Dead-Hand Provision!

what the heck is it?! i don’t understand it… Definition: in case of a friendly takeover, most poison pill plans give the BOD the right to redeem the pill prior to a triggering event.

If you protect yourself from takeover by adopting a poison pill, you grant shareholders rights that convert to lots of highly dilutive securities if some event happens that looks like there will be a takeover. The poison pill can be beaten by a proxy battle by replacing the board with a new board that redeems the poison pill rights. A dead hand provision says that only continuing directors can redeem that poison pill rights so everyone elected to the new board cannot get rid of the poison pill. This protects companies from having acquirers beat their poison pill by a proxy fight.

i know the concept and remember reading about it but i don’t remember “dead-hand provision” as being its name… EDIT: oops, from reading the first response, i didn’t know that part of it although it makes obvious sense. but i certainly don’t remember it having that NAME.