If you had a dress company and you were threatened by a takeover would you sell off your most profitable dress stores to make the takeover less attractive? Our CEO and his staff panicked when GAF, a much smaller company with a lot less assets, threatened to take over UCC. So, what do they do? They sell off our Prestone anti-freeze business along with our Eveready battery business. Our most profitable businesses.
A couple years later our CEO was interviewed by the WSJ and admitted that was the stupidest mistake he had ever made.
The problem there was that it was a bad thing for your company, but not for your CEO. He was afraid he'd lose his job if the company was taken over, so he did whatever he could to make it less attractive.
Back in the 80s when there were a lot of leveraged buyouts being done with junk bonds, one of the strategies companies used to try to prevent being taken over like this was the "poison pill strategy". They'd set things up in their charter so in the event of being taken over some (presumably bad) things would happen to make the company less attractive. One of them was typically large cash payments made to the CEO and senior leadership - ostensibly to avoid the kind of bad decisions your CEO made. The problem there was that it gave CEOs incentive to want to get bought out, even if the deal was bad for shareholders, because they'd personally benefit.
Now such "golden parachute" clauses seem to be the norm for CEO contracts, which goes against everything I was taught in business school about how compensation should be designed to align the employees' interests with that of the corporation. For the CEO, who has the most control over the fate of a corporation, that alignment should be maximized, but golden parachutes go the other direction.
Never understood why giving a lot of money to the CEO was supposed to be a tough pill for the company doing the buyout to swallow. Might as well put in the corporate charter that in the event of a buyout, we'll withdraw $5 million in ones and have a big bonfire in the parking lot. It would be the same for the company doing the buyout, the same from the rank and file employees perspective, but not give the CEO incentive to make his company an attractive takeover target.
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