June 19, 2008

Just Added! John White as “3rd Annual Proxy Disclosure Conference” Keynote

We’re very excited to announce that Corp Fin Director John White will serve as the keynote speaker for our “Tackling Your 2009 Compensation Disclosures: The 3rd Annual Proxy Disclosure Conference.” At last year’s Conference, John delivered his important “Where’s the Analysis?” speech.

So act now to take advantage of the early bird discount – which expires June 30th – for both the “16th Annual Naspp Conference” and the combined “Tackling Your 2009 Compensation Disclosures: The 3rd Annual Proxy Disclosure Conference” & “5th Annual Executive Compensation Conference.”

Posted: Corp Fin’s Staff Legal Bulletin No. 3A

Yesterday, Corp Fin posted a revised Staff Legal Bulletin No. 3A, providing updated guidance on the exemption provided by Securities Act Section 3(a)(10). The SEC had noted that a revised SLB would be issued upon effectiveness of last year’s changes to Rule 145.

This SLB replaces the two prior Section 3(a)(10) bulletins – the one originally issued in 1997 and the revised version issued in 1999 (reflecting the enactment of SLUSA). In addition to the new guidance regarding the Rule 145 amendments, various tweaks and updates have been made throughout the SLB.

Schoon v. Troy: Denying Advancement Rights of Former Directors

A Delaware Chancery Court decision by Vice Chancellor Stephen Lamb from earlier this year may come as a quite a surprise to directors, who may be troubled to now learn that their rights to indemnification or advancement of legal fees and expenses could be eliminated after they leave a company’s board. In Schoon v. Troy Corporation, Vice Chancellor Lamb concluded that a bylaw amendment eliminating the company’s fairly typical legal fee advancement obligations for former directors could be enforced, even in a situation where a former director had served on the board when the pre-amendment bylaws provided for such advancement. Given that the time for appeal of the decision has now expired, it appears that Schoon will remain the law of Delaware for now.

All may not be lost for former directors, however. As Kevin LaCroix notes in The D&O Diary blog, former directors are typically included within the definition of “insured persons” under most D&O liability insurance policies, which means that in most situations the former directors could still get expense protection and indemnification under the policy – even if the company chooses to later change its bylaws to eliminate advancement and indemnification provisions. Kevin also points out the availability of former director and officer liability insurance policies that provide coverage exclusively to the individual director or officer, thus avoiding any potential for interference with the coverage by others (such as the company). That option sounds expensive, but it may be prudent depending on the circumstances.

For more on the Schoon case – and the latest developments with D&O insurance and indemnification – check out our “D&O Insurance” Practice Area.

– Dave Lynn