August 25, 2004

Clarification on Application of 8-K

In the wake of the ABA Annual Meeting, there has been a bit of confusion as to whether companies need to file a 8-K each time an option is granted under the new 8-K rules. Some law firms mistakenly sent out memos indicating that indeed is the case after hearing SEC Staffers speak at the meeting.

Thankfully, I understand that the SEC Staff has provided oral informal guidance that if the form of an option agreement is on file then – in accordance with Instruction 1 to S-K Item 601(b)(10) – the grant of an option does NOT trigger the need to file an 8-K (assuming the award grant fits within the form of award already on file with the SEC). Further, the adoption of an equity compensation plan that must be approved by shareholders does not trigger an 8-K until shareholder approval is obtained.

I have posted a number of law firm memos that address these points – and more – in Section B.26 of the Sarbanes-Oxley Law Firm Memos (look at the bottom of B.26, the last 4-5 memos).

Nasdaq Posts More Staff Interpretative Letters On Governance Listing Standards

The Nasdaq has updated the PDF of staff interpretative letters that it has posted on its website. The PDF is now 66 pages and is dated August 17th – and includes all the staff’s interps for 2002 and 2003. The latest set of staff interpretative letters
begin with Letter 2003-25 and address:

– qualification of a director under revised definition of “independent director” (2003-26, 27, and 35)
– availability of exemptions from corporate governance requirements for non-US issuers (2003-28, 44 to 48, 50 and 51)
– completing transactions prior to the end of the 15-day approval period
for listing additional shares if Nasdaq has completed its review of proposed transactions (2003-42 and 2003-52)
– shareholder approval requirements for a change of control (2003-31, 39, 32, 43, and 52)
– shareholder approval requirements for equity compensation plans (2003-29, 30, 33, 34, 36-38, and 49)
– need for shareholder approval of exchange or rights offerings (2003-31 and 43)
– need for shareholder approval for private placements (2003-25, 32, 39-42, and 52)
– voting rights (2003-53)

Thanks to Suzanne Rothwell of Skadden Arps for the heads up as usual!

The Use of Clawback Provisions: Putting a Price on Disloyalty

Check out one of the latest practice pointers on from Lou Rorimer of Jones Day regarding The Use of Clawback Provisions: Putting a Price on Disloyalty. Register now for the October 20th executive compensation conference and gain access to all the pointers on as a bonus!