T]he profane of every age have derided the furious contests which the difference of a single diphthong [o versus oi] excited between the Homoousians and the Homoiousians.  As it frequently happens that the sounds and characters which approach the nearest to each other accidentally represent the most opposite ideas . . . .

Tittling your "i"

The English word "jot" is derived from the Greek word "iota" and the smallest letter of the Hebrew alphabet, "jod" or "yodh".  It has thus come to mean the smallest piece of a writing.  The word "tittle" in Latin (titulus) refers to an accent mark over a letter, but now usually refers to the dot over the letter "i".  You don't dot an "i", you "tittle" it.  The statement, "I wouldn't change a jot or tittle" means that you would change even the smallest thing.

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30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
(949) 353-6328
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