TheCorporateCounsel.net

March 2, 2007

Corp Fin Issues Exemptive Letter on Tender Offer Prompt Payment – 409A Issue

At the top to the year, I blogged extensively about issues arising from tender offers for backdated options. One of the issues related to the “prompt payment” requirement in the tender offer rules (because new Section 409A of the Internal Revenue Code requires that any cash amounts paid in connection with an option repricing be paid in the year after the option repricing; a requirement which contravenes the SEC’s prompt payment rules).

Yesterday, Corp Fin’s Office of Merger & Acquisitions issued the first exemptive letter – to CNET Networks – relating to Section 409A and the tender offer prompt payment rules.

Rep. Frank Re-Introduces Legislation re: Shareholder Advisory Votes on Executive Pay

As noted in this press release, yesterday, House Financial Services Committee Chairman Barney Frank, joined by 21 other Representatives, introduced legislation that would require public companies to include a non-binding advisory shareholder vote on their executive pay plans on their ballots. The bill, H.R. 1257 – the “Shareholder Vote on Executive Compensation Act” – would not set limits on pay, but would allow shareholders to voice their approval or disapproval on the company’s executive pay practices through an advisory vote (then, the board would have discretion as to how to react to that vote).

The bill also would require a non-binding advisory vote if a company provided a new, not yet disclosed, “golden parachute” while simultaneously negotiating to buy or sell a company. This is a different formulation compared to the last time this bill was introduced; the former bill required shareholder approval of any golden parachute payments in an acquisition (ie. a binding vote).

A House Financial Services Committee hearing on this bill will be held next Thursday, March 8th. Rep. Frank said he expects House passage of this bill as soon as April…

General Electric Files Proxy Statement

In his blog, Mark Borges has been providing some detailed analysis of the proxy statement filed recently by General Electric (as well as other newly filed proxy statements).