IBJNews

Lilly shareholders fail to remove anti-takeover measures

Back to TopCommentsE-mailPrintBookmark and Share

A proposal that would have weakened Eli Lilly and Co.’s defenses against an unwanted takeover failed to pass Monday despite a large majority of shareholders voting to remove those barriers for the second straight year.

At the drugmaker’s annual shareholders meeting at its Indianapolis headquarters, 84.7 percent of the votes cast called for removing several provisions designed to prevent a hostile takeover of the company.

However, Lilly’s bylaws require approval from 80 percent of all shares—whether voted or not—before removing the provisions. By that standard, only 72.6 percent of shares were voted in favor of removal.

The vote tallies were nearly identical to those at last year’s meeting.

For the past 25 years, Lilly has required the approval of 80 percent of the shareholders not only to approve hostile takeovers, but also to enact measures used to achieve them, such as removing directors before their terms end or expanding the size of the board.

If the proposal had passed, such measures could have been approved by a bare majority of shareholders.

“Many shareholders believe that supermajority voting provisions impede accountability to shareholders and contribute to board and management entrenchment,” Lilly said in its proxy statement.

Investors typically favor low barriers to hostile takeovers because an acquiring company almost always pays a premium price to entice shareholders to approve such mergers.

Lilly’s board of directors, which has been fiercely independent during multiple waves of consolidation in the pharmaceutical industry, opposed the removal of the takeover barriers for three years. But it has now supported removal each of the past two years.

Board support has clearly made a difference. The proposed removal had received no higher than 57 percent support in previous years.

“While it is important to maintain appropriate defenses against inadequate takeover bids, it is also important for the board to maintain shareholder confidence by demonstrating that it is responsive and accountable to shareholders and committed to strong corporate governance,” Lilly said in the proxy.

Shareholders also failed to amass enough votes to approve annual election of Lilly directors, something the board has advocated for years. That proposal received 85 percent of shares voted, but only 73 percent of all shares. It needed 80 percent of all shares to pass.

However, with 88 percent in favor, stockholders did approve a proposal that will let them annually to express approval or disapproval of Lilly's executive compensation. The Dodd-Frank Act, approved by Congress last year, requires public companies to give their shareholders a so-called "say on pay" at least every two or three years.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I am a Lyft driver who is a licensed CDL professional driver. ALL Lyft drivers take pride in providing quality service to the Indianapolis and surrounding areas, and we take the safety of our passengers and the public seriously.(passengers are required to put seat belts on when they get in our cars) We do go through background checks, driving records are checked as are the personal cars we drive, (these are OUR private cars we use) Unlike taxi cabs and their drivers Lyft (and yes Uber) provide passengers with a clean car inside and out, a friendly and courteous driver, and who is dressed appropriately and is groomed appropriately. I go so far as to offer mints, candy and/or small bottle of water to the my customers. It's a mutual respect between driver and passenger. With Best Regards

  2. to be the big fish in the little pond of IRL midwest racin' when yer up against Racin' Gardner

  3. In the first sentance "As a resident of one of these new Carmel Apartments the issue the local governments need to discuss are build quality & price." need a way to edit

  4. As a resident of one of these new Carmel Apartments the issue the local governments need to discuss is build quality & price. First none of these places is worth $1100 for a one bedroom. Downtown Carmel or Keystone at the Crossing in Indy. It doesn't matter. All require you to get in your car to get just about anywhere you need to go. I'm in one of the Carmel apartments now where after just 2.5 short years one of the kitchen cabinet doors is crooked and lawn and property maintenance seems to be lacking my old Indianapolis apartment which cost $300 less. This is one of the new star apartments. As they keep building throughout the area "deals" will start popping up creating shoppers. If your property is falling apart after year 3 what will it look like after year 5 or 10??? Why would one stay here if they could move to a new Broad Ripple in 2 to 3 years or another part of the Far Northside?? The complexes aren't going to let the "poor" move in without local permission so that's not that problem, but it the occupancy rate drops suddenly because the "Young" people moved back to Indy then look out.

  5. Why are you so concerned about Ace hardware? I don't understand why anyone goes there! Every time ive gone in the past, they don't have what I need and I end up going to the big box stores. I understand the service aspect and that they try to be helpful but if they are going to survive I think they might need to carry more specialty parts.

ADVERTISEMENT