Delaware courts have invalidated dead hand provisions, which many observers regard as abusive, but the law is unsettled in most other states.
Poison pills protect publicly traded companies from hostile takeovers.
This has the effect of taking discretion away from any future directors not part of current management. Delaware courts have ruled against dead hand provisions because they disenfranchise shareholders, eliminating the practical possibility of any proxy contest to replace directors. Agreement was reached with eight of these companies before it became necessary to file a resolution with them. At six others, resolutions have been withdrawn. Resolutions are pending at seven companies.