March 21, 2005

Magnitude of Form 12b-25 Filings

As predicted, the number of companies filing Form 12b-25s in order to delay their 10-Ks past the March 16th due date reached a record level this proxy season. Here are some stats derived by Brink Dickerson and his team over at Troutman Sanders:

– Form 12b-25s filed between 3/1 and 3/17: 395 this year; 116 last year
– Form 10-Ks filed between 3/1 and 3/17: 2469 this year; 2607 last year
– Percentage of late filers: 16.0% this year; 4.4% last year

These stats do not reflect companies who were able to complete their traditional audit work and therefore file on time – but are taking advantage of the extension for their 404 work. As a result, the 395 number probably slightly understates the magnitude of the problem, which is amazing as the numbers above already indicate a 250% increase!

Deja Vu – WorldCom Directors Settle Again

On Friday, a new $55.25 million settlement with 11 former directors (including one estate) in the WorldCom class action lawsuit was announced, following settlements entered into with the underwriter defendants. If approved, the settlement calls for settling directors to pay $20.25 million of their own money and insurers to pay $35 million.

The prior proposed settlement with directors included a so-called “ability-to-pay” provision that would have limited the amount by which any verdict or judgment against a non-settling defendant would be reduced with respect to the responsibility of settling defendants had there been no settlement, by the financial capability of settling directors to pay. The lead plaintiff terminated the proposed settlement because the Court rejected that provision as being inconsistent with the PSLRA. The new proposed settlement does not have such a provision, reflecting the fact that the lead plaintiff has now reached settlement with all of the underwriter defendants.

The settlement provides that the payment made by each settling director will equal or exceed the compensation received for service as a board member since January 1, 1999, unless the parties otherwise agree based upon unique circumstances. Here is a related NY Times article.

AFL-CIO “Key Votes” Scorecard

Last week, the AFL-CIO released this key votes scorecard. The 28 shareholder proposals on the scorecard from 28 different annual meetings will be used to grade the voting performances of mutual fund managers. See how the AFL-CIO graded managers last year in this report, as well as this special report grading how the 10 largest managers voted on compensation-related shareholder proposals.

The “Bloggies”

Last week, the 5th Annual “Bloggies” were held, with winners in 30 different categories. Here is the site where the principal winners are noted. Here is a Washington Post article about the awards.

Speaking of blogging, lots of press recently about CEOs and directors blogging, such as this Washington Post article from Saturday. As I mentioned in this article from Corporate Board Member, what a nightmare for in-house counsel to ensure that these corporate bloggers are not violating Reg FD, etc. Leave the blogging for the unattached…