I eagerly await Robert J. Samuelson's columns in The Post Business section because he nearly always impresses me with his insights and teaches me something. But his Dec. 23 column, "A Ghastly Antitakeover Idea," disappointed me greatly.
Mr. Samuelson decried the possibility that Delaware might enact an antitakeover law, making hostile takeovers of state-chartered companies more difficult. The idea, he said, "smacks of corporate socialism: the marshaling of government powers to protect established businesses against change and challenge," benefiting executives who "want to sleep easier at night."
Firms that are not lean and mean, he argues, rightly should fear more capable and aggressive investors. From his perspective on high, that might make theoretical sense. From my perspective underneath, it is not so clean and clear.
First, the executives usually are not really harmed by a hostile takeover. Remember, they are the folks with the "golden parachutes." It is the middle-level managers and the shift workers who find their numbers decimated and their responsibilities dramatically increased in the name of efficiency.
Second, Mr. Samuelson's point that only 15 hostile takeovers occurred in 1986 neglects the tortures that many firms went through in their successful efforts not to be bought out. Top- and middle-level management focused their creative energies not on product improvement or marketing strategy but on greenmail and market shenanigans to reduce the likelihood of a buy-out.
Third, the brokerage firms and lawyers and accountants profited handsomely in the process, sucking off revenues that otherwise would have gone to modernizing plants and paying employees.
Fourth, the management of many companies purchased their firms through leveraged buy-outs, mortgaging the soul of the company and then being forced to sell big hunks to pay off the debt. Again, time, energy and money were not productively spent, and middle-level management and assembly-line employees suffered mightily as a result.
Fifth, while U.S. firms were focusing their energies and finances on these ownership battles, foreign firms were spending their resources on products. As a result, more and more of both basic and high-technology products come to us by ship.
I must admit that my evidence is only anecdotal. I know only of the men and women in my community who no longer have jobs because their company was "successful" in fighting off a hostile takeover. I know only of the nearby newspaper that, immediately after being purchased at an astronomical price by a chain, abolished its retirement plan and gave its employees a 1.67 percent annual raise.
Certainly, Mr. Samuelson is right in his implication that slack and wasteful management should not go rewarded. But the other side of that coin is that the rewards ought not to go only to sweatshops that pay hideously low wages.
The tyranny of a financial market that demands increased sales and profit margins every quarter has spawned an unholy groveling for riches that demeans our corporate leadership and embarrasses those of us on the sidelines. To defend and support our capitalistic society, the rest of us must be able to trust in the integrity and vision of our corporate leadership. It is getting harder and harder to do so.
HAMPDEN H. SMITH III Lexington, Va.