Newspaper article THE JOURNAL RECORD

Greenmail Payment Ban Proposed by Pickens

Newspaper article THE JOURNAL RECORD

Greenmail Payment Ban Proposed by Pickens

Article excerpt

WASHINGTON - A statutory ban on greenmail payments was part of a 7-point shareholder rights platform proposed Wednesday by T. Boone Pickens Jr., founder of the United Shareholders Association.

Pickens, managing general partner of Mesa Limited Partnership of Amarillo, testified on behalf of the group at a hearing before the Telecommunications and Finance Subcommittee of the House Committee on Energy and Commerce. The subcommittee, which has jurisdiction over the securities industry, is currently holding hearings on mergers and acquisitions under the direction of Subcommittee Chairman Edward J. Markey.

"The real culprits in a greenmail deal are the weak managers who are willing to use shareholders' money to get rid of a perceived threat to their jobs," Pickens said.

"Anti-greenmail legislation should be a one-liner: No management can make a premium to market offer to any shareholder unless it makes the same offer to all shareholders on a pro rata basis."

In addition to the ban on greenmail, Pickens suggested six other reforms designed to increase management accountability including:

- Outlawing poison pills and other shark repellants.

- Closing the "10-day window" for disclosure of stock purchases of more than 5 percent of a company.

- Requiring corporations to provide shareholders with simplified summaries of complex proxy statements.

- Reforming the proxy process to allow shareholders to vote confidentially.

- Requiring a "one share, one vote" standard for all securities exchanges.

- Encouraging employee stock ownership plans and other incentives designed to increase employee ownership.

In his testimony, Pickens attacked insider trading and said he wholeheartedly supported the Securities and Exchange Commission's request for an increased enforcement budget.

"Insider trading is illegal," Pickens said. "It costs shareholders money, and it should not be tolerated."

Pickens cautioned members of the subcommittee against heeding calls from some entrenched executives, including members of the Business Roundtable, to restrict tender offers in response to the insider trading scandal. …

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