February 16, 2004

NYSE Tweaks Its Rolling 3-Year

In what will be welcome news to NYSE companies, here is what the NYSE staff sent to listed companies on Friday: “Following the release of the Section 303A FAQs on January 29th, the Exchange has been alerted that the interpretation of Section 303A.02(b)(ii) set out in FAQ C-12 was unexpected because in some cases it resulted in a “look-back” period in excess of 3 years. The Exchange agrees that the look-back period should not exceed 3 years, and accordingly is withdrawing the original response to FAQ C-12.

Below please find the original question and revised response which has also been updated in the FAQ document on our public web site.

C-12: What period must be used in applying Section 303A.02(b)(ii) relating to the payment of more than $100,000 per year in direct compensation and how does that interact with the three-year look-back requirement?

The appropriate inquiry under Section 303A.02(b)(ii) is whether a director or his or her immediate family member has received, during any twelve-month period within the last three years, more than $100,000 in direct compensation from the listed company (other than director fees and pension or deferred compensation as specified in the rule).”

By the way, just announced an April 21st webcast on “The Many Faces of Director Independence,” during which our expert panel will analyze the best ways to determine independence – as well as the optimal frequency of determination – and analyze several dozen increasing complex fact patterns under both the NYSE and Nasdaq standards.

NY Judge Rules on Ability of Insurgent to Mail Management’s Proxy Card

Following up on my blog last Wednesday regarding the MONY merger, Judge Holwell (S.D.N.Y.) issued an important decision later that day regarding the applicability and scope of Rule 14a-2(b)(1), the proxy rule that provides an exemption from the filing and disclosure requirements of Rules 14a-3 through 14a-6.

In short, Judge Holwell denied plaintiff’s request for a preliminary injunction. In doing so he reaffirmed the ability of insurgents to circulate a copy of management’s proxy card without simultaneously triggering the requirement to independently file a proxy statement and card. I have posted a copy of the Judge’s opinion in our “Merger & Acquistions” Practice Area under “Proxy Fights/Hostile Takeovers.”