Final 409A Regulations
April 10th, 2007Hot off the press and only 397 pages.
Extreme Backdating
September 22nd, 2006The WSJ law blog has a hilarious post about Cablevision granting options to a dead man. Wow.
How To Investigate Backdating …
September 19th, 2006Effective Dates for SEC Disclosure Rules Released
September 13th, 2006LeBoeuf Lamb has published a little PDF chart summarizing the effective dates of the new SEC executive compensaiton disclosure rules.
Backdating: A Nuanced Approach
June 13th, 2006The Legal Pad has an interesting article that features Morrison & Foerster attempting to bring “nuance” to the backdating scandals:
Sometimes [backdating is] “purely accidental,” corporate attorney William Sherman said, adding that by lumping all the companies in one bag “you’re catching the dolphins in the tuna net.”
You know things are serious when your lawyers have point on spin control …
Officially a Trend?
June 12th, 2006It’s becoming almost tiresome to make these posts, but Monster Worldwide, Inc.—the parent corporation that holds popular job site Monster.com—was subpoenaed today regarding the possible backdating of stock options.
The entire backdating scandal is another example of the lack of transparency and accountability that plagues executive compensation. If compensation monitoring mechanisms generally had been functioning effectively, what are the odds that so many major corporations would be embroiled in scandal simultaneously?
Former Buca Execs Charged
June 8th, 2006The SEC has filed civil charges against three former executives of Minneapolis-based restaurant operator Buca, Inc. for receiving undisclosed compensation and making false statements on proxy filings. Former CEO Joseph Micatrotto has already agreed to settle the charges for $565,000.
Micatrotto isn’t out of the woods yet, however: He also faces a criminal charge of wire fraud, to which he plans to plead guilty.
The other ex-execs, Greg Gadel and John Motschenbacher, also face criminal charges, and we can probably expect them to also plead guilty.
These enforcement actions are certainly welcome news, but they also illustrate the relatively ineffective ex post nature of such actions–and the importance of strong internal controls on management. Buca’s own auditors, not the SEC or the DOJ, uncovered the misconduct that led to the recent charges. Civil and criminal charges may provide a slight marginal increase in deterrence to wouldbe criminals, but it is still up to companies themselves to watch out for crooks.
Final 409A Regs Won’t Come Soon
June 5th, 2006BNA has the latest word on 409A regulations. An insightful quote:
A safe harbor on stock valuations is raising concerns over whether small, start-up companies would be required to hire independent appraisers to determine the value of their company stock, [William] Schmidt noted.
…
When asked whether IRS might include examples of what it considers appropriate stock valuations, [Steven] Tackney said that the issue was so facts and circumstances-oriented "I don’t know how we could do an example."
Don’t expect final regulations until late summer or early fall.
Vitesse fires three suspended officers
May 17th, 2006UnitedHealth admits options problems
May 12th, 2006UnitedHealth now admits that there was a "significant deficiency" regarding its options grant practices. The company will likely have to restate its earnings for at least the last few years. A committee of directors and the company itself are reviewing past practices.
To UnitedHealth’s credit, it has produced at least the appearance of seeking real change in its compensation practices. This may be sufficient to defuse shareholder anger, and prevent heavy hitters such as CalPERS from forcing more extreme measures. According to a press release, it has already:
It will be interesting to see how shareholders react to any earnings restatements, given the corrective measures already taken.