Los Gatos' Netflix Ends 'Poison Pill' Plan

Stockholder Rights Plan ends in December of 2013, two years earlier than its original November 2015 expiration date.

Netflix has ended its stockholder rights plan created to prevent the company from a hostile takeover. Courtesy Netflix
Netflix has ended its stockholder rights plan created to prevent the company from a hostile takeover. Courtesy Netflix

Los Gatos-based online media streaming giant Netflix has announced that its stockholder rights plan was amended to accelerate its expiration date to Dec. 30, 2013.

The plan, adopted to protect the growing company from hostile takeovers, effectively terminated it two years earlier than its original expiration date of November 2015. 

In connection with the expiration of the rights plan, also known as a "poison pill," Netflix will deregister the related preferred share purchase rights under the Securities Exchange Act of 1934, the company said in a press release.

It will also delist the preferred share purchase rights from NASDAQ, the release added.

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Shareholder January 07, 2014 at 01:55 PM
This related proposal was submitted to Netflix on December 12, 2013: Right to Vote Regarding Poison Pills Resolved, shareholders request that our Board adopt a rule to redeem any current or future Poison Pill unless such plan or amendments to such plan are submitted to a shareholder vote, as a separate ballot item, within 12 months. "Poison pills … prevent shareholders, and the overall market, from exercising their right to discipline management by turning it out. They entrench the current management, even when it’s doing a poor job. They water down shareholders’ votes and deprive them of a meaningful voice in corporate affairs." – "Take on the Street" by Arthur Levitt, SEC Chairman, 1993-2001. “That’s the key negative of poison pills – instead of protecting investors, they can also preserve the interests of management deadwood as well.” – Morningstar.com, Aug. 15, 2003. GMI Ratings, an independent investment research firm, reported that the percentage threshold required to trigger the Netflix poison pill was 10%. This proposal may obtain a majority vote because Netflix shareholders supported 2 other shareholder-friendly governance changes at our 2013 annual meeting: • Majority Voting for Directors, sponsored by the California State Teachers' Retirement System 81%-vote in favor. • Independent board chairman, sponsored by the Comptroller, City of New York 73%-vote in favor.
Marilyn Leonard January 07, 2014 at 02:21 PM
Very interesting development.


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