The Practical Corporate & Securities Law Blog

By Broc Romanek

Go to TheCorporateCounsel.net

 
Although the facts of the recent Disney opinion from Delaware Chancellor Chandler were "easy" perhaps, they follow a number of public speeches and articles from the Delaware judiciary about the need for directors to make executive compensation more carefully. We expect compensation consultants and lawyers to provide new guidance on how compensation packages should be structured - and the first law firm memos drafted in the wake of the Disney opinion bear that out.

As usual, we will post these memos under "Latest Developments" under GreatGovernance.com - as well as under "Sarbanes-Oxley Law Firm Memos - Executive Compensation" on TheCorporateCounsel.net. For TheCorporateCounsel.net subscribers, a copy of the Disney opinion is available at http://www.thecorporatecounsel.net/member/FAQ/MA/Disney.pdf.
posted by broc at 11:35 AM

 
Executive compensation is up (what else is new) as borne out by TheCorporateLibrary.com in an excellent 24 page report. This report covers the proxy disclosure made by over 1000 companies over the past 2 years - and breaks out data in a variety of categories (but no director comp). The report is at http://www.thecorporatelibrary.com/company_research/reports/CEOpay2002_061903.pdf.

Compensation committees should heed the warning from Delaware Chancellor Chandler in the recent Disney opinion who indicated that directors might have personal liability for a breach of "good faith" if they approve compensation packages without exercising proper diligence. More to come on the Disney opinion soon...

For TheCorporateCounsel.net subscribers, we have posted an interview with Ken Winer of Foley & Lardner on the Improper Influence of Auditors at http://www.thecorporatecounsel.net/Member/InsideTrack/06_16_03_Winer.htm.
posted by broc at 9:29 AM

 
A NIRI survey conducted to determine whether new disclosure rules were negatively impacting the flow of information to shareholders and analysts reveals that companies are attempting to avoid use of pro forma numbers in earnings statements. 43% of respondents present results strictly in accordance with GAAP - all of which cited Regulation G as the reason. See more at http://www.niri.org/mediaCenter/pressReleases/NIRI%20PRcomm_prac_su0603.pdf.

For Section16.net subscribers, the transcript of last Thursday's webcast - "Alan Dye on the Latest Section 16 Developments" - is at http://www.section16.net/member/Webcast/06_12_03_transcript.htm.
posted by broc at 2:51 PM

 
Last Friday was the deadline for comments on the SEC's concept of easier shareholder access to the ballot - although not yet posted on the SEC's web site, here is the ABA's Task Force comment letter - http://www.abanet.org/buslaw/fedsec/comments/03/20030613.pdf.

For TheCorporateCounsel.net subscribers, today is our webcast - "Burden of SOX on Mid- and Small-Cap Companies" - which promises to be interesting as its the only one of its kind that we are aware of - see the agenda at http://www.greatgovernance.com/programs.html#smallercompanies. If you are not a subscriber, you can get access with a "no-risk" trial at https://www.thecorporatecounsel.net/subscribe/CCNET_NEW/login.asp.
posted by broc at 9:04 AM

 
A quick survey of the Fortune 100 IR webpages reveals that only about a third comply with the upcoming requirement to break out Section 16 filings on corporate websites (filings made on - and after - June 30 have to be posted). Of those that do, most do it as part of their outsourcing agreement with an investor relations' provider.

Very few provide a link to their Section 16 reports as they reside in the Edgar database on the SEC website (eg. Morgan Stanley at http://www.morganstanley.com/about/ir/sec_filings.html?page=inv).

Last month, the SEC tweaked Edgar so that companies can link directly to their insider's Section 16 reports to facilitate compliance with the upcoming requirement. This is important because if companies decide to link to their Section 16 reports, it must be a separate link only for the Section 16 filings - not a link to all of the company's filings. To create such a link, you can use the following URL and insert the company's CIK code for the string of 10 z's: http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=zzzzzzzzzz&owner=only (don't forget the link must be clearly captioned to indicate that it is a link to the Section 16 filings).

For TheCorporateCounsel.net subscribers, we have provided links to the various ways that companies have chosen to comply with the new requirement at http://www.thecorporatecounsel.net/member/FAQ/Disclosure/disclosure_websites.htm.

posted by broc at 4:30 PM