Lucent Accelerates Poison Pill Expiration To Dec 31
WASHINGTON -(Dow Jones)- Lucent Technologies will end its "poison pill" three months before the planned expiration date of March 31, 2006, the company disclosed Thursday.
The Murray Hill, N.J., telecommunications equipment maker also said its board adopted a shareholder-rights policy Wednesday, which requires it to obtain holder approval before adopting a poison pill.
In its filing with the Securities and Exchange Commission, the company didn't say why it's ending the poison pill, a takeover defense mechanism viewed by many shareholder groups as a bad corporate-governance tool.
The company has in the recent past made moves to implement good corporate-governance practices. Several months ago, in response to a majority shareholder vote, it adopted a new policy over severance payments for senior executives, saying the company will seek holder approval in the future for some severance agreements.
In its filing Thursday, Lucent said that if it implements a poison pill before getting shareholder approval under some circumstances, it will put it for their authorization at the next annual meeting.
Under the policy, which is similar to those adopted by several other companies, if shareholders don't approve the board's move, the pill will end within a month of the certification of the vote.
Poison pills, formally known as shareholder-rights plans, are designed to prevent hostile takeovers. Under a typical poison pill, if an investor acquires a certain percentage of a company's stock, other shareholders can start buying additional shares at reduced prices, thereby diluting the acquirer's investment.
Shareholder activists view the poison pill as a tool for management entrenchment and a device that erodes shareholder value. Supporters of the pill argue that boards are better positioned than shareholders to use their experience in deciding the fate of takeover bids.
In the past few years, scores of companies have terminated the pills under shareholder pressure.
-By Bhattiprolu Murti, Dow Jones Newswires; 202-862-1357
(END) Dow Jones Newswires "
Posted to the site on 22nd December 2005
