Friday, February 24, 2017
One of the many questions surrounding benefit corporations is whether their choice of legal entity form will scare away investors.
As previously reported, we now have our first publicly traded benefit corporation. And in this week's news certified B corp and benefit corporation Data.world announced a 18.7 million dollar raise. This raise ranks in the top-ten largest raises by a benefit corporation, according to the information I have seen on benefit corporations. I compiled the publicly available information I was able to uncover on social enterprise raises (including by benefit corporations) in a forthcoming symposium article for the Seattle University Law Review. It is quite possible that there are raises that have been kept quiet and that I have not seen. This Data.world news was announced days after final edits and will not be in my article.
As is often the case in social enterprise news, this news could be seen as encouraging or discouraging for supporters of the benefit corporation form.
On one hand, this is a fairly sizeable raise and a bit of evidence that not all serious investors are scared away by a legal form that mandates a general public benefit purpose.
On the other hand, the mere fact that a raise of under $20 million dollars is big news in the benefit corporation world (commanding its own announcement e-mail from benefit corporation proponent organization B Lab) shows that the benefit corporation form has yet to go mainstream. A raise under $20 million dollars hardly qualifies as news in the traditional financial world. And, as mentioned, to date, there have only been a handful of raises of this size for companies using the social enterprise forms.
Still, I think it is fair to say that benefit corporations have already come further than harsh critics originally thought was possible. The benefit corporation form still needs to evolve significantly, in my opinion, but the form is still growing and the positive news for the form has not yet stopped.
Friday, February 17, 2017
Last week Runner’s World reported:
Mariya Savinova-Farnosova, a Russian middle distance runner, was given a four-year ban for doping by the Court of Arbitration for Sport on Friday. She will also be stripped of two gold medals she won at the 2011 world outdoor championships and 2012 London Olympics, as well as a 2013 world silver medal, all in the 800 meters.
As a result, U.S. athlete Brenda Martinez will likely soon be upgraded to a silver medal for her performance in the 800 meters at the 2013 world championships and American Alysia Montaño will receive bronze medals for her races at the 2011 and 2013 world championships. Officials will first need to verify the new results.
In this post, I’ll examine how the presumably clean athletes—like Brenda Martinez and Alysia Montaño in this case—should be treated with regards to their endorsement contracts. The main question is:
- Should the clean athletes be awarded their endorsement contract performance bonuses based on world rankings than have been revised to exclude doping athletes?
Respected law firm Reed Smith has some helpful contract interpretation materials available here, which is relevant to the discussion. All of the following is merely an academic exercise and not legal advice.
Contract Drafting and the Text of the Contract.
As with any contractual issue, we should start with the text of the contracts. Since few of these endorsement contracts are publicly available, I will use the language in Nike’s endorsement contract that was filed in the Nike v. Berian case last year.
A great many contract disputes could be avoided with clear drafting. If an endorsement contract stated that performance bonuses would be paid based on any revised rankings that remove doping athletes, then I imagine that language would control and the clean athletes would promptly get paid the difference between their old and new ranking. Doping has been uncovered frequently enough in sports like cycling and track & field (aka “athletics”) that such a contractual clarification might be helpful to include on the front end of the drafting process.
The proposed Nike contract in the Berian case does contain promised performance bonuses, based on world rankings, with additional bonuses for Olympic and World Championship Medals (pg. 14), but I did not see any guidance regarding world rankings that are revised due to doping. The potential bonuses in the Berian case were fairly significant, with the top bonus of $150,000 exceeding the proposed annual base pay of $125,000. The contract does allow Nike to terminate the contract due to any sponsored athlete’s doping offense (pg. 9), but, again, I don’t see anything about doping by the athlete’s competitors.
As the Reed Smith contract interpretation flowchart correctly states, judges attempt to construe contracts in accordance with the parties’ intent. We first look at the text of the contract, and can only look at the contract language if the wording in unambiguous. If the contract language is ambiguous (reasonably susceptible to more than one interpretation) then the court may be able to look beyond the contract (parol evidence) to determine the intent of the parties.
Here, I think the parties' intent might be interpreted either way. On one hand, the athlete could argue that the intent was to award bonuses based on the fair world rankings, which would exclude drug cheats. On the other hand, the sponsor could argue that they were paying for publicity, and that the revised rankings publicity is typically significantly less than the publicity surrounding achievement during the actual Olympics or World Championships.
As a practical matter, like most legal disputes, it probably makes sense for the athlete and the sponsoring company to settle the matter outside of court. An example of a principled negotiation could involve the sponsor paying the difference in the performance bonuses, and the athlete promising to do an anti-doping ad for the sponsor or a few extra appearances related to the new rankings.
It future posts, I may write about the appropriate punishment for athletes who use performance enhancing drugs. For example, is jail time appropriate? I may also post on ways to further compensate the clean athletes for their lost earnings, publicity, and recognition.
Thursday, February 16, 2017
Assistant Professor of Business Law Position at Ross School of Business at the University of Michigan
New job posting here; information below.
How to Apply
A cover letter is required for consideration for this position and should be attached as the first page of your resume. The cover letter should address your specific interest in the position and outline skills and experience that directly relate to this position.
Applicants are required to submit their applications electronically by visiting the website: http://www.bus.umich.edu/FacultyRecruiting and uploading the following:1. Evidence of teaching experience and competence (if any)2. A curriculum vitae that includes three references
Please contact Jen Mason, Area Administrator, via email with questions at email@example.com
The Stephen M. Ross School of Business at the University of Michigan is a diverse learning community grounded in the principle that business can be an extraordinary vehicle for positive change in today's dynamic global economy. The Ross School of Business mission is to develop leaders who make a positive difference in the world. Through thought and action, members of the Ross community drive change and innovation that improves business and society.Ross is consistently ranked among the world's leading business schools. Academic degree programs include the BBA, MBA, Part-time MBA (Evening and Weekend formats), Executive MBA, Global MBA, Master of Accounting, Master of Supply Chain Management, Master of Management, and PhD. In addition, the school delivers open-enrollment and custom executive education programs targeting general management, leadership development, and strategic human resource management.
The Stephen M. Ross School of Business at the University of Michigan has a tenure-track position at the assistant professor level available in Business Law starting in the Fall, 2018 term. The successful candidate will have a research and teaching focus in the area of the regulation of financial and banking organizations. Strong preference will be given to candidates with demonstrated experience and expertise in this area; ideally, this would include expertise on the definition of systemically important financial institutions, international financial standards such as Basel III, and legal standards as applied to mergers and acquisitions of banks and other financial institutions.
Qualified candidates must have an earned J.D. in from an ABA accredited law school with an excellent academic record and must demonstrate interest and ability in conducting high-quality, scholarly research. A qualified candidate must demonstrate excellence in university teaching or the potential to be an outstanding teacher in business law. Preference will be given to candidates with significant professional experience as a lawyer and/or evidence of prior excellence in teaching.
For more detailed descriptions of the Business Law Area, Ross School of Business, and the University of Michigan, Please consult our websites:
- Business Law Area: http://michiganross.umich.edu/faculty-research/areas-of-study/business-law
- Ross School of Business: http://michiganross.umich.edu/
- University of Michigan: www.umich.edu
- Benefits Information: www.umich.edu/~benefits
The University of Michigan conducts background checks on all job candidates upon acceptance of a contingent offer and may use a third party administrator to conduct background checks. Background checks will be performed in compliance with the Fair Credit Reporting Act.
The review of applications will begin immediately. Job openings are posted for a minimum of seven calendar days. This job may be removed from posting boards and filled anytime after the minimum posting period has ended.
U-M EEO/AA Statement
The University of Michigan is an equal opportunity/affirmative action employer.
Friday, February 10, 2017
Laureate Education recently became the first standalone publicly traded benefit corporation. They are organized under Delaware's public benefit corporation (PBC) law, are also a certified B corporation, and will be trading as LAUR on NASDAQ.
Plum Organics, also a Delaware PBC, is a wholly owned subsidiary of publicly-traded Campbell Soup Company. And Etsy is a publicly traded certified-B corporation, but is organized under traditional Delaware corporation law.
Whether the for-profit educator Laureate will hurt or help the popularity of benefit corporations remains to be seen, but some for-profit educators have not been getting good press lately.
Inside Higher Ed reports on Laureate Education's IPO as a benefit corporation below:
The largest U.S.-based for-profit college chain became the first benefit corporation to go public Wednesday morning.
Laureate Education, which has more than a million students at 71 institutions across 25 countries, had been privately traded since 2007. Several major for-profit higher education companies have over the last decade bounced back and forth between publicly and privately held status; also yesterday, by coincidence, the Apollo Group, owner of the University of Phoenix, formally went back into private hands….In its public debut, the company raised $490 million….
Becker said the move to become the first benefit corporation that is public is one way to show that Laureate is putting quality first.“There is certainly plenty of skepticism about whether for-profit companies can add value to society, and I feel strongly we can,” Becker said, adding that Laureate received certification from the nonprofit group B Lab after years of “rigorous” evaluations….
But the certification and the move to becoming a benefit corporation doesn’t prove a for-profit will not make bad decisions or commit risky actions that hurt students, said Bob Shireman, a senior fellow at the Century Foundation and for-profit critic.
"The one thing that being a benefit corporation does is reduce the likelihood that shareholders would sue the corporation for failing to operate in the shareholders' financial interest," Shireman said. "So it makes a marginal difference, and there's no evidence that benefit corporations, in the 10 or so years they've existed in the economy, cause better behavior."
Companies and investors could make better choices and decisions for their students without needing a benefit corporation model to do that, Shireman said, adding that the legal protection it provides is small.
"What's more important are what commitments are being made under the rubric of being a benefit corporation," he said. "How is that going to be measured and enforced … and how can they be changed or overruled by stockholders."
Head of Legal Policy at B Lab Rick Alexander, also authored a post on Laureate Education. For those who do not know, B Lab is the nonprofit responsible for the B Corp Certification and an important force behind the benefit corporation legislation that has passed in 30 states.
Friday, February 3, 2017
With the rise of Donald Trump, Vance's book and the book's topic have been much discussed.
I, however, want to focus on Vance's discussion after the 10 minute mark where he thanks various mentors for helping him overcome family financial, and community-based problems. Without a stable immediate family, Vance found guidance from his grandparents, the military, and his professors.
Raised in a predominately individualistic culture, I believed, for a long time, that hard work was the primary driver of success. I still think individual dedication is important, but looking back, I am also incredibly thankful for the many people who provided a helping hand along the way.
While most schools do not specifically reward it, I think professors are particularly well situated to mentor students. We can also be incredibly helpful to our more junior colleagues. Recognizing the value of the mentors in my own life, I do hope to "pay it forward" and become increasingly involved in the mentorship process.
Monday, January 30, 2017
Conference information from an e-mail I recently received.
The second annual Susilo Symposium of the Susilo Institute for Ethics in the Global Economy will be held on June 15-17, 2017 at Boston University Questrom School of Business.
The event will feature distinguished and varied speakers, including Professor Francesca Gino of Harvard Business School, and site visits at Aeronaut Brewing, Bright Horizons, and Fenway Park, among other exciting area companies.
The Susilo Symposium will be part of a new Global Business Ethics week, which begins at Bentley University from June 12-15 for the Global Business Ethics Symposium and teaching workshop, and then will move to BU for June 15-17.
The event promises an audience of both scholars and practitioners from around the world. All seek to explore and exchange ideas in a unique and interactive forum about the role of ethics in the global economy.
This year’s Susilo Symposium follows the inaugural symposium, which was held in May 2016 in Surabaya, Indonesia. Featuring foremost business, academic, and political leaders, it reflected on “Global Business Ethics – East Meets West.”
What to Expect
The program is directed specifically toward both academics and practitioners. Our hope is that attendees will learn from each other and take away ideas and practices that they can implement immediately.
It will feature onsite visits to global corporations and the latest start-ups, from which you will learn about today’s cutting-edge responses to challenging dilemmas.
Symposium sessions will range from traditional academic paper presentations on the most recent research on global ethics, to interactive panels of faculty and practitioners discussing their shared perspectives, to active problem-solving and learning, to programs showcasing effective practices by leading corporate decision-makers.
The conference design intentionally builds in plenty of opportunities for networking among your colleagues and between academics and practitioners, including a Thursday evening social event, a Friday luncheon and Friday evening reception.
Registration & Questions
Friday, January 27, 2017
Many, if not most, law professors teach their students the IRAC framework --- Issue - Rule - Analysis - Conclusion --- to use in addressing legal issues and answering exam essays.
I even teach my undergraduate students the IRAC framework, and find it useful in teaching critical thinking skills.
However, like many of my former law professors, I usually underemphasize the importance of the conclusion. Of course you have to get the issue and rule correct to start, but the meat of the answer is in the fact and rule-based analysis. The conclusion, I often say, can often go either way, especially on the thorny exam issues.
Since I started hearing the term "post truth," I have been rethinking the way I teach IRAC and the underemphasized conclusion. While it is still clearly important to teach and test analysis, I am starting to realize the value of identifying the strongest and best conclusion. This may prove difficult to test, as law exams often focus on unsettled areas of law, but perhaps I will include a few more settled portions to see if students can identify legal issues with a clearer correct answer.
Thursday, January 26, 2017
Belmont Health Law Journal - What’s Next? The Movement from Volume to Value-based Healthcare Delivery
The Belmont Health Law Journal is hosting its first symposium tomorrow, January 27th.
The theme of the symposium will be What's Next? The Movement from Volume to Value-based Healthcare Delivery, and will feature Congressman Jim Cooper as keynote speaker.
Information is available here.
Registration is from 8:30am to 9:00am. Speakers will present from 9:00 am until noon. CLE credit and lunch provided.
Friday, January 20, 2017
In addition to building a team of amateur runners, Oiselle sponsors a number of professional athletes. Kate Grace was the first of the sponsored athletes, signing with Oiselle in 2012. Last year Kate won the U.S. Olympic Trials in the 800m, and she made the Olympic finals in the same distance.
Kate Grace’s sponsorship contract with Oiselle expired at the end of 2016, and Oiselle recently posted a classy goodbye.
A 2011 Yale University graduate, and now an Olympian, Kate Grace is talented, promising, and instantly likeable. She has already accomplished a great deal in the running world, but she is likely to accomplish even more. Kate Grace is on record as praising Oiselle as incredibly supportive of her and full of people with whom she has strong relationships.
So why didn’t Kate Grace and Oiselle sign a sponsorship contract for 2017 and beyond? This is a question I may pose to my negotiation classes.
To be clear, everything below is pure speculation. I have no inside knowledge. I do not know anyone at Oiselle or Kate Grace personally.
Assuming no personal fallouts, the most obvious reason for Kate Grace to move on is financial. Oiselle is still a niche brand and now that Kate is an Olympian, she is likely receiving much more lucrative offers.
But if I were on the Oiselle management team, and I wanted to keep Kate Grace as a sponsored athlete, I would be creative with the contract offer terms. Oiselle may not be able to match the cash offers of the larger companies, but Oiselle could do something like offer significant equity in the company, which larger companies are highly unlikely to do. Oiselle could also offer Kate Grace a longer-term contract than some of the big companies that will probably only want to sponsor her at her peak. Finally, Oiselle could offer her a spot on their board of directors and/or employment in another role, which may last past her running days. All of those options would be creative ways to negotiate a contract to keep top talent.
If not Oiselle, then who will sponsor Kate Grace? It is risky to predict, but I think New Balance is the best fit, based on brand and values. That said, New Balance already sponsors quite a number of strong female distance and mid-distance runners. ASICS or Adidas probably need to sponsor someone like Kate Grace the most, so they will probably throw a lot of money at her. Nike seems to have the deepest pockets, but I would be surprised if Kate Grace signed with them after how they, allegedly, treated Boris Berian, and what her fellow Oiselle athlete Kara Goucher had to say about the Nike Oregon Project.
Update, 1/28/17: Well, this is somewhat surprising. Kate Grace recently signed with Nike. While Nike has gotten some bad press over the past year and is seen by some as the anti-Oiselle, Nike does have a rich track & field history, is an official sponsor of the U.S. Olympic team, has amazing facilities (including a tree-lined track), and was founded by a middle distance runner and his track coach. I am willing to wager that Kate Grace entertained multiple offers. I wish I could see the terms and analyze what influenced her. As mentioned in the original post, Nike probably has the deepest pockets and they could have blown the other offers out of the water from a financial perspective. Also, Nike has focused on track & field more intensely, for a longer period of time than most, if not all, of its competitors. Regardless of the terms and the sponsor, I do wish Kate Grace the very best running going forward.
Friday, January 13, 2017
Over at the Harvard Law School Forum on Corporate Governance and Financial Regulation, Rick Alexander has a post on benefit corporations. I plan to post some comments on Rick's post next week, when I have a bit more time, but for now, I will just bring our readers' attention to the post and include a small portion of his post below:
Benefit corporations dovetail with the movement to require corporations to act more sustainably. However, the sustainability movement often treats the symptom (irresponsible behavior), not the root cause—the focus on individual corporate financial performance. Proponents of corporate responsibility often emphasize “responsible” actions that increase share value, by protecting reputation or decreasing costs. Enlightened self-interest is an excellent idea, but it is not enough. As long as investment managers and corporate executives are rewarded for maximizing the share value of individual companies, they will have incentives to impose costs and risks on everyone else.
Saturday, January 7, 2017
The University of Georgia, Terry College of Business has posted information about two legal studies professor positions - one tenure-track and one lecturer. I know each of the University of Georgia legal studies professors; they are an impressive and thoughtful and friendly group.
Assistant or Associate Professor of Legal Studies:
Lecturer of Legal Studies:
Applications received by February 15, 2017, are assured of consideration; however applications will continue to be accepted until the positions are filled.
Friday, January 6, 2017
I recently finished my first consistent year of running since high school. To celebrate, I bought and read Once a Runner. Yes, that is how nerds like me celebrate - buy and read a book. I was asleep by 10pm on New Year's Eve.
Once a Runner is a cult classic published in 1978 and authored by a former University of Florida runner (and fellow lawyer), John Parker Jr. The novel was originally self-published, sold at running stores and out of the back of the author's car. It eventually became a New York Times Bestseller. The story follows the fictional Quenton Cassidy as he moves from a successful (but still somewhat distracted) college runner to a laser-focused, woods-dwelling hermit who increases his training to beat the best runners in the world. He does, eventually, beat one of the very best milers (in a small track meet), and then goes on to win silver in the Olympic Games.
Among the passages that struck me was the following from Quenton's time at a cocktail party, after spending months (in relative solitude) training and logging 100+ mile weeks:
What was the secret, they wanted to know; in a thousand different ways they wanted to know The Secret. And not one of them was prepared, truly prepared, to believe that it had not so much to do with chemicals and zippy mental tricks as with that most unprofound and sometimes heartrending process of removing, molecule by molecule, the very tough rubber that comprised the bottoms of his training shoes, The Trial of Miles; Miles of Trials.
Along those same lines, I recently listened to the How I Built This podcast on Angie Hicks of Angie's List. Angie stated that she was an unlikely entrepreneur - introverted, risk-adverse, and not a "big idea" person. But she credited her success to one main thing, perseverance. I am still working on how to best teach my students to persevere, and in this instant access society, more and more students are looking for The Secret to allow them to master the material (or at least get an A) with as little effort as possible. While it can be good to look for more efficient ways to do things, I also think we need to teach our students that some things of great value are only acquired through old fashioned hard work.
Friday, December 30, 2016
As avid readers of this blog already know, I am a fan of New Year's Resolutions. I usually set over twenty goals for each year, and they prove helpful in directing effort during the year.
Over the past few years, my employer (Belmont University) has been engaged in Vision 2020, which should amount to something like New Year's Resolutions for the University (to be accomplished by 2020). I recently served on the committee for the Athletics Department's contribution to Vision 2020, which was an enjoyable and interesting experience.
My time on the Vision 2020 committee and my years of doing my own resolutions have taught me a few things. Most importantly, I have learned that SMART goals tend to be the most useful and effective. (For those who don't know, SMART usually stands for Specific, Measurable, Attainable, Relevant, Time-Based, though there are variations).
The most difficult part, in my view, is finding appropriate measurements. Some items are easy to measure - movements in endowment, enrollment, incoming student GPA and standardize test scores, rankings, etc. There are plenty of items that are important, but much more difficult to measure. And measurements can be overdone, especially if the focus on the measurement overshadows the ultimate goal.
Friday, December 23, 2016
I recently updated my list of business law teaching positions. At this point, a number of the positions have probably been filled, but I put posted dates by the more recently posted positions. I still get asked, on a fairly regularly basis, about how one breaks into law teaching, and while I do have thoughts on that topic (basically, write, write, write), I think folks wanting to enter the legal academy should ask themselves a few questions first.
- Are you truly drawn to both teaching and research (or are you just tired of practicing)?
- Are you geographically flexible? (You have to be both really good and really lucky to pick your geographic location in legal academia)
- Do you have a few years to devote to pursuing a career in legal academia? (these days, it often takes a VAP or two, and/or a few years on the market to secure an academic job).
- If you are in BigLaw, are you truly comfortable with a sizable pay cut?
- Can you be patient with students, administrators, staff, etc.? (things typically move much more slowly in academia than in practice)
Once you have received one of more offers, I would ask the following questions.
- What is my BATNA (best alternative to a negotiated agreement? (If you only have one academic offer, and don't like your alternatives in practice, you should be very careful in negotiating and should try to avoid offending the offering school).
- Can I see myself living in this part of the country? (Accessibility to a major airport can be an important consideration as well, if you plan to travel for work or personal reasons)
- What is the teaching package? Does it include night, weekend, or online courses?
- What are the research expectations? When are reviews done? Roughly what percentage of faculty members achieve tenure?
- How is the financial stability of the school? What is the reputation of the school? Does the school have strong distinctive? How is the local competition? What is the discount rate trend? What is the LSAT/UGPA trend?
- How do you get along with the faculty members you met?
- Is the surrounding town/city an area where it is easy or difficult to find an appropriate job for your significant other?
- If you have young children or plan to have children, how are the schools in the area? Does the university have a tuition exchange and/or tuition payment program?
There are many more questions to ask, but again, it is important to start with your alternatives. If you have strong alternatives, you can be more picky, but you also don't want to start your academic career with an overly aggressive negotiation.
I still think teaching is the most rewarding job available, but there are definitely important questions to ask before pursing an academic career path and before committing to school.
Friday, December 16, 2016
My favorite new (to me) podcast is NPR's How I Built This. They describe the podcast as "about innovators, entrepreneurs, and idealists, and the stories behind the movements they built. Each episode is a narrative journey marked by triumphs, failures, serendipity and insight — told by the founders of some of the world's best known companies and brands."
So far, I have listened to two of the episodes: one about the Sam Adams founder Jim Koch and one about the Clif Bar co-founder Gary Erickson.
On the Sam Adams episode, I liked Jim Koch's distinction between scary and dangerous -- repelling off a mountain with an expert guide is scary but not not necessarily dangerous; walking on a snow-covered, frozen lake on a sunny day is dangerous but not necessarily scary. Jim said that his comfortable job at Boston Consulting Group was not scary, but it was dangerous in luring him away from his true calling. However, founding his own company (Sam Adams) was scary, but not really as dangerous as working for BCG. Also, it was interesting to find out that Jim Koch is a Harvard JD/MBA.
On the Clif Bar episode, though I have eaten more than my share of Clif Bars, I was surprised to learn that the bars were named for Gary's father, Clif. The Clif Bar episode also gave great insight into the emotions that can come out when deciding whether to sell your business; Gary decided not to sell to Quaker Oats at the last minute and then needed to buy-out his partner. Separately, Gary talked about the need for corporate counsel (and how a "handshake deal" with a distributor almost cost him his business), but he also noted how many attorneys are simply too expensive for small businesses.
Both entrepreneurs drew on lessons they learned during their outdoor adventure experiences. And both entrepreneurs discussed some combination of lawsuits, contracts, and regulatory challenges.
Looking forward to listening to more episodes.
Monday, December 12, 2016
It used to be that Friday night was Domino's Pizza night in our house . . . . My, how things change if one lets 15-20 years slip by unnoticed. No more of that in our house!
I guess Domino's is doing OK without us, however. Third quarter 2016 financial results for Domino's Pizza, Inc., a Delaware corporation with common stock listed on the New York Stock Exchange, were favorable as compared to the firm's 2015 results, accordingly to the most recent quarterly earnings release. Somebody's eating a lot of Domino's pizza, even if it isn't the Heminway family.
Apparently, Domino's wants to share the wealth--with its customers. Co-blogger Haskell Murray pointed this recent press item out to me and co-blogger Ann Lipton in an email message last week, knowing full well that we both were or would be interested. He was right. Ann may have more to say on this in a later post. (She also noted that other firms are adopting consumer benefit plans similar to the Domino's plan I describe here today.)
Of course, as a corporate finance/securities lawyer, I immediately had visions of Ralston Purina dancing in my head. (Not quite like visions of sugarplums, in this holiday season . . . . But I will take what I can get.) So, I went looking for a registration statement/prospectus. And I found what I sought! No Ralston Purina-like Section 5 violation here.
Domino's has filed a shelf registration statement on Form S-3 and a Rule 424(b)(5) prospectus with the SEC (both filed December 2, 2016). The plan of distribution is summarized in the prospectus in two short sentences: "The Piece of the Pie Program is just one of the ways we are giving thanks to our customers. Through the Plan, we are offering our eligible customers the opportunity to be entered into drawings for a chance to be selected to receive ten Shares."
The prospectus goes on to describe the way the plan operates plan in more detail. Here's a slice off the top:
Shares for the Plan will be purchased in the open market by Fidelity Brokerage Services LLC and o Fidelity Capital Markets,Fidelity or, at our election, provided by us to Fidelity out of our authorized but unissued shares and will be initially deposited in a custody account in the name of the Company (“Custody Account”). Open market purchases will be effected by Fidelity, with all Shares to be credited to the applicable participant’s Fidelity Account. Fidelity has full discretion as to all matters relating to open market purchases, subject to the terms of our agreement with them, including the number of Shares, if any, to be purchased on any day or at any time of day, the price paid for such Shares, the markets on which Shares are purchased (including on any securities exchange, in the over-the-counter market or in negotiated transactions) and the persons (including brokers and dealers) from or through whom such purchases are made.
The Plan is not designed for short-term investors, as participants will not have complete control over the exact timing of redemption transactions or the market value of our Common Stock redeemed pursuant to a Piece of the Pie Award under the Plan. See “—Timing of Purchases.” The Plan is designed primarily for customers who have a long-term perspective and affinity for the Company and its values.
Notably, Domino's is planning to use shares that it repurchases in the market as well as, perhaps, authorized and unissued shares. The use of market repurchases may signal management's belief that the market is undervaluing those shares. It also is a means of preventing dilution to existing stockholders. Public companies often use market purchases to fund dividend reinvestment and other equity-based employee benefit plans.
Customers can enroll in the plan on the Domino's Pizza app at no charge. Here's what the overall offering looks like:
. . . We have established the Plan to provide our eligible customers with the opportunity to be entered into drawings under the Plan to receive ten shares of our Common Stock as a thank you for being a loyal customer. Between December 5, 2016 and November 30, 2017 (the “Offer Period”), we will conduct 25 drawings per month. An eligible customer who has enrolled in the Plan prior to a particular drawing date will be automatically entered into that drawing. Eligible customers will not be eligible to participate in drawings occurring prior to the date of enrollment in the Plan. An eligible customer who is selected in a drawing to receive an award under the Plan will be presented with an offer (the “Offer”) to receive ten shares of our Common Stock (each a “Share” and collectively, the “Shares”) under the Plan (each a “Piece of the Pie Award”).
Redemptions of Piece of the Pie Awards will be fulfilled through Fidelity and will require that, as a condition to redemption of a Piece of the Pie Award, the selected eligible customer open a brokerage account with Fidelity into which the Shares can be deposited. Fidelity will obtain the Shares to be delivered upon redemption of Piece of the Pie Awards through open market purchases or, to the extent determined by the Company, delivery by the Company to Fidelity of newly-issued shares. A Piece of the Pie Award must be redeemed within 30 days of receipt, after which time such Piece of the Pie Award will expire if not previously redeemed. Piece of the Pie Awards are limited to ten Shares per selected eligible customer and no eligible customer may receive more than one Piece of the Pie Award. In order to enter for a chance to receive a Piece of the Pie Award, eligible customers must enroll in the Plan using their account on the Domino’s Pizza App or by registering on the www.dominos.com website. An eligible customer who enrolls in the Plan will only be eligible to participate in drawings occurring after the date of such enrollment.
I am a member of a bunch of consumer loyalty programs--for department and drug stores, restaurants, etc. But few businesses from which I buy goods and services have offered me the opportunity to invest. And none have offered me the opportunity to "win" an equity interest in a firm through a drawing sponsored by a consumer affinity program. Query whether, if equity-based consumer benefit plans like this one are successful and continued to be valued, an exemption like Rule 701 will be promoted in Congress and at the SEC to ensure there is a registration exemption available for these offerings.
I will leave it at that for now. But this is a phenomenon to watch, for sure. And it fits in nicely with my Securities Regulation course next semester. You never know where it might pop up . . . .
Friday, December 9, 2016
Below are some resources related to the integration of faith and work stemming from businesses or business people.
- Acton Institute
- C12 Group
- Christian Legal Society
- Institute for Faith, Work, and Economics
- Jobs for Life
- Faith and Art - Vito Auito
- Vocation is Integral - Steven Garber
- Faith & Work Summit - Troy Tomlinson and Bill Lee
Books and Articles
- Vocation Needs No Justification - Steven Garber
- Faith and Fortune - Marc Gunther
- Why Work - Dorothy Sayers
- Redeeming Law - Michael Schutt
Friday, December 2, 2016
Earlier, I focused on the faith and work movement in churches, and I plan to add to that post over coming weeks. In this post, I will start aggregating information on faith and work in universities. I plan to list university initiatives, scholarly articles and books, and professor presentations.
- Butler University – Center for Faith and Vocation
- Concordia College - Lorentzsen Center for Faith and Work
- LeTourneau University – Center for Faith and Work
- Princeton University – Faith and Work Initiative
- Saint John's Law School - Center for Law & Religion
- Seattle Pacific University – Center for Integrity in Business
- University of Arkansas - The Tyson Center for Faith and Spirituality in the Workplace
- University of Dayton – Center for Integration of Faith and Work
- University of St. Thomas – Faith and Work Talk Series
Articles and Books
- Lyman Johnson (Washington & Lee University and University of St. Thomas) – Faith and Faithfulness in Corporate Theory
- David Miller (Princeton University) – God at Work
- Jeff Van Duzer (Seattle Pacific University) – Why Business Matters to God
- David Miller (Princeton University) – Succeeding Without Selling Your Soul
- Michael Naughton (University of St. Thomas) – Beyond Career to Calling: The Vocation of the Business Leader
- Jeff Van Duzer (Seattle Pacific University) – Why Business Matters to God
Friday, November 25, 2016
It is not secret that Patagonia is one of the companies that I admire most; it may be my favorite company and is certainly in my top-five.
Patagonia's decision regarding its Black Friday sales adds to the reason I like the company. Patagonia will donate 100% of its Black Friday sales to grassroots environmental groups.
As I read it, the donations will be 100% of revenue, not profits, and the donations are estimated to be millions of dollars.
Patagonia is both a California benefit corporation and B corporation certified, but unlike many social enterprises, Patagonia often does things like the above that don't appear to be done just for the PR, and may actually hurt the company in the very short-term.
That said, Patagonia definitely has a good PR team and is probably getting millions of dollars of exposure out of this decision. And their apparel is quite expensive, so they may be able to afford to do things like this, based, in part, on the margins and goodwill built over time.
Friday, November 18, 2016
Interest from churches in the integration of faith and work seems to have grown exponentially over the past few decades. That said, as far back as Martin Luther, there has been a call to view even jobs outside of ministry as a vocation or religious calling.
I plan to update this post from time to time, and I may add more discussion, but for now, I will just list some of the church-founded or church-connected faith & work initiatives or resources below. I welcome suggestions for additions to this list.
- Center for Faith and Work (This recent video on Civility in the Public Square is one example their events)
- Denver Institute for Faith & Work
- Institute for Faith, Work & Economics
- Nashville Institute for Faith & Work
- U.S. Conference of Catholic Bishops: The Dignity of Work and the Rights of Workers
Presentations and Panels
- Why Faith@Work Matters - Katherine Leary Alsdorf
- Redefining Work - The Gospel Coalition Panel Discussion
- Why Work Matters - Tim Keller