Oshkosh terminates shareholder rights plan early

aboutbanner
On behalf of Daniel Watkins of Watkins Firm, A Professional Corporation posted on Wednesday, January 16, 2013.

Many of our blogs discuss the growing impact that shareholders can have on California companies. Shareholder rights are growing in terms of a company’s accountability to the shareholders, which is commonly seen in relation to shareholder input on such issues as executive compensation and overall company forecasting.

In addition to the recently discussed influence of a company’s shareholders, shareholder rights continue to impact companies in more traditional methods. A long-standing shareholder right is the shareholder rights plan, which is still utilized by many California shareholders. A shareholder rights plan is generally the implantation of an agreement that prevents a single shareholder from gaining too much control over a company.

A shareholder rights agreement prevents a single shareholder from gaining too much control by limiting the amount of shares a single shareholder can purchase. A shareholder rights plan acknowledges the impact of shareholder rights and the potential control of a majority shareholder.

The implementation of a shareholder rights plan, which is commonly referred to as a poison pill plan, is typically implanted for a set period of time. The set period of time can be a strategic maneuver, as a shareholder rights plan can be implemented as an offensive maneuver against a hostile takeover. The company Oshkosh Corporation, which manufactures vehicles not the children’s clothing line, recently decided to terminate their existing shareholder rights plan prior to its predetermined expiration.

The termination came almost 10 months early and was required to be approved by the company’s board of directors. When a shareholder rights plan is terminated, all aspects of the plan will end on the actual date of termination.

Source: Market Watch, “Oshkosh Announces Termination of Shareholder Rights Plan” Jan. 7, 2013