question archive Which of the following is NOT normally regarded as being a barrier to hostile takeovers? (Points : 5) a
Which of the following is NOT normally regarded as being a barrier to hostile takeovers? (Points : 5) a
Subject:BusinessPrice:3.87 Bought7
Which of the following is NOT normally regarded as being a barrier to hostile takeovers? (Points : 5)
a. Abnormally high executive compensation
b. Targeted share repurchases
c. Shareholder rights provisions
d. Restricted voting rights
e. Poison pills
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Answer:
The other answer is incorrect.
A poison pill is an anti-takeover defense. The company that is about to be taken over can use a poison pill, which means they will issue many more shares only to the shareholders not trying to take over the company, thereby diluting the shares of the company trying to take them over.
The correct answer is:
Abnormally high executive compensation - this compensation can be reduced very quickly once the new company takes over and often the existing executives are fired. In comparison to the price of buying a company executive compensation are peanuts..
