In other breaking news that many may have missed, Orbitz Worldwide, Inc. recently reported in its most recent 10-Q that a handful of employees of a Hilton-branded hotel were paid wages via direct deposit into bank accounts maintained with Bank Melli. The obvious question is why is Orbitz reporting on seemingly immaterial activities of a… Continue Reading
Tag Archives: Gustav L. Schmidt
Will director compensation be the next target?
Posted in CompensationSince 2007, executive compensation practices of public companies have been at the forefront of activist shareholders’ and shareholder rights groups’ agendas. Mandatory say-on-pay proposals, enhanced executive compensation disclosure, compensation committee and compensation consultant independence rules are just a few of the recent significant changes to the laws and regulations applicable to public companies in the… Continue Reading
Say-on-pay litigation: Round 2
Posted in CompensationWhy doesn’t the plaintiffs’ bar believe Congress means what it says? The Dodd-Frank Act could not have been more clear that the outcome of the mandatory say-on-pay advisory vote for public companies does not create or imply any change to the fiduciary duties of board members. However, as we have discussed in previous blog posts,… Continue Reading
When does hedging or pledging of company stock by insiders equate to bribery?
Posted in Corporate GovernanceThe answer: when ISS is evaluating a public company’s corporate governance under its revised policies for the 2013 proxy season. We previously blogged about the potential insider trading issues that could theoretically arise when insiders pledge company stock to secure loans. Now, with the implementation of the revised ISS governance standards, there are additional reasons… Continue Reading
Proposed campaign contribution disclosure rules may be coming as early as April (but not likely)
Posted in Disclosure GuidanceAs first reported by Professors Lucian Bebchuk and Robert J. Jackson, Jr. in their recent posting on the Harvard Law School Forum on Corporate Governance and Financial Regulation, the SEC may take action to issue proposed rules on corporate political spending disclosures by public companies as early as the second quarter of this year. This… Continue Reading
Did the JOBS Act unintentionally change the statutory private offering exemption?
Posted in Capital RaisingFor securities issuers, the most widely used exemption from registration is the private offering exemption in Section 4 of the Securities Act. Formerly referred to as the “Section 4(2)” exemption, the enactment of the JOBS Act in April of this year fixed the section numbering in Section 4 of the Securities Act which, until now,… Continue Reading
Are political contribution disclosure rules for public companies coming in the near future?
Posted in Disclosure GuidancePetition and comment letters urging the SEC to create rules requiring public companies to disclose their political contributions may finally be gaining some traction. We previously blogged about this petition, which was submitted by a group of ten law professors in response to the Supreme Court’s opinion in the Citizens United v. Federal Election Commission… Continue Reading
Acquirers beware! New expedited acquisition method could violate the Exchange Act
Posted in Mergers and AcquisitionsWhen the private equity firm 3G Capital took Burger King private in 2010, it used an innovative “dual-track” acquisition structure to minimize the amount of time to consummate the acquisition. This involved 3G simultaneously pursuing both a friendly tender offer to Burger King shareholders as well as a traditional merger that would need to be… Continue Reading
Did Apple violate Regulation FD at its iPhone 5 release conference?
Posted in Disclosure GuidanceOn September 12, 2012, Apple, Inc. held a highly anticipated conference at which it announced the upcoming release of the latest model of the iPhone. These types of conferences have been part of Apple’s standard operations for many years and seem to be a key element of its marketing strategy. Although attendance is limited to… Continue Reading
Video Interview: Discussing the Facebook-Instagram Deal’s Fairness Review with LXBN TV
Posted in Mergers and Acquisitions, Technology Company IssuesFollowing up on my post on the subject, I had the opportunity to speak with Colin O’Keefe of LXBN regarding the Facebook/Instagram deal. In the brief interview, I explain how things have changed since Facebook’s IPO and what, if anything, that meant for the deal’s fairness review with the California Department of Corporations.
Is Facebook’s acquisition of Instagram fair to Instagram shareholders?
Posted in Mergers and Acquisitions, Technology Company IssuesWe previously blogged about the potential liability for Facebook, Inc. directors if the company paid too much for the social media start-up company Instagram. Recall that in April, Facebook agreed to acquire Instagram for, at the time, approximately $1 billion with the consideration payable 30% in cash and 70% in Facebook common stock (now, due… Continue Reading
Margin calls: The insider trading trap
Posted in Corporate GovernanceImagine the following scenario. Your company is publicly traded. As such, senior management is keenly aware of the potential for executives and employees trading in the company’s securities on the basis of material nonpublic information in violation of Section 10(b) of the Exchange Act and the infamous Rule 10b-5 promulgated thereunder. To prevent improper trading,… Continue Reading
Binding say-on-pay: Is it coming to a public company near you?
