The Anatomy of Corporate Law:A Comparative and Functional Approach by unknow

Author:unknow
Language: eng
Format: epub
Publisher: Oxford University Press
Published: 2009-07-23T00:00:00+00:00

8.2.3.5 Reward strategy

Under this strategy the self-interest of the incumbent management in retaining their jobs is replaced by self-interest in obtaining a financial reward which is dependent upon surrendering control of the company to the acquirer.82 This may arise because rewards under general incentive remuneration schemes for managers are triggered upon a transfer of control;83 or because payments can be claimed under the management’s contracts of service;84 or because, less often, ad hoc payments are made to the incumbent management, either by the acquirer or the target company, in connection with a successful control shift. Such payments are widely available in the U.S.; and it has been argued that the reward strategy has succeeded in bringing about, in terms of incentives not to invoke the poison pill, what the removal strategy failed to achieve.85 Outside the U.S., however, it is often unacceptable or unlawful to make payments of a sufficient size to amount to a significant counter-incentive for the managers, at least without the consent of the shareholders, which, in the context we are considering, undermines the reward strategy.

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