Greenbackd

InFocus Corporation (NASDAQ:INFS) has just announced that its board has amended INFS’s bylaws and adopted what it euphemistically calls a “Shareholder Rights Plan.” The company’s press release reads:

Effective today, if any person or group acquires 15 percent or more of the voting power of the Company’s outstanding common stock without the approval of the Board of Directors, there would be a triggering event causing significant dilution in the voting power of such person or group. The Plan may be terminated by the Board at any time.

In what is clearly a response to Nery Capital upping its INFS stake to 12.2% of the oustanding stock, one “right” will be distributed for each share of INFS common stock outstanding as of the close of business on January 18, 2009. In the press release, Bob O’Malley, INFS’s CEO, says:

The amendment to our Bylaws and the adoption of a Shareholder Rights Plan will help ensure that the previously appointed independent committee of our Board of Directors is able to conduct its review of strategic alternatives without the threat of coercive takeover or control tactics that do not offer shareholders a fair premium. Neither the Plan, nor the amendment to our Bylaws is intended to prevent an offer that the Board concludes is in the best interest of [INFS] and its shareholders.

INFS’s adoption of the poison pill is a disappointing step for management to take. Calling this thing a “Shareholder Rights Plan” is pretty galling when its effect is to take rights away from shareholders and deliver them to management. The suggestion that the board are the ones to determine what is “in the best interest of [INFS] and its shareholders” and how much of a premium is “fair” is just a joke given the level at which INFS’s stock languishes. We also  have a problem with the use in the press release of such emotive language (“the threat of coercive takeover or control tactics”).

We’ve been following INFS because it is a deeply undervalued asset situation with two activist investors, Nery Capital and Lloyd I. Miller, III, pushing the company to “improve [INFS]’s financial condition and increase shareholder value” (see our first post here). The company’s adoption of a poison pill is a negative development for stockholders. Hopefully it is not a precursor to management handing the company to the second potential bidding group, which includes INFS’s founder Steve Hix, because they don’t want to see it fall to the “New York sharks.” INFS management has now set itself a high bar for the “review of strategic alternatives.”

Perhaps INFS management has read an early copy of the magazine Corporate Board Member’s January issue titled “How to Icahn-proof your board.”

Head nod to commenter Chad, who seems to be doing most of the heavy lifting around here while we’re asleep at the wheel.