Posted in CompensationFollowing the recent financial crisis and government bailouts of major U.S. financial institutions, the federal government has gradually facilitated a power shift from companies and their officers and boards of directors to their shareholders. A prime example of this is the recently enacted “say-on-pay voting” requirements. Through provisions of the Dodd-Frank Act which was passed… Continue Reading
The new crowdfunding exemption: much ado about nothing
Posted in Capital RaisingSocial media is all the rage and seems to be rearing its head in just about every aspect of daily life. Turn on any television news program, whether CNN, ESPN, or any other, and you’ll be sure to be brought up to date with who has “tweeted” what to whom or what someone’s latest facebook… Continue Reading
Could directors be personally liable if Facebook paid too much for Instagram?
Posted in Corporate GovernanceIt is a basic tenant of corporate law that directors of a corporation are not liable for business decisions as long as the directors acted with a reasonable level of care in making these decisions. This is referred to as “the business judgment rule.” Because directors are not guarantors of corporate success, the business judgment… Continue Reading
Are more disclosure requirements for public companies in the works?
Posted in Disclosure GuidanceRecent comments from SEC commissioner Luis Aguilar indicate that the SEC may consider new rules that would require public companies to disclose political expenditures. In his recent speech from February 24, 2012, Commissioner Aguilar informally called on the SEC to adopt political spending disclosure rules in light of the landmark U.S. Supreme Court Case, Citizens… Continue Reading
Your company may be ‘publicly traded’ without your knowledge – and there may be a price to pay
Posted in Corporate GovernanceWhen someone refers to a company as being “publicly traded” we normally understand that to mean that it has sold shares to the public through an initial public offering (or “IPO”) and is listed on a national securities exchange (like the NYSE or Nasdaq) and makes periodic filings with the SEC. However, some smaller companies… Continue Reading
SEC May Have Grossly Underestimated the Costs of Proposed Conflict Mineral Disclosure Rules
Posted in Disclosure GuidanceSection 1502 of the Dodd-Frank Act mandates the SEC to adopt rules requiring reporting companies to disclose whether certain minerals used in production chains originate from the Democratic Republic of the Congo or its neighboring countries. Minerals sourced from these areas of central Africa often fund militia and other military groups’ operations which have exacerbated… Continue Reading
Has New Life Been Given to Derivative Suits Based on Failed Say-On-Pay Votes?
Posted in CompensationSection 951 of the Dodd-Frank Act states that the results of a shareholder say-on-pay advisory vote will not trigger or imply a breach of fiduciary duty. Because Congress went out of its way to be explicitly clear on this point, most legal commentators felt that shareholder derivative suits based on failed say-on-pay votes, without more,… Continue Reading
SEC Considering Petition to Adopt Rules Requiring Disclosure of Political Contributions
Posted in Disclosure GuidanceThe SEC is currently considering a petition submitted by a group of 10 law professors asking the SEC to adopt rules that would require public reporting companies to disclose political contributions in their annual proxy statements. As justification for the proposal, the petitioners assert that there is empirical evidence that indicates public company shareholders are… Continue Reading
SEC Adopts Amendments to Form S-3 Eligibility
Posted in Capital RaisingOn July 26, 2011, the SEC approved amendments to eligibility criteria for use of the short form registration statement on Form S-3. To use the short form registration statement, a proposed offering must meet both the issuer eligibility requirements and a transaction eligibility requirement. While there are several available transaction eligibility standards, a frequently relied… Continue Reading
Will Dodd-Frank Mandated Executive Compensation Disclosures and Related Items Apply to the 2012 Proxy Season?
Posted in CompensationOn August 2, 2011, the Securities and Exchange Commission (the “SEC”) released a revised Dodd-Frank rulemaking calendar. The new calendar indicates that rulemaking pertaining to the following sections of the Dodd-Frank Act will be delayed until the first half of 2012: §§953 and 955: Adopt rules regarding disclosure of pay-for-performance, CEO pay ratios, and hedging… Continue Reading
SEC Publishes Notice of Proposed Amendments to “Qualified Client” Test
Posted in Financial InstitutionsSection 205(a)(1) of the Investment Advisers Act generally prohibits an investment adviser from collecting performance based compensation that is based on a share of capital gains on, or capital appreciation of, a client’s funds or assets under management. The Securities and Exchange Commission (“SEC”) adopted Rule 205-3 to provide exceptions to this prohibition if the… Continue Reading
SEC to Consider Possible Exemption for Micro-Finance Offerings
Posted in Capital RaisingIn a response letter to Representative Darrell Issa (R-CA) dated April 6, 2011, Mary Shapiro, the Chairman of the Securities and Exchange Commission (“SEC”), indicated that the SEC would be reviewing the feasibility of, among other things, a new exemption from registration for micro-financing or “crowdfunding.” Crowdfunding generally refers to the pooling of small contributions… Continue Reading