HomeMy WebLinkAboutMINUTES - 03051985 - X.7 To; BOARD OF SUPERVISORS
FROM: Supervisor Tom Powers Contra
Costa
DATE: March 5 , 1985 Cour#y
SUBJECT: "Greenmail"
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
Recommendation:
The Contra Costa County Board of Supervisors recommends that the Retirement
Board participate with the State of California and other states in actively.
working to prevent "greenmail" and other actions which hurt investors in
private corporations thereby protecting the pension funds of many city ,
county and state employees .
Background:
"Greenmail" is the practice of an outsider mounting a raid on a company
stock in an attempt to buy control of a company. The resultant activity
is that the board of directors of the target company, in an attempt to
protect their positions , buys out the raider at a price above market value.
When the potential raider is out of the picture, the stock often loses.
ground significantly.
A recent example of this was when Walt Disney Productions ' stock plunged
15 points clipping $500 million off the market value of its shares in the
days following the buy-back of one individual 's 11. 1 percent .equity stake
at a premium price.
California pension funds hold substantial amounts of privately held stock
for investment purposes . One of these pension funds held 500 ,000 shares
of Disney which took a quick $7. 5 million loss in the market value of its
portfolio due to the take over attempt. This type of activity could
result in losses to Contra Costa's pension fund which employees rely
upon for their retirement and which the tax payers support.
The efforts by Jesse Unruh, California State Treasurer, as the trustee
of the state pension fundjto organize shareholders against the practice
of "greenmail" and other self serving practices by corporate managements
is an appropriate activity which the county's Retirement Board should
join. It is time for local pension funds to become educated in order to
make' informed decisions of their own when dealing with a company' s
management , when voting and trading their shares , or possibly when taking
legal action.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S)
ACTION OF BOARD ON March 198 S APPROVED AS RECOMMENDED _ OTHER
a
VOTE OF SUPERVISORS
UNANIMOUS (ABSENT_ ) 1 HEREBY CERTIFY THAT THIS IS A TRUE
AYES: NOES: AND CORRECT COPY OF AN ACTION TAKEN
ABSENT: ABSTAIN: AND ENTERED ON THE MINUTES OF THE BOARD
OF SUPERVISORS ON THE DATE SHOWN.
CC: County Administrator ATTESTED March 19.85
Retirement Board
Auditor-Controller
Treasurer Tax Collector
M382/7-83 BY , DEPUTY