JCPenney became the third company this proxy season to reach an agreement with me to amend its by-laws to limit the adoption of poison pills.
The adopted by-law is based on a shareholder proposal to amend the company’s by-laws that I submitted for the company’s upcoming annual meeting. Following my agreement with the company, the company’s board adopted the new by-law and I withdrew the shareholder proposal. The company’s amended by-laws were filed yesterday and are available here.
Under the new by-law provision, any extension of a poison pill plan not ratified by the shareholders must be approved by at least 75% of the members of the board of directors, and a pill not so extended will expire one year after its adoption or last such extension. An article about my model pill by-law on which this provision is based is available here.
JCPenney’s adoption of my poison pill by-law was preceded in this proxy season by an adoption by Safeway and an adoption by CVS Caremark, as well as an earlier adoption by Disney and an adoption by Bristol-Myers Squibb. Disney amended its by-laws after my proposal won 57% of the votes in Disney’s annual meeting. Safeway, CVS Caremark, and Bristol-Myers Squibb, like JCPenney now, amended their by-laws following an agreement with me that made a shareholder vote unnecessary. I hope that other public companies will follow the example set by these five companies.
I would like to express my appreciation again to Michael Barry and Ananda Chaudhuri from the law firm of Grant & Eisenhofer for their valuable legal advice and legal representation in connection with my shareholder proposals in general and the pill by-law proposals in particular. I also wish to thank again Greg Taxin and Julie Gresham of Spotlight Capital Management for advising me on engagement with companies.