Securities and Exchange Commission Chairman John S. R. Shad said yesterday the SEC does not intend to reintroduce its 1984 legislative proposals relating to tender offers.
Shad, testifying before a securities subcommittee of the Senate Banking Committee, said market forces and new laws already have cut down on some of the worst abuses in the corporate takeover process. Concerns about greenmail, the purchase by a target company of a corporate raider's stock at a price above the market, are declining for several reasons, he said. One reason, he noted, is that companies that purchase the shares of one raider frequently become the target of other raiders.
He said some companies have adopted language in their corporate charters, similar to the SEC's 1984 proposal, that prohibit greenmail.
Shad also said certain portions of the deficit reduction act make greenmail attempts made with borrowed funds more expensive.
The SEC's 1984 tender offer proposal would have prohibited golden parachutes -- which are special severance arrangements for top executives of companies that are acquired -- as well as greenmail, and would have allowed the SEC to reduce the 10-day period within which holders of 5 percent or more of a company's stock are required to disclose their holdings.
Shad said new laws already have made golden parachute payments less attractive because they are now subject to a 20 percent excise tax payment by the receiving employe and they are non-deductible expenses to the employer.