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MCI WorldCom Shareholders Reject 'Poison Pill' Strategy
At the company's annual meeting in Clinton, Miss., WorldCom shareholders took back control of their company by adopting a proposal that requires shareholder approval for the adoption or retention of a "poison pill" provision.
Some 54 percent of shares - about 872.3 million shares - was voted in support of the proposal. The measure was submitted by the Communications Workers of America Pension Fund. About ten CWA members joined Brenda Scott, president of CWA Local 3570, and Rev. James Evans, a member of the Mississippi House of Representatives and civil rights activist, in calling for adoption of the CWA resolution.
A poison pill prevents any change in the control of a company without the approval of the board of directors, forcing any potential buyer to negotiate only with management and not allowing any offers to be made directly to the shareholders.
Shareholders, not the board of directors, should decide whether there are special circumstances that might offset the risk that a poison pill could entrench management or make it less responsive or accountable to shareholder interests, CWA said in a bulletin to investors.
This measure is especially important in light of recent reports that the merger with Sprint may be blocked by anti-trust officials in both the United States and Europe. If the merger does fail, MCI WorldCom's assets may be very valuable to another telecommunications company, and "shareholders should be able to determine whether a bid for their share is fair, without having that right infringed on" by management perhaps pursuing its own best interests, CWA pointed out.
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Some 54 percent of shares - about 872.3 million shares - was voted in support of the proposal. The measure was submitted by the Communications Workers of America Pension Fund. About ten CWA members joined Brenda Scott, president of CWA Local 3570, and Rev. James Evans, a member of the Mississippi House of Representatives and civil rights activist, in calling for adoption of the CWA resolution.
A poison pill prevents any change in the control of a company without the approval of the board of directors, forcing any potential buyer to negotiate only with management and not allowing any offers to be made directly to the shareholders.
Shareholders, not the board of directors, should decide whether there are special circumstances that might offset the risk that a poison pill could entrench management or make it less responsive or accountable to shareholder interests, CWA said in a bulletin to investors.
This measure is especially important in light of recent reports that the merger with Sprint may be blocked by anti-trust officials in both the United States and Europe. If the merger does fail, MCI WorldCom's assets may be very valuable to another telecommunications company, and "shareholders should be able to determine whether a bid for their share is fair, without having that right infringed on" by management perhaps pursuing its own best interests, CWA pointed out.
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