In defending against hostile takeover attempts, a company will include provisions in theemployment contracts of key executives that provide them with sizable compensation if the firm istaken over. This is called the __________strategy.
A) shark repellent
B) greenmail
C) white knight
D) golden parachute

Question

Quizplus · Accepted Answer

This is because this strategy is commonly referred to as a "golden parachute" where key executives are provided with substantial compensation in the event of a takeover. Option A, "shark repellent," refers to tactics used by a company to make itself less attractive to potential acquirers. Option B, "greenmail," involves a company buying back its own stock from a potential acquirer at a premium to discourage further takeover attempts. Option C, "white knight," refers to a third party that is invited by a company to come in and acquire it to fend off a hostile takeover attempt.

In Defending Against Hostile Takeover Attempts, a Company Will Include