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Are Shareholder Rights Plans a "Poison Pill" During COVID-19?

Our COVID-19 Impact Tracker is highlighting a number of the companies that have been the hardest hit by COVID-19 are adopting limited duration shareholder rights plan. These plans are being adopted in an effort to give the Board and Management time and room to maneuver through this crisis.

Typically considered a negative for corporate governance these "poison pills" have been used to limit the ability for company outsiders to effect change. However, given today's environment of an unprecedented market dislocation brought about by factors exogenous to the companies -- though more than a few will be exposed for bad governance practices in the end -- it may be the right time to institute some protection.

To date, companies we've seen adopt limited shareholder rights plans due to the COVID-19 pandemic's economic and market impact include:

  • AAR Corp. [AIR]
  • Spirit Airlines, Inc. [SAVE]
  • The Chefs' Warehouse, Inc. [CHEF]
  • Williams Companies, Inc. (The) [WMB]
  • Delek US Holdings, Inc. [DK]
  • Tempur Sealy International, Inc. [TPX]
  • Six Flags Entertainment Corporation New [SIX]
  • Tailored Brands, Inc. [TLRD]
  • Viad [VVI]

Track all the impacts and mitigation strategies with our COVID-19 Impact Tracker.