Answer (B) is correct . A golden parachute provides large payments to specified executives if their employment is terminated by the acquiring firm after a takeover. These provisions are passed by the board of directors. Shareholders are unhappy about golden parachute payoffs and have filed suits because they feel that these payoffs enrich management at their expense. In 1984, a change in the tax law imposed a 20% excise tax on these payoffs and provided for their nondeductibility by the corporation. This law was designed to reduce golden parachutes.
Answer (A) is incorrect because Greenmail consists of payments to potential bidders to delay or stop unfriendly takeover attempts.
Answer (C) is incorrect because A poison pill may be included in a target corporation’s charter, by-laws, or contracts to reduce its value to potential tender offerors.
Answer (D) is incorrect because Blackmail is obtaining a desired result by threats, such as public exposure of a negative attribute, and is usually not relevant to corporate takeover defenses.
|
