September 17, 2008

Completed! Lynn, Romanek and Borges’ “The Executive Compensation Disclosure Treatise & Reporting Guide”

Broc and I are more than excited to be finally done with our comprehensive treatise of executive compensation disclosures: Lynn, Romanek and Borges’ “The Executive Compensation Disclosure Treatise & Reporting Guide”. This thing is massive, over 1000 pages long and it wouldn’t have been possible without the help of our new co-author Mark Borges and our two co-editors, Julie Hoffman and Dan Greenspan.

It’s great to have Mr. Borges as part of our Treatise team since he was able to lend his well-known experience and wisdom to the project. And of course, we thank the many of you that have sent us encouraging words (and ordered a copy).

We hope to have the online version of the Treatise up over the next week or so and it will take about a month to typeset and print the hard copy of the book. Remember that when you order the Treatise, you not only get the hard copy of the book – but you also get access to an online version of the Treatise. We’ll let you know when the Treatise is online – as well as when we mail. Here are FAQs about the Treatise.

Order your Treatise now so we can rush it to you right after it’s printed; remember there is a reduced rate if you are attending any of our Conferences.

Order online – or here is an order form if you want to order by fax/mail. If at any time you are not completely satisfied with the Treatise, simply return it and we will refund the entire cost.

Is it Friday Already? The AIG Bailout

Apparently AIG couldn’t wait around for the typical flurry of weekend meetings at the New York Federal Reserve and had to be bailed out on, of all days, a Tuesday. It just doesn’t seem to have quite the same dramatic flair as when the announcements are made on Sunday. But the bailout of AIG is quite dramatic, involving an $85 billion bridge loan and the nationalization of one of the largest insurance companies in the world. Under the terms announced last night, AIG has access to up to $85 billion through a Fed liquidity facility with a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. The government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders. Not the best of terms for AIG or its shareholders, but I guess beggars can’t be choosers. I note that $85 billion is more than twice the amount that AIG was seeking over weekend.

Why backstop AIG but not Lehman? It is certainly hard to say, other than apparently it was thought that Lehman could be unwound in an orderly fashion under Chapter 11, while AIG was at risk for a “disorderly failure.” At this point, there doesn’t seem to be a whole lot of consistency in the government’s approach, which could only spell more uncertainty for those institutions still standing.

Kevin LaCroix has provided a great summary of what we know so far in The D&O Diary blog. Kevin notes: “The problem for AIG is that sale of its non-core subsidiaries alone may not be sufficient to pay back even half of $85 billion. The Deal Journal blog estimates (here) that sales of AIG’s non-core subsidiaries and minority interests might raise ‘as much as $42 billion’ – and that, I might add, is before taxes. (I think Uncle Sam will insist on the payment of all applicable taxes.) Which raises the question whether the sale of ‘businesses’ specifically contemplates the sale of some or all of AIG’s core insurance operations?

Left unanswered in the Fed press release is the question of what this development means for AIG’s continuing business operations. The primary goal of the Fed facility is the orderly sale (as opposed to the ‘disorderly failure,’ as the Fed statement put it) of AIG’s businesses. What does this imply about the future of AIG’s operating companies? And what will be left of AIG after the ‘orderly sale’?”

Kevin raises a number of excellent questions that we will only know the answers to as the situation unfolds. Chief among the questions for me is why is the government now the majority owner of a major insurance company and what does it intend to do with its ownership interest?

Shell Companies and Rule 144

New paragraph (i) of Rule 144 has provided a framework for Rule 144 sales of shell company securities, but it has raised a number of questions and concerns for practitioners.

In this podcast, David Feldman of Feldman Weinstein & Smith discusses the latest developments with Rule 144(i), including:

– What are the principal concerns that have come up so far in implementing Rule 144(i)?
– What guidance did you seek from the SEC Staff and what did they say?
– What are some practical considerations for issuers now?
– What further adjustments to Rule 144(i) might be possible at this point?

– Dave Lynn