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Will They Ever Learn? TARP Participants and Perverse Compensation Amendments

By broc

Will They Ever Learn? TARP Participants and Perverse Compensation Amendments

If you review the Form 8-Ks filed for those financial institutions participating in the Treasury's TARP Capital Purchase Program (here is our ongoing list of 8-Ks), you will be disturbed to learn that some companies are taking the opportunity to play it "cute" with how they revise their executive compensation arrangements in response to EESA.

In a perverse irony, some companies participating in Treasury's program are amending their existing "double trigger" change of control arrangements to make them pure single triggers. Single triggers have been widely discredited in recent years and most companies have replaced them with more investor-palatable double triggers (ie. compensation is payable only (i) after a control change actually takes place and (ii) if a covered executive's job is terminated because of the control change).

Apparently, single trigger payments on a change of control aren't prohibited “golden parachute payments” under the Treasury's program. I find it hard to believe that this movement back to single triggers is the result that Congress wanted - and I doubt investors will take kindly to this development.

Coming Soon: Mandatory E-Proxy

Since the end of last year, larger US companies (ie. large accelerated filers) have been required to post their proxy materials on their corporate websites. Soon, all companies engaging in proxy solicitations will need to do so as the SEC's mandatory e-proxy rules for smaller companies become effective commencing on - or after - January 1st of '09.

In this podcast, Matt Dallett of Edwards Angell discusses how smaller companies need to get ready to comply with mandatory e-proxy for the first time, including:

- What is mandatory e-proxy?
- What will be absolutely required and what is still voluntary?
- What do smaller companies need to do to get ready for mandatory e-proxy?

Reforming Securities Class Actions Via Shareholder Proposals

Bruce Carton's "Securities Docket" includes this interesting piece on how Professor Adam Pritchard has developed this model proposal to reform the class action process through the Rule 14a-8 process (here is a paper on this topic too).

- Broc Romanek

Full post as published by The Corporate Counsel.net Blog on November 06, 2008 (boomark / email).