Netflix Adopts Shareholder-Friendly Poison Pill

After Carl Icahn announced that he had acquired a 9.98 percent stake in Netflix, the company took steps to protect itself and its shareholders from a corporate takeover.

2013-01-26

January 26, 2013 (Press-News.org) Netflix Adopts Shareholder-Friendly Poison Pill

After Carl Icahn announced that he had acquired a 9.98 percent stake in Netflix, the company took steps to protect itself and its shareholders from a corporate takeover. The shareholder rights plan - also known as a poison pill - is intended to prevent Icahn from obtaining a controlling stake in the company. While the Netflix board sees its efforts as necessary to protect the company, Icahn claims that enacting the pill without a shareholder vote is an example of poor corporate governance.

The exact mechanism of the poison pill is complex, but the result is simple to understand. If a shareholder obtains more than 10 percent of the company, the pill is activated. Upon activation, every shareholder except the one who triggered the pill receives discounted stock. As a result, the stake of the triggering shareholder is diluted. The plan is set to expire on November 2, 2015.

Netflix Plan Shareholder-Friendly

The adoption of a poison pill plan effectively ends the threat of a corporate takeover. After all, most investors would not choose to reduce their stake in a company without compensation. The threshold set by the company is, however, important because it sets a limit on the number of shares than an individual investor can buy.

In setting its threshold, Netflix chose to allow institutional investors with a passive take in the company to hold up to 20 percent of its stock. All other investors - including Icahn - are subject to the 10 percent threshold. In most cases, companies set a 15 percent threshold for all investors. The choice by the Netflix board to treat passive institutional investors differently is unusual.

In order to justify a poison pill plan, companies must show that there is a threat and that its plan is proportional to that threat. In this case, Netflix is likely to argue that the varied treatment of shareholders in its plan is due to Icahn's statements that he would like to sell the company after taking it over. By setting the 20 percent threshold for some investors, Netflix can argue that it is aiming to counteract the efforts of activist investors like Icahn, but not other investors such as mutual funds.

A Business Law Attorney Can Help

If you are a shareholder considering action against a corporation regarding a dispute over business strategy, operations, or other matters, contact an experienced business litigation attorney. A knowledgeable business litigation lawyer can assess your case and advise you of your options. For more information, contact a business law attorney today.

Article provided by The Adanas Law Firm
Visit us at http://www.adanaslaw.com/

ELSE PRESS RELEASES FROM THIS DATE:

An Overview of Workers' Compensation in New York

2013-01-26

An overview of workers' compensation in New York It is an unfortunate reality that work can be dangerous. Of course, some professions are more hazardous than others, but nearly every job carries some risk of injury or illness. A work-related injury can cause major disruptions in a person's life. At a minimum, there will be medical care to pay for. In some cases, the worker will need to take time off to recover. In others, he or she may be left with long-lasting disabilities. When work injuries or illnesses happen, it is important for workers to avail themselves ...

The Liability of Drivers for Pedestrian Injuries in Pennsylvania

2013-01-26

The liability of drivers for pedestrian injuries in Pennsylvania Two recent accidents in Pennsylvania highlight the often-tragic results of what happens when car meets pedestrian. Near North Belle Vernon, police are investigating an accident when a man was killed while walking along Interstate 70. Unfortunately, this tragedy was compounded when two other vehicles crashed while trying to avoid the pedestrian accident. In a separate accident, a Baden man, who was driving without insurance and with a suspended license, struck a pedestrian in Ambridge, knocking him unconscious. ...

The Possible Future of Search Warrant Detentions

2013-01-26

The possible future of search warrant detentions In July 2005, Suffolk County, New York police obtained a warrant to search the apartment of Chunon Bailey. Specifically, officers were looking for a handgun described by a confidential informant. After obtaining the warrant, surveillance officers saw Bailey and another man drive away from the apartment and began to follow them. After those officers drove off, the SWAT team executed the search warrant and entered the apartment. The officers followed Bailey for approximately one mile before pulling him over. Their only ...

