ADVANTAGE perpetuates the company's existing management and employees

DISADVANTAGE while benefiting the predator, the company and its shareholders lose money

GREENMAILEE

GREENMAILER

RUPERT MURDOCH

GREENMAILER

ADVANTAGES
Help companies attract the best executive talent Discourages mergers, which are usually beneficial to investors

DISADVANTAGES
Executives may not be as motivated to do their job because they stand to make as much or more through their various severance packages than by working The existence of golden parachutes is evidence that there is a strong management bias

21 CEOs over $100 million

Company General Electric Exxon Mobil Corp. UnitedHealth Group AT&T Home Depot Inc. North Fork Bank Merck & Co., Inc./Schering-Plough IBM Pfizer Inc. CVS Caremark Corp. CEO John F. Welch Jr. Lee R. Raymond William D. McGuire Edward E. Whitacre Jr. Robert L. Nardelli John A. Kanas Fred Hassan Louis V. Gerstner Jr. Hank A. McKinnell Jr. Thomas M. Ryan Tenure 1981-2001 1993-2005 1991-2006 1990-2007 2000-2007 1977-2006 2003-2009 1993-2002 2001-2006 1998-2011 Total Payout $417,361,902 $320,599,861 $285,996,009 $230,048,463 $223,290,123 $214,300,000 $189,352,324 $189,005,929 $188,329,553 $185,415,435

Gillette Co.

James M. Kilts

2001-2005

$164,532,192

Company Target Corp. Merrill Lynch & Co. U.S. Bancorp Omnicare, Inc. Wachovia/South Trust United Technologies Corp. eBay Inc. WellPoint Health XTO Energy Inc. Viacom

CEO Robert J. Ulrich E. Stanley O'Neal Jerry A. Grundhofer Joel F. Gemunder Wallace D. Malone Jr. George A. L. David Margaret C. Whitman Leonard Schaeffer Bob R. Simpson Thomas E. Freston

Tenure 1994-2008 2002-2007 2001-2006 2001-2010 1981-2004 1994-2008 1998-2008 1992-2004 1986-2008 2006

Total Payout $164,162,612 $161,500,000 $159,064,090 $146,001,476 $125,292,818 $122,631,309 $120,427,360 $119,041,000 $103,485,972 $100,839,772

- used by public companies to give shareholders certain rights in the event of takeover by another firm - to protect themselves from investors they fear may oust them following a takeover

If a hostile takeover occurs, investors have the option to purchase the bidders shares at a discount, thereby devaluing the acquirers stock and diluting its stake in the company.

Management offers shares to investors at a discount if an acquirer merely purchases a certain percentage of the company. The discount is not available to the acquirer, and so it becomes extremely expensive for that acquirer to complete the takeover. Experts estimate that it would cost an unwanted bidder, on average, four to five times more to swallow a poison pill in order to acquire a target.