M & A Law Prof Blog

Interview with Chief Justice Steele

Francis Pileggi at the Delaware Corporate and Commercial Litigation Blog interviews Delaware Chief Justice Myron Steele.  

-bjmq

Just in time for the holidays

The M&A Market Trends Subcommittee of the ABA just announced that the 2009 Private Target Deal Points Study is now available to Subcommittee members here.   Highlights of the 2009 Study were presented last month at an ABA telecast on "M&A Negotiation Trends: Insights from the 2009 Deal Points Study on Private Targets." The MP3 is available here. 

If you want full access to this and the many other valuable studies published by the subcommittee, you must be (or know really well)  an active member. You can directly sign up for update alerts here. 

One supplement already in the pipeline focuses on financial sellers (i.e., VCs and private equity groups). Benchmarking "financial seller deals" with the Study sample generally, the subcommittee is trying to answer the age-old question: "Do financial sellers really get a better deal?" It expects to release this supplement at the Subcommittee's meeting in Denver (April 23-24)

MAW 

Happy Holidays!

I'll be taking a break from blogging for the next week or so to do what law professors tend to do this time of year -- grade exams and fret about next semester's syllabi.  If I'm lucky I might be able to squeeze in some writing between Christmas and the New Year's.  Here's hoping. 

Happy Holidays.  And see you in the New Year.

-bjmq

GM: 0 for 4?

When GM came out of bankruptcy the plan was pretty simple.  It would shut a number of divisions and then shed four of others - Opel, Saturn, Saab and Hummer.   GM balked at the Opel sale after walking most of the way down the aisle.  The Saturn deal collapsed after Penske walked away.  GM then announced that it would shutter Saturn rather than try to find another buyer.  The proposed deal to sell Saab to Koenigsegg Group in Sweden, but that deal fell through.  Then, GM entered into discussions with Spyker Cars also in Sweden.  After those talks fell apart yesterday GM announced that Saab, too, would be shuttered. 

0 for 3 is a pretty poor batting average.  At least the Hummer sale went through, right?   Right?  I mean, GM announced the deal to sell the Hummer brand to some company no one ever heard of before not once, but twice.  So, that sale went through, didn't it?  Oh, that's right.  The deal was contingent upon getting approval from the Chinese government.   Guess who hasn't approved the deal, yet?   Don't hold your breath.  

-bjmq

2009 MAC Survey

Nixon Peabody's annual MAC Survey is out.  My only question - which are the 3% of transactions with a MAC, but no definition for what a MAC is?  I know MAC definitions can be frustratingly vague, but c'mon!

-bjmq

Bad Bidders Make Bad Targets

'Tis the season for papers on value destroying merger transactions!  Offenberg, Srtaska and Waller have a paper, Who Gains from Buying Bad Bidders?, that examines whether there are gains to be had from acquiring companies who have been bad acquirers themselves.  I guess the thought there is that two wrongs might make a right.  I don't know.  Who gains from buyer bad bidders?  Apparently not the buyer. Lesson here:  when a company has been laid low by its poor acquisition decisions, give it a wide berth as you pass up on the chance to pick up the pieces.

Abstract: This paper studies the value gains from corporate takeovers of firms that have a history of undertaking value-destroying acquisitions. We document that the larger the value loss from target’s prior acquisitions, the higher the takeover premium received by target shareholders, but also the higher the value loss to the acquiring shareholders at the announcement of the takeover. We find no evidence of synergy gains from these takeovers. Our findings challenge the notion that the market for corporate control is an effective mechanism for unlocking the value from firms that engaged in value destroying acquisition programs.

-bjmq

Exxon/XTO's Fracking MAE

There is a piece in today's WSJ on the Exxon/XTO deal.  The piece centers on the controversial practice of hydraulic "fracking" in the drilling process and whether the deal might be stopped in the event Congress moves legislation to ban or limit the practice or otherwise make the practice commercially impracticable.  It turns out that fracking is really central to this deal.  So central that if fracking were made impracticable Exxon would want to walk.  It's no real surprise.  Fracking is part of the reason we've enjoyed a boom in domestic natural gas supplies these last few years.  Take it away and there wouldn't be much left to pursue in the XTO deal I would imagine.  While the WSJ article doesn't come right out and say it, it doesn't take a genius to figure out how Exxon might have written in a "fracking" out.  It's right there in the definition of the MAE from the Exxon/XTO merger agreement.  

[1.01] ... “Company Material Adverse Effect” means a material adverse effect on  the financial condition, business, assets or results of operations of the Company and its Subsidiaries, taken as a whole, excluding any effect resulting from, arising out of or relating to (A) changes in the financial or securities markets or general economic or political conditions in the United States or elsewhere in the world, (B) other than with respect to changes to Applicable Laws related to hydraulic fracturing or similar processes that would reasonably be expected to have the effect of making illegal or commercially impracticable such hydraulic fracturing or similar processes (which changes may be taken into account in determining whether there has been a Company Material Adverse Effect), changes or conditions generally affecting the oil and gas exploration, development and/or production industry or industries (including changes in oil, gas or other commodity prices), (C) other than with respect to changes to Applicable Laws related to hydraulic fracturing or similar processes that would reasonably be expected to have the effect of making illegal or commercially impracticable such hydraulic fracturing or similar processes (which changes may be taken into account in determining whether there has been a Company Material Adverse Effect), any change in Applicable Law or the interpretation thereof or GAAP or the interpretation thereof, [italics mine] (D) the negotiation, execution, announcement or consummation of the transactions contemplated by this Agreement, including any adverse change in customer, distributor, supplier or similar relationships resulting therefrom, (E) acts of war, terrorism, earthquakes, hurricanes, tornados or other natural disasters, (F) any failure by the Company or any of its Subsidiaries to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period (it being understood and agreed that the facts and circumstances that may have given rise or contributed to such failure that are not otherwise excluded from the definition of a Company Material Adverse Effect may be taken into account in determining whether there has been a Company Material Adverse Effect), (G) any change in the price of the Company Stock on the NYSE (it being understood and agreed that the facts and circumstances that may have given rise or contributed to such change (but in no event changes in the trading price of Parent Stock) that are not otherwise excluded from the definition of a Company Material Adverse Effect may be taken into... 

Fracking appears not once but twice in the carve-outs to the carve-outs of the MAE - so important is it to the deal.  What the parties have done here is that they have taken the MAE definition, which is typically written to leave foreseeable risks with the buyer and unforeseeable risks with the seller and left a foreseeable and entirely likely risk with the seller.  So, in the event something freaky happens that no one could have foresee, the buyer is able to walk away.  On the other hand, if there is a foreseeable event, one that presumably the buyer could price into the transaction, then the buyer remains in the hook for close the transaction.  Now, a spokesman for Exxon says that the deal is subject to "a number of customary provisions for a transaction of this nature."  

True enough, but I dare say the fact that the parties foresee the risk of legislative changes specific to the business and have written them into the MAE is not quite customary.  It's more like the MAE we saw in the Sallie Mae deal of a couple years ago where parties carved-out from the carve-out legislative changes to educational lending.  The way the Exxon/XTO deal is written, if tomorrow Congress were to ban fracking, then Exxon would get a free option to walk from the deal.

-bjmq

Coast is Clear: Saks Pulls Its Pill

Last year Carlos Slim, Mexcian magnate and occasionally the richest man in the world, began accumulating an 18% position in Saks Fifth Avenue, which at that point was trading at al all time low (around $2.50/sh).  Almost immediately, the Saks board adopted a poison pill.  Now that Slim has moved on, the Saks board has filed an 8-K announcing that it has amended its poison pill (rights plan) to allow the rights to expire on Dec 14, 2009 rather than 2018 as the plan had originally envisioned.  

If you had invested in Saks two years ago, your investment would have lost approximately 60% in value -- even after the mini-run-up since this past summer.  Congratulations.  

- bjmq

eBay-Craigslist: When good deals go bad

In 2004 eBay and Craigslist announced a friendly deal in which eBay would take a minority position in the online classifieds business.  It seemed like a nice fit at the time - complementary in a way that Skype wasn't.  At the same time eBay's investment kept Yahoo! and Google at bay.  By 2008 it was clear that the party was over and perhaps eBay would have been better off acquiring Craigslist rather than accept the minority stake.  Craigslist sued eBay (Craigslist CA complaint) and eBay sued Craigslist (eBay Del. complaint) in competing lawsuits.  You can imagine the allegations -- loyalty breaches left and right.  It's been playing out in Chancellor Chandler's Delaware courtroom for the past week.   You can view the proceedings care of Courtroom View.  If nothing else, when we get a ruling, we can expect a nice restatement of Weinberger and entire fairness that will no doubt be quickly adopted into casebooks. 

I'm not going to review the factual allegations - the claims of dilution, corporate opportunity, misuse of confidential information, etc.  There are plenty of articles out there.  Start here.  However, yesterday's testimony from Craigslist CEO Jim Buckmaster is worthwhile.  He recounted a discussion with an eBay exec following the transaction in which the terrible truth was revealed...

"He said he needed to tell me there were two Meg Whitmans. We had met and reached an agreement with Good Meg. There was another Meg, an Evil Meg. We would be best served to know that Meg could be a monster when she got angry and frustrated," Buckmaster told a court in Georgetown, Delaware.

Among the many reasons why you rarely want your clients to end up in a courtroom is this -- goodness knows what might be said that could potentially sink your client's gubernatorial campaign.   The vision of an "evil Meg" can't be good.

-bjmq

More Bad Lawyers and Galleon

Well ... Galleon claims another lawyer scalp.  The SEC and the US Attorney's Office in the Southern District of NY announced that Brien Santarlas, another former Ropes & Gray attorney has pleaded guilty to criminal insider trading charges.  According to the USAO's criminal complaint: 

From June 2007 through May 2008, SANTARLAS conspired with others to steal material, nonpublic information ("Inside Information") from the law firm of Ropes & Gray for the purpose of buying and selling securities. In violation of his duty of confidentiality to the law firm and its clients, as well as Ropes & Gray's written policies and procedures, SANTARLAS stole Inside Information about several mergers and acquisitions of public companies for which Ropes & Gray was providing legal services, prior to the public announcements of the deals. Specifically, SANTARLAS stole Inside Information about the acquisitions of 3ComCorporation and Axcan Pharma, Inc., and provided it to his co-conspirators in exchange for thousands of dollars in cash payments. As a result of trading that was based on the Inside Information provided by SANTARLAS and his co-conspirators, other individuals collectively made millions of dollars in illegal profits. 

SANTARLAS, 33, of Hoboken, New Jersey, pleaded guilty today to one count of conspiracy to commit securities fraud and one substantive count of securities fraud. The conspiracy charge carries a maximum sentence of five years in prison and a maximum fine of the greater of $250,000, or twice the gross gain or gross loss from the offense. The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense.

The SEC's complaint alleges that Santarlas together with Cutillo were part of the same insider trading network.  The SEC alleges that Santarlas stole inside information regarding pending acquisitions by stealing it from Ropes' electronic network.  For his trouble, Santarlas allegedly received $25,000.  Geez, not even enough to pay off his loans from Franklin Pierce.

If you read the SEC's complaint closely, you'll see that the SEC connects Cutillo directly to the trading network by way of phone calls.  Santarlas however is no where to be seen in the wiretaps.  One wonders how the FBI was able to tie Santarlas to the ring?  I have a guess.  When you look at a document on Ropes' document server, I guarantee you that a record is kept of who you are and whether you edited the document or simply viewed it.  It wouldn't be all that hard, if someone was looking at documents on the server to go in ex post and figure who it was.  Notwithstanding the fact that these guys were tech-types, turns out they weren't all that tech savvy.  

Turns out that's not the only way they got their information, according to Bloomberg, they they also eavesdropped on others’ conversations, and questioned unwitting lawyers at the firm to learn details of impending deals: 

- "Whatcha working on?"  
- "Oh, not much.  We're selling 3Com to a PE investor.  Too bad insider trading rules prohibit me from trading on that info."
- "Yeah, too bad."

One important lesson for Ropes I think is that they need to seriously reconsider their training programs.  

Both Cutillo and Santarlas (courtesy of the Way- Back-Machine) were litigation associates in Ropes' IP group.  I wonder whether litigation associates at Ropes are given adequate training with respect to their obligations under the insider trading laws?  I suspect that corporate and transactional associates have it pretty well drilled into them, but are the litigation associates sent to depo training instead of the insider trading sessions?  If so, that's turning out to be a really poor decision.  If everyone in the firms has access to confidential inside information at the tap of a few keys, then everyone ought to be trained the same with respect to how one treats that information.  Just saying.

-bjmq

  

Non-Profit Mergers

If you've got students in a transactional clinic, most likely they are working with non-profit organizations.  They may sign up for the clinic hoping to work for big corporate clients, but that's just the way it is.  In any event, non-profits do transactions, too.  In particular, they have been known to merge.  When non-profits merge, the process looks familiar, but it's different in a couple of important respects.  First, no pesky shareholder votes.  You might be required to get the pre-approval of the Attorney General of the state in which the non-profit is incorporated, but not always.  For example, here's California's Not For Profit Public Benefit Corporation act's merger provision.  You'll note that basically it just requires the approval of the respective boards of the constituent non-profits.  

Well, I wish it were that easy.  Non-profits, because of their tax exempt status, must make additional filings with the IRS and there are specific accounting issues.  Bryan and Cave has a summary of some recent changes in this area.  

-bjmq

Update:  A little bit of "local" news related to this subject - this morning by a vote of 14-4 the Board of Trustees of UMass just approved its acquisition of the Southern New England School of Law.  Although the transaction documents are not yet available widely, this transaction is being described as a donation of assets from SNESL to UMass.  So, it's not a non-profit merger.  Call it the equivalent of a non-profit dissolution with the proceeds of the dissolution being handed over to UMass instead of the "stockholders."  Presumably, the Attorney General might also have a role in approving this transaction. 

K&E on LOIs

This client alert from K&E offers a timely reminder of potential pitfalls for parties entering into letters of intent or term sheets believing they are merely unenforceable "agreements to agree." It offers the sound advice that, when you enter into a LOI, you should clearly express which provisions are intended to be binding and which are not, and should expect to be held to these commitments.

The client alert notes that, in a recent Delaware bench decision, newly appointed VC Laster cited a number of key factors that merit consideration by parties negotiating LOIs.  These include (quoting the alert):

• Delaware does not recognize an inherent fiduciary out in every contract if one is not negotiated by a party. A seller that agrees to exclusivity with a potential buyer should not expect that it can later violate that agreement based on an implicit back-door exit from that commitment grounded in its fiduciary duties.

• An exclusivity or no-shop provision is a unique right, the breach of which is not "readily remedied after the fact by money damages." As such, injunctive relief is an appropriate judicial remedy to enforce the benefits bargained for by the potential buyer.

• When an LOI requires the parties to negotiate or to enter into an agreement, this creates an affirmative obligation on the parties to in fact engage and negotiate in good faith notwithstanding the fact that there are still material issues to be hashed out and other pieces to fall into place. The court stated that "radio silence is not negotiating in good faith."

• The court briefly noted that parties can protect themselves against unexpected obligations by expressly stating that the relevant terms of the LOI are non-binding.

MAW

Conference on Teaching of Transactional Law and Skills

Emory University School of Law’s Center for Transactional Law and Practice recently announced its second biennial conference on the teaching of transactional law and skills, Transactional Education:  What’s Next?  The conference will be held at Emory on Friday, June 4, and Saturday, June 5, 2010.

The Steering Committee is an impressive group that has been thinking for quite some time about the issues facing those of us who train people to practice transactional law.  Its members include:

Tina L. Stark, Chair, Emory University School of Law,
Danny Bogart, Chapman University School of Law,
Deborah Burand, University of Michigan Law School,
Joan MacLeod Heminway, The University of Tennessee College of Law,
Jeffrey Lipshaw, Suffolk University Law School, and
Jane Scott, St. John’s University School of Law

I attended this conference the last time it was held and found it very valuable.  The Tennessee Journal of Business Law published what is essentially a transcript of the conference, which is available on-line here.

The Steering Committee is accepting proposals now through February 1, 2010 on any subject of interest to current or potential teachers of transactional law and skill

Click here to find out more information about the conference or how to submit a proposal.

 

MAW

Merger Pricing

Baker, Pan, and Wurgler have a new paper, A Reference Point Theory for Mergers and Acquisitions.  They suggest that initial offering prices are important for determining the ultimate success of an offer.  In particular, they point to the 52-week high heuristic.  If an offer price is close to the target's 52-week high (notwithstanding the fact that past prices, don't say much about the future, synergies, whatever), the offer is more likely to be successful.  They find a 10% increase in the 52-week high is associated with as much as a 3% increase in the likelihood that a target will accept the offer.  in the offer premium.  That's an interesting, and totally reasonable, observation.  Of course, you can imagine how making an offer close to the highest price range over the past year (the reference point) will set the table for friendly negotiations.  Boards and managers are also able to easily access the value of the 52-week high, so it makes for a convenient reference point when evaluating initial offers.

Abstract: The use of judgmental anchors or reference points in valuing corporations affects several basic aspects of merger and acquisition activity including offer prices, deal success, market reaction, and merger waves. Offer prices are biased towards the 52-week high, a highly salient but largely irrelevant past price, and the modal offer price is exactly that reference price. An offer's probability of acceptance discontinuously increases when the offer exceeds the 52-week high; conversely, bidder shareholders react increasingly negatively as the offer price is pulled upward toward that price. Merger waves occur when high recent returns on the stock market and on likely targets make it easier for bidders to offer the 52-week high.

-bjmq

Destroying Value through Mega-Mergers

The bigger and more complicated the deal, the more likely it is to fail.  Sometimes empire building and confusing luck for ability result in disastrous decisions.  This definitely comports with one’s ex ante sense of how things should work.   AOL-TimeWarner is the obvious example.  Bayazitova, Kahl and Valkanov have a new paper, Which Mergers Destroy Value? Only Mega-Mergers, that confirms this thinking.

Abstract: We argue that the transaction size determines which mergers create and which destroy value. In particular, mega-mergers, the top 1% of mergers in terms of absolute transaction value, destroy value, while non-mega-mergers create value. Mega-mergers are particularly important, because 43% of all money spent on acquisitions is spent on mega-mergers. Average acquirer short-term announcement returns are strongly negative (-3.2%) in mega-mergers but positive (1.5%) in non-mega-mergers. This result is robust to the known determinants of acquirer announcement returns, including acquirer size and the target’s public status. Using three different approaches, we show that for both mega- and non-mega-mergers, the acquirer returns are directly due to the merger and not due to a revaluation of the acquirer’s stand-alone value. We find evidence that mega-mergers are driven by managerial motives and weak corporate governance. We conclude that most mergers are driven by value-maximizing motives, but mega-mergers are driven by managerial objectives or hubris.

-bjmq

Comcast-NBC and the Various Premerger Approvals

Comcast’s deal to acquire NBC from GE announced yesterday doesn’t break a whole lot of new ground from a deal structuring point of view.  In general, GE contributes its NBC/Universal assets to the joint venture.  For its parts, Comcast pitches in cash plus cable assts like the E! Network and the Golf Channel (which suddenly have many more synergies than they used to).  Where this deal is likely to get interesting, though, is on the regulatory approval front. 

Of course, it will need antitrust clearance through the HSR premerger approval process.  Although this is a pretty well-trod path, the present Administration has already signaled on a number of occasions that the era of somnolent antitrust enforcement is over.  This is a big transaction, vertically integrating a large segment of the media industry (content generation to distribution).  Comcast already making its pitch that this deal will be good for consumers – “Universal movies could reach cable [subscribers] more quickly after showing in theaters.”  Somehow, the thought of Land of the Lost and Drag Me to Hell showing up my TV faster than they otherwise would does not make me feel better.

As I noted in a post a couple of months ago, in media deals, the FCC also has an independent premerger approval process of its own.  Although the FCC rarely stops deals from proceeding, it has a much broader charge than the FTC.  The HSR process is focused on assessing the potential anti-competitive effects of a proposed merger.  The FCC’s charge is to assess the proposed transaction on the basis of a “public interest” analysis. In assessing whether the Comcast/NBC deal is in the public interest, the FCC will determine whether the transaction will media diversity (“the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.”  Turner Broadcasting System, Inc. v. FCC), the quality of local services and the provision of new services, promote competition, and localism among others.  That’s a lot of ground to cover. I’m sure Comcast’s legal counsel have been studying the FCC’s 2003 order in the GM/Hughes and News Corp merger for hints how this review is going to go.  The structure of the transaction there was similar to this one.  Although the vertical integration in the NewsCorp/Hughes transaction was up the chain and not down, the arguments and the public interest analysis done there should look familiar to people.  This process, because it’s done on a case-by-case basis and because it’s not nearly has common as the HSR process, could take some time to accomplish.

Third, there’s Congress.  Although Congress doesn’t have a premerger approval process, every cable TV subscriber has a Congressman and they must be heard.  That fact no doubt generates what the Supreme Court has called “an independent interest in preserving a multiplicity of broadcasters.” Henry Waxman, Chairman of the House Committee on Energy and Commerce, released the following statement:

The proposed Comcast-NBC Universal joint venture agreement has the potential to reshape the media marketplace.  This proposal raises questions regarding diversity, competition, and the future of the production and distribution of video content across broadcasting, cable, online, and mobile platforms.  It is imperative that the FCC, the Justice Department, and the FTC rigorously assess whether this transaction is in the public interest.

I will work with Rep. Rick Boucher, Chairman of the Subcommittee on Communications, Technology, and the Internet, to schedule hearings on this matter at the earliest practicable date.

So, there will hearings in which assorted Congressmen ask questions and give their point of view on the usefulness of a Comcast/NBC link-up.  That ought to be fun.

-bjmq

Update:  Not to be outdone - Sen. Herb Kohl, Chairman of the Senate Subcommittee on Antitrust, Competition, and Consumer Rights has also released a statement of the proposed deal.  Surprise, surprise, he'll be holding hearings, too!

This acquisition will create waves throughout the media and entertainment marketplace and we don't know where the ripples will end.  Antitrust regulators must ensure that all content providers are treated fairly on the Comcast platform, and that Comcast does not get undue advantages in gaining access to programming.   We plan a public hearing so that consumers can get a better sense of how this deal could affect their access to diverse programming and information, especially as they more often look to the internet for such services.  It's critical that we preserve robust competition and promote innovative and emerging program delivery in this rapidly changing market.

Horizontal Merger Guidelines Workshops

The FTC is hosting a series of workshops on horizontal merger guidelines as part of its process of rethinking such guidelines.  The first of the five workshops is today in DC.  You can catch the webcast here.  The schedule for the rest of the workshops and materials is here.

-bjmq

Golden Parachute Waivers

You'll remember that early last month Burlington Northern announced that Buffet's Berkshire Hathaway  would acquire the balance of BNSF's stock that it did not already own.  Recently reported that the CEO of Burlington Northern Santa Fe waived his rights to compensation under the company's change of control agreement/golden parachute.  

In general, seeing incumbent management waive their rights like this is a sign that the buyer and seller's management have a reasonably high level of confidence that the deal will work out well over the long term for both sides.  Sometimes "working out well" involves a lucrative new contract for management.  This case appears to be following Buffet's typical M.O. of buying strong management teams and leaving them in place to continue to run the business.  So, it's not really a surprise that the CEO would waive his rights under the change of control agreement. 

A copy of Burlington's form of change in control agreement is on file with the SEC.  It's a double trigger - a termination for other than cause following a change in control.  Here's the relevant language:

 If (x) your Date of Termination (or the date of delivery of the applicable Notice of Termination) occurs during the Agreement Term and is coincident with or follows the occurrence of a Change in Control [ed: up to a period 24 months following a change in control] or (y) if you have a disability during the Agreement Term after the occurrence of a Change in Control, then you shall be eligible for payments and benefits in accordance with, and to the extent provided by, Section 4, with such eligibility determined on the basis for your termination of employment. 

Payments are also due in the event the employee resigns for "good reason" following a change in control.  Good reason includes the typical list of things like diminution of duties, salary, forced relocation beyond 50 miles, failure to pay salary and bonuses, failure to continue to provide benefits, etc. 

The payments due under the contract are set equal to 2.5 times the highest 12 month salary over the previous 24 months (including deferred comp) and 2.5 times the targeted bonus for the current year.  Of course, it goes without saying that the agreement provides for continuation of health insurance benefits for 24 months for the terminated employee under COBRA.   Premiums to be paid by the company.  To the extent there are tax implications - "parachute taxes" that are raised by payments under this agreement, the covered employee will be eligible for a tax gross-up payment as well.  

What?  Your employer doesn't pay your COBRA premiums and make gross-up payments to you? 

Before I get too worked up, it's worth remembering the purpose of the Golden Parachute/Change of Control Agreement.  In general, we want senior managers not to recoil in fear at the first sign of a takeover.  Indeed, we'd like to create incentives for senior managers to be open to the possibility of being acquired.  During the takeover boom of the 1980s that generated so much of the takeover case-law we now have, incumbent management fighting off potential acquirers was the constant theme.  That particular theme has since receded from view, in part because the prevalence of change of control agreements has made senior managers more open to the prospect of losing their jobs.  

The fact that Burlington Northern's CEO has waived his right to payments under the change of control agreement suggests that he is happy with the new boss and not likely going anywhere.  That's a good thing. 

-bjmq