January 10, 2006

Get Ready to Rumble: The 2006 Proxy Season

If you plan to take in tomorrow’s webcast – “Forecast for 2006 Proxy Season and Solicitation Strategies to Consider” – please print off these 38 pages of course materials from Pat McGurn of ISS first. Pat will open the webcast by going over what to expect this proxy season, then a panel of proxy solicitors will delve into specific strategies to consider in a variety of hot areas, including:

– What should companies be thinking about in terms of additional or modified disclosure if there is a stock plan on the ballot this year?

– More than 90 proposals to adopt majority voting are expected this season. How do you expect target companies to respond?

– Hedge fund activism is increasing and expected to do so. What should companies do or not do when approached?

– Looking forward, how might the SEC’s proposal for paperless proxy solicitation affect the landscape for activism?

Sneak Preview of the SEC’s Executive Compensation Proposals?

As I blogged yesterday, the SEC has calendared next Tuesday as the date on which the Commission will formally vote to propose new comp disclosure requirements. Apparently, someone is talking from the SEC because the WSJ ran this front-page article today providing specific details about what to expect.

According to the article, these elements might be included in the SEC’s proposals:


Judge Orders Scrushy to Repay Bonuses

Last week, an Alabama Judge ruled that former HealthSouth CEO Richard Scrushy must repay $48 million in bonuses to the company. Scrushy received the bonuses over the years 1997 to 2002.

Jefferson County Circuit Judge Allwin E. Horn III said the bonuses were undeserved because they were based on erroneous financial reports. Specifically, the Judge’s order states: “Scrushy was unjustly enriched by these payments to the detriment of HealthSouth and to allow Scrushy to retain the benefit of these payments would be unconscionable.” Scrushy reportedly intends to appeal the decision. Here is a related article.

Over the past six months there have been calls for CIBC to recapture bonuses paid to senior executives in the several years prior to the bank’s massive settlement of its Enron litigation. Repaying what history determines to have been unearned and unwarranted comp is emerging as a common theme in the compensation arena, including Sarbanes-Oxley’s Section 304 (more information on Section 304 in our “Securities Litigation” Practice Area).