Establishing a Long-term Care Plan Will Ensure Seniors Are Properly Cared for in Old Age

2013-01-26

Establishing a long-term care plan will ensure seniors are properly cared for in old age. As the number of American senior citizens continues to rise, the need for good-quality, affordable long-term care options is greater than ever. For Americans of all ages, it can be difficult to determine the best way to plan for the future and ensure you will be well taken care of in old age. Since navigating through the intricacies of Medicare and Medicaid can be complicated, it is often wise to discuss your options with a skilled elder law attorney. Establish an Effective Long-Term ...

Disability: the Other Social Security Benefit

2013-01-26

Disability: the other Social Security benefit When you hear people talking about "Social Security," you most likely think of the retirement benefits that are paid to former workers who are in their sixties. However, 36 percent of Americans who receive benefits from the Social Security Administration (SSA) are not retired workers. Disability benefits The most common non-retirement benefits administered by the SSA are disability benefits. This type of benefit provides financial assistance to people who are unable to work because of a medical condition. ...

Personal Injury in Organized Athletics: Concussions and Brain Injuries

2013-01-26

Personal injury in organized athletics: Concussions and brain injuries Concussions are mysterious injuries that can cause long term and sometimes permanent brain damage. Concussions are often described as a bruise to the brain. The "bruise" is caused when the brain hits the skull at such a force that causes brain tissue to expand and brain nerves to be cut. This often occurs when the head is directly hit but can also occur when the head is forcibly snapped back. Because the brain is so delicate and complex, the force of the hit disrupts the brains function ...

'Til Debt Do Us Part: a Primer on Joint Credit

2013-01-26

'Til debt do us part: a primer on joint credit "Joint debt." Seems like a fairly simple concept, right? Two people are named on a particular debt (typically a credit card), and they both are responsible for the debt. Right? Well, that's not always how it works. Just like there are different types of joint credit, there are different kinds of joint debt. Different types of joint credit There is a huge difference between co-signed accounts, joint accounts and having one or more authorized users on a preexisting account. What is a co-signed account? A ...

Strategies for Addressing a Car Loan When Filing for Bankruptcy

2013-01-26

Strategies for addressing a car loan when filing for bankruptcy Car loans are just one of the many things a debtor needs to deal with when filing for bankruptcy. There are several strategies to consider when seeking to discharge this type of debt in the most beneficial manner. Relinquishing your car before filing for bankruptcy One option is to relinquish your vehicle to the lender prior to filing for bankruptcy. The lender will then repossess the car and sell it. You will only be responsible for paying off any remaining balance on the loan after the car has been ...

The Spotlight is On Bookwhirl.com's RTIR Marketing Service

2013-01-26

Bookwhirl.com, one of the leaders in the self-publishing industry, has introduced another helpful service for its clients: the RTIR Marketing Service. With help from Radio-TV Interview Report (RTIR), a well-known trade publication, Bookwhirl.com aims to provide aspiring authors the opportunity to promote themselves and their works by helping them to catch the attention of radio and TV show producers across the United States and Canada. By signing up for the said service, clients will be able to avail of ad space in the famous magazine, an Email Advertisement Campaign, ...

Multifamily News Publisher Reports New Multifamily Construction Growing at a Steady Pace

2013-01-26

The editor of the Multifamily News Minutes on the Sales, Inc. website today reported new multifamily home construction is growing at a steady pace nationally. The growth numbers show good signs which correlate to the housing market activity currently taking place in Washington D.C., Houston and North Dakota. Sales, Inc. is a housing industry leader and one of the biggest apartment leasing firms in the country. The official name of the report is "Multifamily News Minutes - Jan 7, 2013 December Wrap-Up". The topics covered in the publication and multifamily ...

Netflix Adopts Shareholder-Friendly Poison Pill

ELSE PRESS RELEASES FROM THIS DATE:

LAST 30 PRESS RELEASES: