November 20, 2007
Apple Wins Again
Judge Fogel, after dismissing the securities class action against Apple for back dating options and telling plaintiffs that their remedy was a derivative action, has dismissed the derivation action against Apple for violating the statute of limitations. So, one of the most high profile cases of compensatory stock option back dating will go unaddressed by federal courts in private actions.
November 19, 2007
With the dismissal of the Apple lawsuit, lawyers have discovered that stock backdating suits are better presented as derivative actions that securities class actions. In securities class actions, the plaintiffs cannot relate the offense to declining stock prices. In derivative suits, on the other hand, plaintiffs can claim that all back dated stock options should be canceled and any profits off such options be returned to the firm.
Cutting Through the "Interpersonnal Skills" Myths
The Wall Street Journal reports that CEOs that have certain traits (persistence, attention to detail, efficiency, analytical skills, and setting high standards) do much better than those that feature the common traits pushed by many academics in business and law schools (strong oral communication ability, teamwork, flexibility/adaptability, enthusiasm, and listening skills). Some academics even claim the later skills as gender related. Once again the world has intruded on wishful theory.
The efforts of Cerberus Capital Management and others to walk away from buyout agreements reproves a truism. Clients under appreciate legal language until times get tough. Legal language is usually the most important when risk manifest and once stellar deals go south in value. Unfortunately, lawyers often also take the language for granted, relying on old stock forms. With the busted buyouts look for radical, and overdue, redrafting of MAC (Material Adverse Change) and breakup fee clause in all future deals. The stock forms will change -- for the better.