dead hand poison pill

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Dead Hand Poison Pill

A provision in some antitakeover measures stipulating that only persons who were members of the board of directors at the time the antitakeover measure was put into place have the power to rescind the antitakeover measure. More specifically, it may refer to the right of the board of directors to dilute the stock holdings of the person or institution taking over by issuing more stocks and giving them to themselves. The intent is to make the hostile takeover prohibitively expensive for the party taking over. Dead hand poison pills are controversial and have been challenged in some jurisdictions.

dead hand poison pill

A special type of poison pill antitakeover defense in which only ousted directors can rescind the poison pill. Poison pill plans are put in place in order to make a hostile takeover prohibitively expensive by issuing a huge number of new shares.