US ISS outlines the future of poison pills
Author: | Published: 30 Nov 2012
The Delaware Supreme Court ruled in
1985 that a board of directors could adopt preferred share
purchase rights plans, so-called poison pills, as a takeover
defence mechanism. Patrick McGurn, special counsel at
Institutional Shareholder Services (ISS) says it was no
coincidence that ISS was launched that same year
Shareholder rights plans are often understood as anything
but. By giving shareholders the opportunity to dilute a
potential owner's stake in a company, they have effectively
deterred any and all hostile acquisitions of companies that
have adopted them.
Takeover defence mechanisms like shareholder rights plans,
especially those accompanied by classified boards, have
declined in recent years, and pro-shareholder policies have
risen. A lot of the trend is thought to be a result of proxy
advisory firms like ISS.
"I'd say defences continued to go up and then stabilised
in the first decade after Moran, then they went down over the
course of the...