Once again, shareholders have expressed their strong objections to dead hand poison pills," said Peter Clapman, TIAA-CREF senior vice president and chief counsel, Investments.
In 1998, the Delaware Chancery Court and the Delaware Supreme Court ruled that dead hand poison pills are invalid because they would prevent a newly elected board from completely discharging its fiduciary duties to the company and its shareholders.
A dead hand poison pill, however, can only be removed by incumbent directors on the board before a proxy fight.
Earlier this year, TIAA-CREF resolutions opposing dead hand poison pills won strong support from shareholders of The Lubrizol Corporation (NYSE: LZ) and Bergen Brunswig Corporation (NYSE: BBC).
Whereas typical poison pills can be removed by newly appointed directors who, because of their support for an acquisition offer, are voted onto the board by shareholders, dead hand poison pills can only be removed by incumbent directors who were on the board prior to a proxy fight, or by their hand-picked successors.
Mylan is incorporated in Pennsylvania, where the adoption of dead hand poison pills is a matter of company discretion.
Whereas typical poison pills can be removed by newly-appointed directors who, because of their support for an acquisition offer, are voted onto the board by shareholders, dead hand poison pills can only be removed by incumbent directors on the board before a proxy fight.
Towards that end, TIAA-CREF will file additional shareholder resolutions with companies that have dead hand poison pills and will withhold voting support for director nominees at companies that this year adopted plans with dead hand provisions.
During this current proxy season, TIAA-CREF filed shareholder resolutions regarding dead hand poison pills with 10 non-Delaware companies.
Dead hand poison pills are a takeover defense which prevent an acquisition of a company even if a majority of shareholders favor the acquisition.
Bergen's proxy statement defense of its dead hand poison pill "misses the point," said Peter C.
Lubrizol's dead hand poison pill
can be redeemed only with the consent of Lubrizol's current directors (or future directors approved by them).