TheCorporateCounsel.net

According to this Form 8-K filed yesterday, Dell has adopted the same majority vote standard as Intel (contrary to media reports that Dell took it one step further and adopted a standard under which nominees must receive favorable votes from holders of a majority of the shares entitled to vote, rather than from those that actually vote). If you read the Form 8-K – which includes Dell’s restated bylaws – you can rest assured that Dell’s standard is the same as Intel’s (except that Intel solves the holdover problem in their restated bylaws; Dell accomplishes that in its corporate governance guidelines).

This Chicago Tribune article (and a few other media pieces) got the explanation of the standard mixed up after Dell’s initial press release jumbled the operative language. By the way, an in-house lawyer from Dell will serve on the panel for the upcoming webcast on how to implement these standards (I should be able to post the flyer for this program in the next day or so).

[Speaking of corrections: According to members more obsessed with Seinfeld than me, Kramer’s friend’s name was not Bob Sacramento as I blogged yesterday; it was “Bob Saccomanno.” Translated into Italian: “Bob Handbag.” This can be verified from the episode during which George mistakenly believes he is having a heart attack and Kramer says: “Oh yeah? My friend, Bob Saccomanno, he came in here for a hernia operation.. Oh yeah, routine surgery.. now he’s sittin’ around in a chair by a window going, “My name is Bob” .. George, whatever you do, don’t let ’em cut you. Don’t let ’em cut you.”]

SIA’s Underwriting Agreement Guidance

A number of those members that caught yesterday’s superb webcast on the latest deal conveyance, underwriting agreement and legal opinion practices have asked for a copy of the Securities Industry Association’s guidance that Jack Bostelman mentioned. We have posted those two SIA documents in the “Securities Act Reform” Practice Area. If you missed the program, the panelists had great chemistry and it was one of the best webcasts I have heard (and I have heard many) – the audio archive is now available.

Shareholders Blast Sovereign Bill Approval

As I run off this morning to teach my first governance class of the semester at George Mason, I see the title of this Associated Press article and immediately think, “how am I going to explain this to the students?”

Without knowing a whole lot about what the situation myself, the article claims that the Pennsylvania legislature is in cahoots with this year’s governance posterchild, Sovereign Bancorp, when it passed a bill on Wednesday that would forbid the removal of company directors without cause and weaken an anti-takeover law by changing rules to determine which shares count toward the 20% threshold (the Pa. Governor hasn’t yet signed the bill). Remember that the NYSE is pondering dumping the treasury stock exception due to Sovereign’s actions.

If true, so much for state regulation as noted by Peter Langerman, CEO of Franklin Mutual Advisers, Sovereign’s second-largest shareholder: “This is an extraordinary abuse of the legislative process” – and I would say that it’s ironic that this type of behavior occurs during the high-profile Enron trials.

Coming Soon: Fair Valuations Galore and Lease Accounting Overhaul

In this podcast, Jack Ciesielski, Publisher of The Analyst’s Accounting Observer, provides insight into the latest accounting trends, including:

– What are that latest FASB projects?
– How large does fair value accounting loom this year?
– What can we expect regarding lease accounting?

Gunjumping Lives!

Below is a nice Professor Bill Sjostrom blog from “Truth on the Market“:

“Burger King announced today that it plans to file an IPO registration statement with the SEC in March (here is a Reuters article). According to BK’s CEO: “Our goal has always been to take Burger King public . . . . We believe the transparency and stability in ownership offered by being a public company will benefit our employees and franchisees for years to come.”

BK was purchased in 2002 from Diageo PLC by a group of private equity funds for about $1.5 billion. The funds are likely looking to partially cash out, so it will be interesting to see how many shares they sell in the deal. The timing of the IPO is probably motivated in part by the 50% increase in Wendy’s stock this past year and the strong showing of Chipotle’s recent IPO.

As for the possible Securities Act violation, section 5 of the Act prohibits offers to sell a security unless a registration statement is on file with the SEC. “Offer” is broadly defined as “every attempt or offer to dispose of, or offer to buy, a security or interest in a security for value,” and the SEC interprets this to include any publicity that contributes to conditioning the public mind or arousing public interest in the issuer or its securities. Under this definition, it looks like Burger King has made an offer. There are, however, some safe harbor rules pursuant to which a company can disclose a proposed offering without it constituting an “offer.” Rule 135, in particular, may save BK from a section 5 violation, but it depends on whether its announcement contained a required legend. Regardless, statements from BK’s CEO seem to go beyond what is allowed under Rule 135. Incidentally, new Rule 163A which establishes a bright-line exclusion from the definition of offer for communications made more than 30 days prior to filing does not appear to apply because BK’s communication references the securities offering.

In the end, does it really matter? Probably not in this situation, and the SEC recognizes this. The remedy for a slipup of this nature (assuming it is one) is typically a 30-day cooling off period between the technical violation and the SEC declaring the registration statement effective. Given BK clearly will not be in a position to go effective on its IPO registration statement within 30 days, it looks like no harm, no foul.”

I sure hope they run those BK ads during the Super Bowl where the King plunges over the goal line. I root for him every time! In the ad, the King is superimposed over the footage of Steve Young’s legendary 49-yard scramble in the 1988 NFC Divisional Playoffs against the Minnesota Vikings.