We just posted the registration information for our popular conferences – “Tackling Your 2011 Compensation Disclosures: The 5th Annual Proxy Disclosure Conference” & “7th Annual Executive Compensation Conference” – to be held September 20-21st in Chicago and via Live Nationwide Video Webcast. Here is the agenda for the Proxy Disclosure Conference (we’ll be posting the agenda for the Executive Compensation Conference in the near future).
Special Early Bird Rates – Act by April 15th: With anger over CEO pay at record levels, Congress and the regulators are intent on shaking things up and huge changes are afoot for executive compensation practices and the related disclosures – that will impact every public company. We are doing our part to help you address all these changes – and avoid costly pitfalls – by offering a special early bird discount rate to help you attend these critical conferences (both of the Conferences are bundled together with a single price). So register by April 15th to take advantage of this discount.
Corp Fin Revises the Non-GAAP Section of Its “Financial Reporting Manual”
Yesterday, Corp Fin posted a revised version of its “Financial Reporting Manual” with revisions to “Topic 8: Non-GAAP Measures of Financial Performance, Liquidity and Net Worth” to include “Section 9500: Critical Accounting Estimates-Goodwill Impairment” and other changes.
On Friday, the SEC posted the 334-page adopting release related to amending Regulation SHO and short selling.
Delaware Chancery Court Finally Rules in Selectica
On Friday, the Delaware Court of Chancery issued its long-awaited opinion in Selectica v. Versata Enterprises, addressing the first modern triggering of a rights plan. The court provided judicial validation of NOL poison pills, upholding the directors’ adoption and implementation of the rights plan and their subsequent decision to dilute an acquiring person who deliberately crossed the pill’s threshold.
The court delivered a well-reasoned opinion that employed a very straightforward Unocal analysis. It found that the NOLs were a valuable corporate asset and, therefore, an “ownership change” which might jeopardize their value constituted a valid threat to corporate policy and effectiveness. It made clear that because “NOL value is inherently unknowable ex ante, a board may properly conclude that the company’s NOLs are worth protecting where it does so reasonably and in reliance upon expert advice.” Central to the Court’s analysis was the board’s reliance on outside financial, tax, and legal advisors.
The Court then found that the plan, with a 4.9% trigger, was not preclusive or coercive, notwithstanding the acquiring person’s argument that no stockholder would run a proxy contest against Selectica’s staggered board. The Court explained that “[t]o find a measure preclusive…, the measure must render a successful proxy contest a near impossibility or else utterly moot….”
The Court went on to find that the use of the rights plan fell within Unocal‘s “range of reasonableness.” It rejected the acquiring person’s argument that, among other things, the Selectica board should have adopted a more narrowly tailored response. “[O]nce a siege has begun,” the court stated,” the board is not constrained to repel the threat to just beyond the castle walls.” It concluded that “[w]ithin this context, it is not for the Court to second-guess the Board’s efforts to protect Selectica’s NOLs.”
While Selectica is not the Chancery Court ‘s first foray into the world of poison pills, this opinion marks the first time the Court has upheld a modern pill that has been actually triggered by an acquiror.
– Broc Romanek