Editing Shareholder rights plan (section)

===Common types of poison pills===
==== Preferred stock plan ====
The target issues a large number of new shares, often [[preferred stock|preferred shares]], to existing shareholders. These new shares usually have severe redemption provisions, such as allowing them to be converted into a large number of common shares if a takeover occurs. This immediately dilutes the percentage of the target owned by the acquirer and makes it more expensive to acquire 50% of the target's stock.

==== Flip-in ====
{{Main|Flip-in}}
A "flip-in" permits shareholders, except for the acquirer, to purchase additional shares at a discount. This provides investors with instantaneous profits. Using this type of poison pill also dilutes shares held by the acquiring company, making the takeover attempt more expensive and more difficult.

==== Flip-over ====
{{Main|Flip-over}}
A "flip-over" enables stockholders to purchase the acquirer's shares after the merger at a discounted rate. For example, a shareholder may gain the right to buy the stock of its acquirer, in subsequent mergers, at a two-for-one rate.

==== Back-end rights plan ====
Under this scenario, the target company re-phases all its employees' stock-option grants to ensure they immediately become vested if the company is taken over. Many employees can then exercise their options and then dump the stocks. With the release of the "golden handcuffs", many discontented employees may quit immediately after having cashed in their stock options. This poison pill is designed to create an exodus of talented employees, reducing the corporate value as a target. In many high-tech businesses, attrition of talented human resources may result in a diluted or empty shell being left behind for the new owner.

For instance, [[PeopleSoft]] guaranteed its customers in June 2003 that if it were acquired within two years, presumably by its rival Oracle, and product support were reduced within four years, its customers would receive a refund of between two and five times the fees they had paid for their PeopleSoft software licenses. While the acquisition ultimately prevailed, the hypothetical cost to Oracle was valued at as much as US$1.5 billion.<ref>{{Cite news |last=Leyden |first=John |date=2003-11-11 |title=Oracle chokes on PeopleSoft's poison pill |url=http://www.theregister.co.uk/2003/11/11/oracle_chokes_on_peoplesofts_poison/ |archive-url=https://web.archive.org/web/20171114074757/http://www.theregister.co.uk/2003/11/11/oracle_chokes_on_peoplesofts_poison/ |archive-date=2017-11-14 |work=[[The Register]]}}</ref>

==== Voting plan ====
{{Main|Voting plan}}
In a [[voting plan]], a company will charter preferred stock with superior voting rights over that of common shareholders. If an unfriendly bidder acquired a substantial quantity of the target firm's voting common stock, it then still would not be able to exercise control over its purchase. For example, [[ASARCO]] established a voting plan in which 99% of the company's common stock would only harness 16.5% of the total voting power.<ref>{{cite journal |last1=Malatesta |first1=Paul H. |last2=Walkling |first2=Ralph A. |title=Poison pill securities |journal=Journal of Financial Economics |date=January 1988 |volume=20 |pages=347–376 |doi=10.1016/0304-405X(88)90050-5 }}</ref>

In addition to these pills, a "dead-hand" provision allows only the directors who introduce the poison pill to remove it (for a set period after they have been replaced), thus potentially delaying a new board's decision to sell a company.