3FIRST IT WAS POISON PILLS -- NOW IT'S 'PEOPLE PILLS'

This article features the two-part People Pill unveiled by Borden Inc. on January 4, 1989. The first part sets guidelines for the board of directors to determine a takeover price. Under the plan, any acquirer must pay shareholders what the board and its own investment banking experts determine to be the worth of the U.S. company. In addition, an acquirer must pay shareholders 50 percent of any potential gain from new synergies, efficiencies, or sold-off operations. But is a raider makes an all-cash bid that is accepted by outsider shareholders owning 85 percent of the stock, the judgment of the board is overridden. The plan's innovation come in Part Two. It can kick in if an acquirer takes over the company for less than what the board calls fair. The managers of Borden agree to resign en masse under certain circumstances, including if the new owner fires or changes the responsibility of any one of them. That would prevent any major restructuring. The agreement says the acquirer must pay the managers $10 to $30 million. The Borden plan may succeed at keeping bust-up artists at bay, while setting reasonable bidding guidelines for serious buyers. It is effective because it includes lots of operating people, the guts of any company.