TheCorporateCounsel.net

October 5, 2005

CEOs and Their Ferraris

One of our members said it better than I could about this recent Chief Executive article: “I work in the law department at a public company in the midwest. Although this Chief Executive article isn’t about stock options, restricted stock or a perk awarded to directors or executive officers, I still think it is rather heinous that a publication “flaunts” the fact that executives are, in effect, using shareholder money to buy their cars. I find this article in strict contrast to “CEOs Who Have Set an Example” on Compensation Standards.com and just thought it might be of interest for one of your more succinct words of wisdom and insight.”

Trading Restricted Stock on an Exchange?

Last Wednesday, this NY Times article analyzed the new Restricted Securities Trading Network, a platform that has been built to trade “restricted stock.” I don’t know about you, but the article seemed a little off.

Sounds like the reporter is confusing restricted securities (a la Rule 144) with restricted stock, which may be registered on S-8 but nevertheless is illiquid. I don’t see how there could be a market for restricted stock, so the issue must be whether there’s a market for restricted securities that are not yet eligible for resale under Rule 144, like the market for Rule 144A stock that’s open only to QIBs. If that’s the case, I would think that any user of this new service should be asking a number of questions, such as what’s the applicable ’33 Act exemption (Section 4(1 1/2)?) – and what practical hurdles must be overcome (eg. will the transfer agent require a legal opinion for each trade, since the shares will be legended?). Thanks to Alan Dye for his insight here.

Some Thoughts on Why We Need Option Expensing

Yesterday, I posted this rebuttal by Lynn Turner, Managing Director of Research for Glass Lewis and a former SEC Chief Accountant, to the points made by former US Senators Bob Dole and Tom Daschle in this WSJ opinion editorial. Lynn provides strong support for the FASB’s move to require options expensing.