TheCorporateCounsel.net

From Keith Bishop: A few weeks back, a reporter called me about “B” corporations; if you haven’t heard of them, here is an article about the subject. “B” stands for “beneficial.” Proponents hope that the “B corp.” logo will eventually become a well-known seal of approval for socially responsible businesses.

In California, the proponents of B corporations have introduced a bill – AB 2944 – that would explicitly permit directors to consider other constituencies in considering the best interests of the corporation. I found the bill analysis particularly interesting in its reference to the Chicago Cubs and Rutgers (I believe that the case referred to in the legislative analysis is Shlensky v. Wrigley, 95 Ill. App. 2d 173, 237 N.E. 2d 776 (1968)).

As noted in the article, the use of B corporations would have interesting implications in acquisitions since the board of a B corp. could weigh considerations other than financial ones to accept an offer. Learn more about B corps at BCorporation.net.

Options Backdating: Cases Now Proceeding

From Adam Savett in the RiskMetric’s “Governance Blog“:

Back in February, we took a quick look at the scorecard in the options backdating litigation, tallying up the settlements and dismissals, among other things. In our earlier review, of the 36 options backdating cases that have been filed as securities class actions, 7 had settled and 3 had been dismissed.

Run the clock for a few months, and 9 of those cases have now been dismissed and 9 have now settled. The nine settlements total $255.58 million, for an average of $28.4 million. As noted earlier, these cases have settled much more quickly on average, than other cases. The nine cases have settled in an average of just 440 days. Removing the outlier, Mercury Interactive, which was filed earlier and added the options backdating allegations in a later
amended complaint, drops the average time from filing of initial complaint to tentative settlement for the remaining 8 cases to 397 days.

And the ratio of settlements to dismissals is somewhat out of line with historical averages as well. Most studies (and a quick check of our database) indicate that the percentage of new securities class actions that are dismissed is between 33-40 percent. With this group of cases, we can look at the data two ways. Dismissals as a percentage of total cases or dismissals as a percentage of cases that have reached a final, or quasi-final resolution.

Under the former analysis, exactly 25% of these cases have been dismissed. That number is artificially low, as not all of the cases have yet had a ruling on the motion to dismiss. Under the latter method, 50% of these cases have been dismissed. This number is artificially high, as a number of these cases have already survived a motion to dismiss. In any event, things remain interesting in the sometimes long-forgotten world of options backdating.

And law firm lawyers need to watch out. As noted in this article, some firms are being named as defendants in these backdating lawsuits.

An Overwhelming Response

Last week, we announced our new upcoming comprehensive treatise of executive compensation disclosures – Lynn & Romanek’s “The Executive Compensation Disclosure Treatise & Reporting Guide” – and the response was overwhelming.

We want to clarify that to obtain the “Conference Attendee” discount for the new Treatise, you need to register for one of the October Conferences before you order the Treatise. And since the early bird discount for the Conference expires on June 30th, you will want to register for those Conferences now:

– “Tackling Your 2009 Compensation Disclosures: The 3rd Annual Proxy Disclosure Conference” & “5th Annual Executive Compensation Conference” (10/21-22 in New Orleans or via Nationwide Video Webcast)

– “16th Annual NASPP Conference” (10/22-24 in New Orleans)

– Broc Romanek