What are "poison pills?" Do they increase or decrease the price of a company's stock? Are poison pills good for the economy?
"Poison pills" are changes in company operating policy, often made without stockholder approval, that require high-level management personnel, directors and stockholders to receive extra compensation, often in the form of preferred stock, in the event of a "hostile" takeover. There are other measures that can be taken to make the compnay less attractive to an outside buyer. See
(Broken Link Removed) general, poison pills make the purchase of the company more expensive and lower the value of the stock to shareholders, and the market price, by limiting the open market bidding of the company's value. The practice is not good for the economy, but that is a matter of opinion. In Britain, the process is illegal.