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Survey Results: More on Blackout Periods

By broc

Survey Results: More on Blackout Periods

Every few years, we survey the practices relating to blackout and window periods (there are results from five others in our "Blackout Periods" Practice Area). Here is the latest survey results, which are repeated below:

1. Does your company ever impose a "blanket blackout period" for all or a large group of employees?
- Regularly before, at, and right after the end of each quarter - 74.1%
- Only in rare circumstances - 17.2%
- Never - 8.6%

2. Our company’s insider trading policy defines those employees subject to a blackout period by roughly:
- Stating that all Section 16 officers are subject to blackout - 6.8%
- Stating that all Section 16 officers “and those employees privy to financial information” are subject to blackout - 5.1%
- Stating that all Section 16 officers “and others as designated by the company” are subject to blackout - 18.6%
- Stating that all Section 16 officers “and those employees privy to financial information and others as designated by the company” are subject to blackout -47.5%
- All employees - 5.1%
- Some other definition - 16.9%
- Our company doesn’t have an insider trading policy -0.0%

3. Does your company allow employees (that are subject to blackout) to gift stock to a charitable, educational or similar institution during a blackout period?
- Yes, but they must preclear the gift first - 52.5%
- Yes, and they don’t need to preclear the gift - 8.5%
- No - 20.3%
- Not sure, it hasn’t come up and it’s not addressed in our insider trading policy - 18.6%

4. Does your company allow employees (that are subject to blackout) to gift stock to a family member during a blackout period?
- Yes, but they must preclear the gift first - 39.7%
- Yes, and they don’t need to preclear the gift - 8.6%
- No - 24.1%
- Not sure, it hasn’t come up and it’s not addressed in our insider trading policy - 27.6%

5. Are your company’s outside directors covered by blackout or window periods and preclearance requirements?
- Yes - 98.3%
- No - 1.7%

Don't forget that we have posted a new "Quick Survey on Rule 144 Practices." Please take a moment to weigh in!

Being In-House

In this podcast, Mike Cahn, a former Senior Associate General Counsel of Securities at Textron, talks about what’s it like to be in-house and how that role has changed over the years, including:

- When did you start and what were your duties as they evolved over time?
- Over time, how much more did you need to rely on outside counsel?
- Did you work more hours as the regulatory environment became more complex?
- What advice would you give to someone going in-house today?

Citigroup's Director Search: A New Recruiting Method?

As noted in this WSJ article, Citigroup's lead director posted this statement on the company's website, noting that the board seeks new finance-savvy directors. The statement appears to be from the company's Chair of the "Nomination and Governance Committee," who also serves as the board's lead director.

I was quite surprised by the statement for several reasons. First was just the novelty of it - one of the largest companies in the world recruiting publicly? I can't recall that happening before. However, the purpose of this statement likely was not to recruit; rather it was likely posted to assure the market that the company knows changes on the board are necessary (on the same day, a management shake-up was announced). Even if boards generally are increasingly having trouble finding willing - and capable - candidates, I would never imagine Citigroup to be in that boat.

Another striking item though is that the statement - at least, implicitly - comes from a member of the board. It is rare to have broad communications addressed to investors from a director. Most companies shy away from having directors as authorized spokespersons (except from the Chair in limited circumstances).

I do recognize that Citigroup has novel circumstances, with a major crisis at hand - but I'm still surprised by the statement for a third reason. From a litigator's perspective, the call for "finance-savvy" directors seems a tacit admission that the current board was ill-equipped to oversee the type of operations that the company is engaged in.

The bottom line is that I chalk up the statement to "things you are willing to do when shareholders threaten to withhold or vote against your director nominees."

As an aside, here is an article criticizing the notion of a board packed with financial-savvy people.

- Broc Romanek

Full post as published by The Corporate Counsel.net Blog on April 09, 2008 (boomark / email).