Fair price provision

Fair price provision

Fair Price Provision

A provision in the bylaws of some publicly-traded companies stating that a company seeking to acquire it must pay a fair price to targeted shareholders. The formula for determining a fair price may be indicated in the bylaws; it is often a calculation based on historic prices. Additionally, the fair price provision mandates that the acquiring company must pay all shareholders the same amount per share in multi-tiered shares. The fair price provision exists both to protect shareholders and to discourage hostile acquisitions by making them more expensive. See also: Antitakeover measure.
References in periodicals archive ?
In other voting, shareholders approved both the selection of KPMG as Pfizer's independent auditor for 2006 and management proposal to amend Pfizer's charter to eliminate the supermajority vote requirements and fair price provision.
ISS wrote, "The company has an arsenal of antitakeover provisions in place, including a poison pill that was not approved by shareholders, a classified board, golden parachute executive severance agreements, blank check preferred stock, and a fair price provision .
Amending or repealing the fair price provision or the requirements in FedEx's certificate of incorporation and bylaws that (i) stockholder action be taken at a duly called annual or special meeting, and (ii) special meetings be called only by the Board of Directors; and
UNITE's choice of Chubb as a target is all the more puzzling in light of the fact that Chubb has chosen not to avail itself of other anti-takeover defenses such as the staggered election of directors and a fair price provision in the company's articles of incorporation and bylaws.
The company has an arsenal of anti-takeover provisions in place, including a poison pill that was not approved by shareholders, a classified board, golden parachute executive severance agreements, blank check preferred stock, and a fair price provision.
During the takeover heyday, challenges centered around defensive mechanisms -- poison pills, classified boards, fair price provisions, and opt-outs of state takeover legislation.