September 25, 2006
Sample Related-Party Transaction Policy
In our “Related Party Transaction” Practice Area, we have posted a sample related-party transaction policy in a Word file. I expect to be posting a flurry of other sample documents as the SEC’s new rules require changes to quite a few disclosure controls & procedures.
As for any content on our sites, we have a disclaimer – but even more so for these sample documents, as they should not be presumed to be legally sound as you should make that analysis yourself. If you peruse a sample document and upgrade it, please let me know – or if you have a sample document that you wish to contribute (anonymously or otherwise), you will receive total consciousness on your deathbed…
Corp Fin’s Executive Compensation FAQs: Early Compliance and IPOs
On Friday, the SEC’s Division of Corporation Finance issued a small set of FAQs on its new executive compensation and related-party transaction rules, confirming what I blogged last week about the interplay between the effective date of the new rules and early compliance. The FAQs also address the application of the rules and transition provisions to IPOs.
Cablevision’s “I Pay Dead People” Grants
Ah, another contender for governance posterchild of the year! Some pretty heated competition this year. In Friday’s WSJ, this article revealed that Cablevision Systems awarded options to a vice chair after his 1999 death but backdated them, making it appear the grant was awarded when he still was alive. Critics of executive pay often call it “pay for pulse” – but this doesn’t even meet that low standard!
Perhaps even more troublesome is that the company improperly granted options to a compensation consultant options accounted for them as if he were an employee. So far, the compensation consultant hasn’t been identified (apparently, the award was cancelled in 2003) – but this raises all sorts of red flags as “the company also said the consultant ‘directly participated in the options dating process.'” Lesson learned: Board cannot solely rely on compensation consultants to do the right thing.
From the ISS “Corporate Governance Blog,” here is Pat McGurn’s hilarious take on this development.