Extract to table

The second prong requires the board to show that the defensive response was not disproportionate to the threat — that is, the response must be within the "range of reasonableness" and must not be either coercive or preclusive

The Unitrin framework is particularly relevant to the analysis of a rights plan adopted in the context of an activist campaign, as the plan must not preclude Pinnacle Harbor from conducting a proxy contest or acquiring board representation

Prong 1 — Reasonably Perceived Threat Under the first prong of Unocal, the Board must identify and articulate a threat to corporate policy and effectiveness that it reasonably perceives to be posed by Pinnacle Harbor's campaign

The Board's threat perception must be based on a good-faith investigation and must be reasonable in light of the totality of the circumstances

This category of threat has been recognized by Delaware courts as a legitimate basis for defensive action under Unocal, though it must be supported by specific facts rather than generalized assertions

Prong 2 — Proportionality of Response Under the second prong of Unocal, the Board must demonstrate that the adoption of a rights plan is a reasonable and proportionate response to the identified threat