December 18, 2007

Disclosing Your Airplane Perks: “Incremental Cost”

There is still much confusion over what to include when computing the aggregate incremental cost for personal use of corporate aircraft. Proxy disclosures from this past season revealed that many issuers are significantly understating the incremental cost of the use of corporate aircraft, for example by failing to include dead-head costs and the loss of corporate tax deductions.

In the Advance Copy of our January-February 2008 Issue of The Corporate Executive, we provide a model disclosure that shows everything that needs to be included – and disclosed – regarding the aggregate incremental cost of airplane perks. We think many companies will be using this disclosure in the coming year – which will hopefully help provide consistency and help issuers avoid charges of “hiding the ball” on this sensitive issue.

Here is where you can access this Advance Copy now (you will need to renew for ’08 to receive it). Note that we will be mailing this issue to ’08 subscribers early in January. Feel free to let me or Dave know if you have any thoughts on the model disclosures in the Advance Copy. If you are not yet a subscriber, we encourage you to take advantage of a no-risk trial, which will give you immediate access to this important issue.

An Evelyn Y. Davis Sighting

Yesterday’s Washington Post ran this pretty humorous article about Evelyn Y. Davis at the Fannie Mae annual meeting (first meeting for the company in three years). It’s good to hear that Fannie Mae’s CEO gave Evelyn her normal deference to avoid (more of) a scene. Here is an excerpt from the article:

“She lectured the gathering on the price of her clothes (she never pays retail) and her marital history. That’s ‘Mrs. Davis,’ she said, correcting chairman Stephen B. Ashley when he addressed her as ‘Miss Davis.’ ‘I’ve had four husbands,’ she said. ‘Some women, particularly those who are jealous of me, can’t even get one.’

With the velvet fist of a boss dismissing an underling, Davis urged Mudd to take a walk. ‘I’m sorry, Dan. I know you tried, but you’re just not working out.’ In fact, Davis urged all the directors to resign — all except for former FBI director Louis Freeh, whom she praised lavishly and championed for the job of chief executive. ‘If anybody can do it, Louis can do it,’ she said.”

Federal Judge Tells SEC Lawyer “Sit Down, Shut Up”

Tis the end of the year and I’m doing some clean up to showcase gems that I had meant to blog about long ago. Here is one from October posted by Peter Lattman in his WSJ Blog (Dave blogged about this PIPEs case back then too):

“Judge Graham Mullen dismissed part of an SEC civil lawsuit alleging that a former executive at Friedman Billings Ramsey engaged in illegal conduct related to a securities offering. The claim alleged that John Mangan Jr. committed a so-called Section 5 violation involving a Pipe, or private investment in public equity. Representing Mangan: George Covington of King & Spalding in Charlotte and James Wyatt at Wyatt & Blake. Said Wyatt to the Observer: “We firmly believe (the case) will be resolved in his favor because we believe he has done absolutely nothing wrong.”

While the case is interesting — especially for those of you obsessed with the controversy surrounding Pipes and naked short selling — what’s interesting to us is this excerpt from the transcript of the oral argument on Mangan’s motion to dismiss.

Judge Mullen: Naked shorts are not legal, are they?

SEC lawyer Amy Greer: No. No, they’re just very risky, Your Honor.

SEC lawyer Catherine Pappas: And Your Honor –

Judge Mullen: They’re not illegal; they’re just risky.

Greer: Correct. Naked short sales are not illegal; they’re just risky, Your Honor.

Judge Mullen: Why in the world don’t you all make them illegal? Don’t you understand what happens in the market when you allow naked short selling to attack companies? I mean, do you understand that?

Greer: Your Honor, I think that that’s an issue for the United States Congress. I appreciate your concern –

Judge Mullen: Well –

Greer: — and I –

Judge Mullen: — the answer to my question is, yeah, I understand it or, no, I don’t.

Greer: I do understand your –

Judge Mullen: Do not try — okay.

Greer: I do understand, Your Honor.

Judge Mullen: Thank you for understanding it.

Covington: Your Honor, one thing –

Judge Mullen: Excuse the interruption.

Covington: No, sir.

Judge Mullen: Sit down, shut up, let the man talk. I’m not going to let him introduce (sic) you. Last warning.

Pappas: I’m sorry?

Judge Mullen: Sit down –

Pappas: Yeah, I got that.

Judge Mullen: — shut up, let the man talk. Last warning.

Pappas: Okay.

Judge Mullen: Understood?

Pappas: Okay.

Judge Mullen: Excellent.

Covington: With all due respect, Your Honor –

Judge: And you don’t interrupt her when she’s talking.

Covington: Yes, sir.

Judge: Proceed.

– Broc Romanek