TheCorporateCounsel.net Blog |
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Friday, October 17, 2003
11-Ks and 404 On Wednesday - on a teleconference program on my old website - David Lynn, Chief Counsel of Corp Fin, clarified that Section 404 of is not applicable to Forms 11-K. Section 404, and the SEC's rules implementing it, requires each issuer that files periodic reports with the SEC under the Securities Exchange Act of 1934 to (i) establish and maintain a system of internal control over financial reporting, (ii) include in its annual report a report by management on the system of internal controls, and (iii) accompany the report with an attestation report on the system of internal controls. As noted by Gibson Dunn in a recent client alert, "this guidance addresses a significant question that was left open in the release adopting the Section 404 internal control requirements. Although most employee benefit plans would not have been viewed as "accelerated filers," and thus would not have been required to comply with the Section 404 rules until filing the Form 11-K report for the fiscal year ending on or after April 15, 2005 (whereas public companies that qualify as "accelerated filers" must comply with the 404 rules for fiscal years ending after June 15, 2004), there was substantial uncertainty as to how the 404 rules would apply in the context of employee benefit plans. Accordingly, the SEC staff's interpretation provides reasonable and welcome relief." Thursday, October 16, 2003
Microsoft Receives Tender Offer No-Action Relief After my blog last night, the SEC posted its no-action response to a request from Microsoft that sought exemptive relief from certain tender offer provisions to conduct its option exchange program. The relief granted includes exemptions from: - Rule 13e-4(f)(2)(ii) to permit Microsoft to terminate withdrawal rights for tendered options at the end of the Election Period. - Rule 13e-4(f)(8)(i) to permit Microsoft to exclude certain options and certain option holders from the program. - Rule 13e-4(f)(8)(ii) to permit Microsoft (i) to pay holders of Multi-year Grant Options less for those options than other options with similar terms, (ii) to pay option holders, who are entitled to a total payment in excess of $20,000, a portion of the payment on a deferred and contingent basis, (iii) to further defer the contingent payment portion due to senior management, and (iv) to calculate the initial payment due to senior management holders in certain foreign jurisdictions with adverse tax regimes based on the relevant increased tax imposed. In addition, the SEC staff noted that it would not object nor take enforcement action if: - the pricing structure has a final price that will be neither known nor paid until after the Averaging Period ends. - the total payment for transferred options is determined after the Election Period and during the Averaging Period (i.e. Rules 13e-4(f)(1)(ii) and 14e-1(b)). - the total payment for options is determined after the Election Period and pays holders for transferred options (i.e. Rules 13e-4(f)(5) and 14e-1(c)). Wednesday, October 15, 2003
Microsoft Files Tender Offer Documents for Option Transfer Program Another day of hectic travel, so I borrow liberally from Mike O'Sullivan's blog to inform you that Microsoft has filed tender offer documents divulging the details of its novel stock option transfer program, which is designed to permit its employees to sell their underwater options to J.P. Morgan. There are a number of tender offer documents - but the main document appears to be the "Notice to Eligible Employees of Stock Option Transfer Program." As I am at the NASPP conference with a horde of experts on the topic, I will endeavor to get you insights into this arrangement tommorrow. Tuesday, October 14, 2003
Shareholder Access Release is Up The SEC has posted its shareholder access proposal - lots of questions asked in the release... GMI Study Shows Link Between Good Governance & Financial Performance GovernanceMetrics International - one of the governance rating services - recently completed a study that demonstrated a positive link between strong governance practices and a company's financial performance. Among other things, GMI found that overall, average annual total returns are higher as the percentage of independent directors increases. For TheCorporateCounsel.net subscribers, we have posted an interview with Howard Sherman, the Chief Operating Officer of GMI, on the results of that study and the relationship between corporate governance and a company's financial performance. 8-Ks and 906 Certifications I have received a few clarifying questions on what Paula Dubberly stated at the ACCA conference last week regarding the SEC/DOJ joint position on 906 certs (see my10/8 blog). The most common question relates to 8-Ks - its should be noted that the joint position applies to no 8-K, even ones with financial statements. |
