TheCorporateCounsel.net

Recently, the California legislature passed SB 1207 (Alarcon) to allow some California corporations to adopt a form of majority voting. California law currently requires plurality voting for California corporations. The bill was co-sponsored by CalPERS and CalSTRS. Unless Governor Schwarzenegger returns the bill before September 30, it will become law and take effect on January 1, 2007. Voting on the bill in both houses of the legislature was sharply divided and bill supporters and opponents are making opposite predictions on the likelihood of a veto by the Governor.

As the bill moved through the California legislature, I understand some objected to the fact that it would allow majority voting in corporations with cumulative voting. California law mandates cumulative voting for all California corporations (and even corporations incorporated in other states that meet specified conditions). However, listed corporations (i.e., companies with shares listed on the NYSE, AMEX or Nasdaq National Market) may eliminate cumulative voting by an amendment to their articles or bylaws.

In the last few weeks of the legislative session, SB 1207 was amended to address this concern. As amended, a listed corporation that has eliminated cumulative voting may adopt an amendment to its articles or bylaws to provide that in an uncontested election the “approval of the shareholders” is required to elect a director.

Approval of the shareholders means the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present, which shares voting affirmatively also constitute at least a majority of the required quorum. If a director fails to be elected by approval of the shareholders, his or her term ends on the date that is the earlier of 90 days after the date on which the voting results are determined or the date on which the board selects a person to fill the vacancy.

Test Your Ability to Access Video Webcast

For those attending next week’s conference – “Implementing the SEC’s New Executive Compensation Disclosures: What You Need to Do Now!” – by video webcast, please test your ability to access video today (use your conference id/password to reach the testing area; a successful test means that you were able to play the sample video). We are unable to keep up these testing links beyond tomorrow, so it’s important that you test now.

Options Backdating: US Senate Finance Committee Meeting

For those of you burning to catch today’s US Senate Finance Committee Meeting on options backdating, I hear that you may be able to access a webcast of the 10 am eastern hearing. The witnesses include:

– Deputy Attorney General Paul McNulty

– IRS Commissioner Mark Everson

– SEC’s Enforcement Director Linda Thomsen