"Robert Sturgeon" wrote in message
...
On Mon, 29 Aug 2005 16:33:24 GMT, "John R. Carroll"
wrote:


"Robert Sturgeon" wrote in message
news
On Mon, 29 Aug 2005 00:14:42 GMT, "John R. Carroll"
wrote:

(snip to the heart of the matter (perhaps).

What were the examples of "green mail"? How did that work?

In the Good Year instance Bob Mercer, GoodYear's chairman, paid Sir
James
GoldSmith a substantial premium to go away.
Goldsmith was trying to buy and reorganize Goodyear. They were
underpreforming. Mercer saved his job. Green Mail is a form of
extortion.

If "green mail" forced Mercer to get Goodyear to stop
underperforming and start performing up to its potential, I
see that as a Good Thing. Extortion? To force Mercer to
get Goodyear performing? I don't think so.

(rest snipped)



He didn't.
Good Year did it's level best to become an unattractive acquisition. They
took on a mountain of new debt that resulted in cuts to the activities
that
are frequently the first to go when servicing debt incurred to by back
outstanding shares. R&D took a pretty good hit.

In that case it was Mercer who was misbehaving, not
Goldsmith.



I don't especially care for smug old schoolers but Mercer did exactly what
he was being paid to do and he didn't like it one bit.
The plan he executed was what his shareholders had approved at a prior
annual meeting and two subsequent special ones. The owners of Good Year
exercised their prerogative within the boundaries of what was then legal.
They also lobbied the Congress and what happened then is now proscribed
under the law.
Fred Friendly had a one hour panel at Columbia University that addressed the
ethics and law in these situations. Mercer, Goldsmith, Pickens, Joe Flomm
and Herb Wachtel as well as the CEO at Soloman Brothers and Warren Buffet
were part of the group and it was very interesting. PBS runs a collection
of these panel discussions from time to time and they are worth watching.

--
John R. Carroll
Machining Solution Software, Inc.
Los Angeles San Francisco
www.machiningsolution.com