TIAA-CREF withdrew six other resolutions on board independence, as it did for 16 resolutions on a takeover-defense known as the dead hand poison pill
, after targeted companies removed the pill provision.
A dead hand poison pill, however, can only be removed by incumbent directors on the board before a proxy fight.
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 is a takeover defense that prevents an acquisition of a company even if a majority of shareholders favor the acquisition.
Stockholders should be concerned that a board lacking independence, such as this one, may use a dead hand poison pill to entrench itself and management, to the detriment of shareholders," said Peter C.
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).
The attempts by management at Lubrizol and Bergen Brunswig to justify the dead hand poison pill were seen clearly by shareholders for what they are -- rationalizations of an unreasonable anti-takeover defense designed to maintain incumbent managements by effectively precluding legitimate proxy contests," said Clapman.
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.
Bergen's proxy statement defense of its dead hand poison pill "misses the point," said Peter C.
Seven out of ten companies to which TIAA-CREF submitted a similar resolution this year have voluntarily agreed to remove their dead hand poison pill.
Lubrizol's dead hand poison pill
can be redeemed only with the consent of Lubrizol's current directors (or future directors approved by them).