Pills Popped at Prodigious Pace
In the 1999 proxy season, companies continued to adopt or renew poison pills at a torrid pace. Through the first five months of 1999, more than 200 companies either adopted new pills or renewed existing ones. Dead-hand provisions, which allow only a board's continuing directors to redeem the pill, have become increasingly popular among companies seeking to insulate themselves from hostile overtures, despite some state court rulings invalidating such features.... TIAA-CREF, the world's largest pension system, scored two victories in the first-ever votes on shareholder resolutions to put dead-hand provisions to a shareholder vote (at Bergen Brunswig Corp. and Lubrizol Corp.).
Joseph Sargent, VP for ISS Inc., in "A Fix on the Shareholder Focus" [Summer 1999].
What to Do about a Class Action Suit?
No matter what the company, no matter what the product, no matter what the allegations raised, when a major class action lawsuit arrives, there will be those in senior management who bar the doors, pound the tables and quote Churchill: "Never give in. Never give in. Never. Never. Never." For them, settlement is no less than surrender on the battlefield. Sometimes you have no choice but to muster all available firepower, strap on your helmet and hunker down for the duration. There are times [however] when the spiraling costs of litigation, the uncertainty of outcome at trial, and the occasional absurdity of the legal sparring that transpires in advance of trial -- have you ever seen a Reply to a Motion for an Extension of Time to Move for Reconsideration of a Denial of a Motion for an Extension of Time? -- together suggest the value of exploring settlement. Under the right circumstances, settlement of a major class action can be a business opportunity, allowing you to: cap your liability; provide substantial r elief to class members at a manageable cost; and obtain a comprehensive release.
Ralph Ferrara and Herbert Thomas, of the Debevoise & Plimpton law firm, in "You Have Been Named in a Class-Action Lawsuit" [Spring 1999] Mr. Ferrara. a partner in the firm, is a former SEC general counsel.
Do a Human Capital Audit
A comprehensive human capital audit provides a running start for a successful merger. It highlights where hidden strengths may lie, and where a strategy may face significant barriers. It provides an evaluation of which key executives should take on what roles in the new company, how much integration to anticipate, and which priorities should be set in post-merger activities. An audit can also reveal whether there is fresh talent in the managerial ranks -- an important signal to the firm's long-term potential -- and whether the top performers intend to stay. One of the risks to an acquiring company is the threat of a post-merger brain...