Don't Make Poison Pills More Deadly - NYTimes.com:
UPDATE:
I was asked why this would be bad. My answer is actually from a previous NY Times article from Lucian as well:
"Poison pills were developed in the 1980s to enable insiders to block a hostile acquisition. Over time, however — and without sufficient attention by investors and public officials — companies have started to use poison pills to prevent acquisitions of stakes that fall substantially short of a controlling block.and later
Indeed, among the 637 companies with poison pills in the FactSet Systems database, 80 percent have plans with a threshold of 15 percent or less."
"...by entrenching insiders and insulating them from engagement by large outside shareholders, low-threshold poison pills could well impose costs on public investors who do not wish to sell their shares."Good stuff from Harvard's Lucian Bebchuk!
UPDATE:
I was asked why this would be bad. My answer is actually from a previous NY Times article from Lucian as well:
"...the presence of large outside shareholders, or the prospect of their emergence, provides an important source of discipline for management. Often, a company’s stock price is bolstered after S.E.C. records, known as 13D filings, disclose the emergence of a large outside shareholder. This is a reflection of investors’ belief that such a presence can be expected to benefit their fellow shareholders. The proposed 5 percent hard cap, however, would reduce the amount of stock that could be purchased before making a 13D filing. That would lower the potential returns to large outside shareholders produced by identifying an underperforming company and taking a significant stake in it."
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