The Securities and Exchange Commission has picked veterans of merger contests to serve on an advisory committee to review the rules of the game and report to Congress by July.
Four of the 16 members of the panel were involved in the spectacular multibillion-dollar battle between Bendix Corp. and Martin-Marietta Corp. that ended last year with Allied Corp. acquiring Bendix.
They include Edward L. Hennessy Jr., chairman of Allied Corp., and Bruce Wasserstein, managing director of First Boston Corp., who introduced Allied to Bendix and has worked on seven of the 10 largest mergers in the past two years.
The committee will investigate such controversial practices as "golden parachutes" (a lucrative bailout for executives forced out after a change of corporate control) and "Pac Man defenses" (where the companies try to gobble each other up by tendering for each other's shares). Other issues include the two-tier offer (in which those shareholders who tender quickly get a better deal than those who delay) and the "crown jewels" or "scorched earth" policies (which result in a company being relieved of its best assets or debt being added at the last minute to discourage takeover attempts).
The SEC said the panel also will examine whether the threat of tender offers focuses management's efforts on short-term profits rather than on long-term goals.
It also will study whether bidders should require prior approval of their shareholders for major tender offers and financings.
Other panelists are Michael D. Dingman, chairman of Wheelabrator-Frye Corp.; Robert F. Greenhill, managing director of Morgan Stanley & Co.; Alan R. Gruber, chairman of Orion Capital Corp.; Robert P. Jensen, former president of G.F. Technologies; Dean LeBaron, president of Batterymarch Financial Management; attorney Martin Lipton; Robert E. Rubin, a general partner of Goldman, Sachs; attorney Irwin Schneiderman; John W. Spurdle Jr., senior vice president of Morgan Guaranty Trust Co., and Jeff Tarr, managing partner of Junction Partners, an arbitrageur.