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Under at least two scenarios these days, a director may be required to submit a resignation letter – either when the company’s corporate governance guidelines require it when a director has a change in his/her job responsibility or as part of a majority vote provision. Below are our recent survey results about director resignations:

1. If a director resignation scenario arises, the process our company uses to obtain the letter involves:
– Corporate secretary or general counsel reminds the director of the need to submit the resignation letter – 47.1%
– Board chair or governance committee chair reminds the director of the need to submit the resignation letter – 41.2%
– Full Board reminds the director of the need to submit the resignation letter at a board meeting – 0.0%
– Nobody reminds the director of the need to submit the resignation letter – 8.8%
– Other – 2.9%

2. After a director resigns, the process our company uses as part of an “exit” interview – and to ensure that a Form 8-K under Item 5.02(a) is not required – involves:
– Board meets in executive session without the “resigning” director – 2.9%
– Board chair meets with the resigning director – 14.7%
– Nominating/governance chair meets with the resigning director – 23.5%
– CEO meets with the resigning director – 11.8%
– General counsel meets with the resigning director – 26.5%
– Corporate secretary meets with the resigning director – 8.8%
– Other – 11.8%

Please take a moment to participate in this “Quick Survey on D&O Questionnaires and Director Independence.”

Shame on Regulators: European Bank Blowups Hidden With Shell Games

From Lynn Turner: This Bloomberg article highlights what fools the European regulators and accounting standard setters now look like. The article rehashes how the banks and politicians ganged up together on both the FASB and IASB to immensely water down their rules three years ago, so that banks could prepare misleading financial statements that omitted losses on their investments. At the time, the SEC also failed to defend the FASB and in fact, when questioned, told a congressman they would see to it the FASB got the rule changes done in just 30 days.

Now, as the article highlights, this change has allowed (1) banks to avoid reporting the losses they have suffered on Greek Debt, (2) banks are slowing “dripping” their losses into their financials over a number of years including years to come, much like Chinese water torture, (3) resulting in banks failing to actively manage their problems, and (4) extending the problem and probably the magnitude of losses incurred. Back at the beginning of the 1990s, a report from the GAO noted the US government had engaged in similar financial shenanigans until Richard Breeden became chair of the SEC and forced the S&Ls and banks to report their true losses. Unfortunately, the politicians undid his work and the result is a negative outcome for investors.

September-October Issue: Deal Lawyers Print Newsletter

This September-October issue of the Deal Lawyers print newsletter was just sent to the printer and includes articles on:

– The Down Economy: Special Negotiating and Diligence Items to Consider
– Changing Due Diligence Practices for Uncertain Times: An In-House Perspective
– Due Diligence: Implications of Dodd-Frank’s Whistleblower Provisions for Acquirors
– $17.50 from Column A and $17.50 from Column B: “50/50 Split” Implicates Revlon

If you’re not yet a subscriber, try a “free for rest of ’11” no-risk trial to get a non-blurred version of this issue on a complimentary basis.

– Broc Romanek