Anti-Greenmail Provision

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Anti-Greenmail Provision

A provision in a corporate charter forbidding the payment of a bon voyage bonus without the approval of a given majority of shareholders. Greenmailing is a practice in which a corporate raider buys a large amount of stock from another publicly-traded company and forces the latter to buy back the stock at a substantial premium in order to avoid a takeover. One refers to this buyback as the bon voyage bonus, as this enables the company to be left alone by the greenmailer. An anti-greenmail provision discourages corporate raiders from greenmailing in the first place as it makes the bon voyage bonus more difficult to receive, which may result in the greenmailer becoming stuck with ownership of shares he/she does not actually want.
References in periodicals archive ?
Anti-greenmail provisions prevent such arrangements unless the same repurchase offer is made to all shareholders or unless the transaction is approved by a majority of shareholders.
In addition, shareholders agreed with the Board in rejecting shareholder proposals regarding anti-greenmail payments and a stockholder rights plan.
Davis has withdrawn the anti-greenmail proposal she submitted last July for inclusion in Chrysler's 1996 proxy materials.
Adopted an anti-greenmail bylaw formalizing Chrysler's
In addition, shareholders agreed with the Board in rejecting shareholder proposals regarding China labor standards and anti-greenmail payments.
In keeping with the Company's previously announced intention not to pay greenmail to anyone, Eaton said the Board also will consider adopting an anti-greenmail bylaw.
By making this data available through Wharton's WRDS service, researchers at educational institutions around the world will be able to use a web-based system to identify companies that have poison pills, anti-greenmail, classified boards, golden parachutes, and other devices that are designed to prevent hostile takeovers and weaken shareholder rights.