TheCorporateCounsel.net

As noted in this article, Sara Lee and Coach recently amended their by-laws so that a shareholder who nominates a director or submits a proposal must also disclose if it has “hedged its ownership” or has “any short position” in the stock. These revised bylaws should enable other shareholders to make better informed decisions as the interests of a shareholder who has hedged its ownership may not align with the interests of other shareholders.

For example, a shareholder can eliminate or reduce its economic risk through hedging or other derivatives – or be motivated to focus on short term gains at the expense of long-term wealth creation. Alternatively, a shareholder may have a much greater economic interest in the company than is evident from its SEC filings (in my opinion, an area that the SEC should be tackling). The revised by-laws should provide increased transparency – but of course, may still not deter a shareholder from making a nomination or submitting a proposal.

Interestingly, both Sara Lee and Coach are incorporated in Maryland – but they are not the first to take this action. A fund family did it for 11 funds back in December and these did it within the past month: Five Star Quality Care; Redwood Trust; and HRPT Properties Trust. Here is a Form 8-K filed by Sara Lee – and the Form 8-K filed by Coach – with their amended by-laws.

Delaware Chancery Court: Denial to Dismiss a Bullet-Dodging Case

One of these senior moments – didn’t I already blog about this case? I thought so, but apparently not. Here is a recent Delaware decision – Weiss v. Swanson – from Delaware Vice Chancellor Lamb that held that directors who approved spring loaded and bullet dodged stock option grants may have breached their fiduciary duty and forfeited the protection of the business judgment rule since the spring-loading and bullet-dodging practices constituted material information that should have been disclosed to the shareholders. VC Lamb also ruled that the alleged stock manipulation supported a claim of corporate waste.

Company Communications with Investors During the Proxy Season

Thanks to Kris Veaco of the Veaco Group, we have posted a new game: “Pro or Troll #7: Company Communications with Investors During Proxy Season.” Give it a whirl and see how ya do…

Dave and I are off to Dallas to attend the ABA’s Business Law Section Spring Meeting (with a pitstop before the Dallas Chapter of the Society of Corporate Secretaries) for the next two days. Look for an old dude wearing a mullet…

– Broc Romanek