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On Parachutes: Workers Also Deserve a Break

November 09, 1986

Having witnessed a Bloody Tuesday on the wrong side of a corporate takeover, my reaction to John F. Lawrence's Oct. 26 column (Why Golden Parachutes Are Fool's Gold) is, "right on." The chairman and president of our then-parent company took about $4 million in cash out of the deal. Most of the 200 employees who were fired received one or two weeks' pay plus one week's pay for each full year of service up to eight.

Ignored in all takeover situations is the fact that successful companies are built with the blood, sweat and guts of their employees. This is an investment greater in real value than that made by most shareholders. Economic loss by employees can be considerable (well expressed in letters to the Business section of The Times by Lucky and Gemco employees). Yet in takeover negotiations, no consideration is given to this investment--employees have no representation. Company directors worry about the welfare of shareholders, and executive management worries about the size of its own personal gain.

I'm a believer in the free enterprise system and am no advocate of frivolous lawsuits. However, I would like to see two kinds of actions taken to slow down this crazy takeover parade:

- Legislative action to proscribe, limit or regulate corporate takeovers. Transactions whose main purpose is to funnel corporate assets into private pockets should be prohibited as bad public policy.

- Class-action lawsuits against corporate executives and directors should be brought by employees suffering personal economic loss. The personal assets of executives and directors should be put at risk if they have breached their fiduciary responsibilities.

JOHN J. SCHMIDT

Sherman Oaks

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