CVS Caremark, Safeway, and JCPenney adopt Bebchuk's by-Law proposal
April 18, 2008
Professor Lucian
Bebchuk, LL.M. '80 S.J.D. '84
Following agreements reached with Harvard Law School Professor Lucian Bebchuk LL.M. '80 S.J.D. '84, CVS Caremark, Safeway, and JCPenney have all adopted a by-law provision he proposed for limiting the adoption of poison pills.
“I commend the boards of CVS Caremark, Safeway, and JCPenney for agreeing to adopt the pill-limiting by-law this proxy season,” said Professor Bebchuk. “I hope that other companies will follow the example set by them and adopt similar by-law provisions.”
Under the new by-law provisions, any poison pill plan not ratified by shareholders will expire one year after it was adopted or last extended. In addition, any decision to extend a poison pill plan not ratified by shareholders must be approved by at least 75% of the members of the board of directors.
Bebchuk’s proposals were based on a model by-law that was the subject of a Delaware court decision in Bebchuk vs. CA, Inc., which led the CA corporation to abandon its attempt to exclude Bebchuk’s proposal from the corporate ballot.
With the recent adoptions, the number of major companies adopting Bebchuk’s pill by-law reached five. Prior to this proxy season, his proposed by-law was adopted by the Walt Disney Company and Bristol-Myers-Squibb. Disney adopted the by-law after the proposal won 57% of the votes at its annual meeting.
Lucian Bebchuk is director of the school’s Program on Corporate Governance. More information about Bebchuk’s proposals and their implementation can be found on the policy and advocacy page of his homepage.