TULSA - Hostile takeovers of
publicly-traded companies are not all bad, and federal regulation of
takeover activity might be preferable to inconsistent state laws, a
panel of experts told state legislators this week.
State involvement in securities regulation was discussed in
Tulsa at the National Conference of State Legislatures.
"Good arguments can be made for either side of a takeover," said
Susan Bryant, administrator of the Oklahoma Department of
Securities. "Our goal is to maintain balance and an equal playing
field for shareholders and management."
Shareholders are the owners of a company, and management
officials are their employees, said Ralph Whitworth, director of
United Shareholders Association of Washington, D.C. The association
was formed in 1986 and chaired by corporate raider T. Boone Pickens.
In the past, decisions were made by investment bankers, lawyers
and chief executive officers, and the real owners did not have a
voice, Whitworth said.
Current state anti-takeover laws put negotiations in the hands
of boards of directors, he said.
"They don't negotiate for the company, they negotiate for their
own golden parachutes," Whitworth said.
The association believes that takeovers solve more problems than
they create, although they may not be the best way to go about it,
"But until the system is changed, there is no other way to bring
accountability into the system," he said.
The association supports a universal one share/one vote standard
for public corporations, and a reformed proxy system to require a
confidential vote in corporate elections, Whitworth said.
United Shareholders favor the elimination of such management
tactics as greenmail, poison pills and golden parachutes. It
supports federal minimum standards for state tender offer regulation
instead of the more than 30 differing state laws on the issue, he
Bryant, who is also president-elect of the North American
Securities Administrators Association, said the association agrees
with the one share/one vote proposition.
"We convinced the Securities and Exchange Commission to enact a
provision, but the state attorney generals have come out against it
because they said it was pre-empting state law," she said.
Another panelist said state takeover statutes have eliminated a
lot of abuses.
Steve Wallman, a securities attorney with the Washington, D.C.
law firm of Covington and Burling, said states had addressed such
coercive tactics as the two-tiered offer.
An example of this is a case where a buyer offers $100 per share
for the first 50 percent of a company's outstanding stock, but only
$75 per share for the second half, Wallman said.
"You have to take the offer, because if enough of your brethren
accepted $100, you'd be squeezed out," he said.
About five years ago, one-fifth of all offerings were
two-tiered, Wallman said. State regulation has whittled the number
to less than 3 percent, he said. …