DealLawyers.com Blog

Here’s an excerpt from this Reuters article:

A major funds company is putting directors on notice: if you adopt poison pill anti-takeover measures without shareholder approval, you will be blacklisted. Since October, Dimensional Fund Advisors, the eighth largest U.S. mutual fund firm with $398 billion in assets, has been sending warning letters to companies whose stock it owns and who have adopted the measures without shareholder approval.

In the letters, the Austin, Texas-based money manager warns that it will vote against directors who approved those measures – not just at the company with the poison pills, but at every company they serve – unless they remove those pills or put them up for shareholder vote. The campaign, which hasn’t been previously reported, will eventually target 250 companies. DFA is worried that companies too often use the measures to deter acquirers and shareholder activists who could benefit shareholders, said Joseph Chi, the firm’s co-head of portfolio management.

DFA appears to be the first major fund group to blacklist individual directors across its portfolios for such conduct. That may be a sign parts of the funds industry are taking a tougher line against boards who don’t do what the funds want. Some of the largest U.S. fund managers have also recently been pressuring companies to make it easier for shareholders to nominate board candidates.