Unocal Stiffens Bylaws, Hinders Takeover Bids
In an apparent attempt to deflect potential takeover moves, Unocal Corp. has changed its bylaws to make it more difficult for shareholders to nominate directors and bring up matters at the company’s annual meeting.
Unocal, parent of Los Angeles-based Union Oil Co., revealed in a filing Friday with the Securities and Exchange Commission that its board voted to require at least 30 days’ notice to nominate a candidate for director.
In addition, Unocal now requires that the nominee disclose any Unocal stock holdings, a five-year history of businesses and occupations, any criminal convictions, companies in which the nominee has a 10% or larger stake and all information normally required by federal proxy rules.
Before the bylaw change, which the board adopted at its regularly scheduled meeting on Feb. 25, only 24 hours’ notice had to be given and no extra disclosure was required.
Unocal’s board also voted that shareholders can raise matters at annual meetings only if they have given at least 30 days’ written notice.
The written notice must include a description of the motion, the shareholder’s name and address, the number of Unocal shares owned by the shareholder and any “material interest” the shareholder has in the matter. Previously, no notice or disclosure was required.
The bylaw changes went into effect immediately and therefore will apply at Unocal’s April 29 annual meeting. The revised bylaws aren’t subject to shareholder approval.
A Unocal spokesman said the revisions had “been in the works for some time” and were not a response to recent Unocal stock purchases by a group led by Texas oilman T. Boone Pickens.
Pickens’ group, Mesa Partners II of Amarillo, Tex., now owns 9.7% of Unocal’s stock. Pickens has said the group bought the stock as an investment but could change its mind and attempt a takeover.
David Batchelder, vice president of finance with Pickens’ Mesa Petroleum Co., said the bylaw changes were a surprise.
“The (Unocal) board has unilaterally taken away some of the rights of shareholders,” he said. “We wish they would do something for shareholders instead.”
The most recent changes in the bylaws are minor compared to anti-takeover measures that were approved by shareholders in April, 1983.
That reorganization created Unocal as a Delaware corporation, staggered the terms of company directors, abolished cumulative voting for directors and required 75% shareholder approval of takeover proposals instead of a simple majority.
The shareholders also approved a measure that allowed the Unocal board to propose or change most bylaws without shareholder approval.
Unocal Chairman and President Fred L. Hartley is one of three directors up for reelection at the April annual meeting.
