Polishing the Pill’s Image at a Tarnished Firm

Poison pills are increasingly tough sells for almost any company in the shareholder activist era of the early 21st Century but it’s got to be especially rough going for the scandal-scarred firm. So how does that type of company handle the ticklish job of keeping a key defense in place? If the firm is software giant CA Inc., it tries to package the pill as good medicine for the stockholders. The former Computer Associates International Inc., centerpiece of one of the nastier accounting scandals of the last few years, unveiled new pill in mid-October, naming it the Stockholder Protection Rights Plan. Besides suggesting that the pill “protects” shareholders, the new plan, aimed at replacing a pill that expired in late October, contains a bevy of shareholder-friendly features that have become fixtures at companies trying to retain defenses without infuriating the stockholder populace. Stockholders will get a crack at voting on the pill at CA’s 2007 annual meeting, the plan will run only three years instead of the customary 10, and a committee of independent directors will check every three years to see if the pill is still needed – the so-called TIDES review. With a 20% trigger, the pill has flip-in and flip-over features. But the pill will not kick in if an offer is made and 10% of the shareholders petition for a special meeting to consider exempting the offer for the plan’s provisions. In other takeover defense developments, DHB Industries installed a pill as well as other defensive mechanisms including having director vacancies filled only by the board and requiring special board meetings to amend by-laws. Pills were scrapped at Gen-Probe and State Street Corp. (c) 2006 Mergers and Acquisitions Journal and SourceMedia, Inc. All Rights Reserved. http://www.majournal.com http://www.sourcemedia.com