Saturday, April 7, 2007
Occidental Pretroleum reported that its CEO Ray R. Irani received $416.3 million in compensation last year, most of it in stock options or from the deferred shares program. See WSJ, Occidental's $416.3 Million CEO: Pay Package Puts Irani in Lofty Air.
Steven J. Heyer was forced out as CEO of Starwood Hotels last week and forfeited $35 million in severance pay. The WSJ reports that the board forced him out after an anonymous letter accused him of inappropriate conduct. Heyer came to Starwoods from Coke with a reputation for a difficulty personality. See WSJ, Starwood CEO's Ouster Followed Battle with Board Over His Conduct.
An economics professor Albert E. Parish Jr. (Charleston Southern U.) and manager of several mutual funds claimed amnesia after a SEC investigation found that $134 million of funds were missing. The SEC charges Parish with misleading investors about the funds' profitability. See WPost, Fund Manager Offers Memorable Response to SEC's Fraud Charges.
Friday, April 6, 2007
The SEC issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions Order) against Myron F. Olesnyckyj. Olesnyckyj served as General Counsel of Monster Worldwide, Inc. from 1994 until Nov. 21, 2006. The Order finds that a final judgment was entered against Olesnyckyj permanently enjoining him from violating the federal securities law and from acting as an officer or director of a public company, stemming from his involvement in backdating stock options at Monster. Based on the Court's entry of an injunction against Olesnyckyj, the Order suspends Olesnyckyj from appearing or practicing before the Commission as an attorney. Olesnyckyj consented to the issuance of the Order without admitting or denying any of the findings. (Rel. 34-55587; AAE Rel. 2593;File No. 3-12609)
Executive compensation at the struggling U.S. auto manufacturers continues to draw attention. Ford Motor's SEC filing disclosed that it paid a total of $62 million to its senior management after losing $1.5 billion last year. This includes $28.2 million paid to new CEO Alan Mulally for four months' work (including a signing bonus of $18.5 million for leaving Boeing). See WSJ, Ford Leaders' Pay Packages
May Heighten Labor Tension; NYTimes, Ford Pays Chief $28 Million for 4 Months’ Work.
Only 14.6% of Fortune 500 companies have a woman on their board of directors. The DirectWomen Institute, sponsored by the ABA and Catalyst (a research group focused on women in the workplace) seeks to change that. The New York Times reports on its efforts to groom women lawyers who are "of a certain age" and nearing retirement to serve on boards. See NYTimes, Female Lawyers Set Sights on Yet One More Goal: A Seat on a Board.
Thursday, April 5, 2007
The AFL-CIO is campaigning against the reelection of the Verizon directors who authorized CEO Ivan Seidenberg's compensation, saying that he received $110 million over a five-year period while the stock price dropped and calling Verizon "the poster child for pay for pulse." Previously, the union took on Home Depot and Pfizer, both of whose CEOs were forced out. See WSJ, AFL-CIO Seeks to Oust
Verizon Compensation Committee.
ISS recommends that shareholders of the New York Times withhold their votes for the directors to express their dissatisfaction with the company's dual-stock structure, which places control of the newspaper in the hands of Chairman Arthur Sulzberger Jr. and his family. ISS says that the company has been too slow in addressing shareholders' concerns. See WSJ, Proxy Adviser ISS Levels Criticism at New York Times.
Kirk Kerkorian's Tracinda Corp. sent a letter to DaimlerChrysler stating it was prepared to offer $4.5 billion in cash for Chrysler, subject to completing its due diligence, becoming the first to announce publicly an interest in the company. Kerkorian was a Chrysler shareholder and attempted a takeover prior to Chrysler's 1998 merger with Daimler. See WSJ, Tracinda Is Prepared to Offer $4.5 Billion to Acquire Chrysler.
The Securities and Exchange Commission has received two proposed national market system plans from separate groups of stock exchanges relating generally to securities symbols. In addition, Nasdaq has filed with the Commission a separate proposal to permit a company in certain circumstances to retain its symbol when transferring its listing to Nasdaq from another stock exchange. After publishing these plans and proposal for comment the Commission will resolve the conflicts over the allocation of stock symbols as fairly and expeditiously as possible. See SEC Announces Process for Proposals on Securities 'Ticker' Symbols, Release 2007-63.
A class action on behalf of participants in the New York State United Teachers Member Benefits Trust charges that the Trust accepted payments from insurer ING to endorse its high-fee annuity product to its plan participants. The law suit follows last year's investigation and settlement with the New York Attorney General's office, when the Trust paid $30 million to settle related charges. See NYTimes, Trust Sued Over Backing Retiree Plan.
Wal-Mart apologized to several activist shareholders for calling them "threats" after they submitted shareholders' proposals critical of the company's policies. See WSJ, Wal-Mart Apologizes to Groups
That Were Focus of Surveillance.
Barnes and Noble joins the list of companies admitting to backdating stock options. It says senior management thought the practices, which extended from 1996-2006, were proper and acted on the advice of outside counsel. It also stated its internal investigation found no evidence of fraud and that restatements of financials were not necessary. See NYTimes, Online Bookseller to Take Option Charge; WSJ, Backdating Was Pervasive At Bookseller.
A day after announcing it would sell $250 million of convertible bonds, Borders said it changed its mind, "based on shareholder feedback." Some investors want a merger with Barnes & Noble; there is also talk of a buyout with a private equity firm. Either plan might be derailed by the new issuance of debt. See WSJ, Borders Halts Debt Sale Plan As Its Shareholders Squawk.
Apollo Management, the private equity firm headed by Leon D. Black, is reportedly looking for a private investor to buy a minority stake in the firm. Apollo has been the target of speculation that it would soon go public, following the lead of the Blackstone Group. Both moves reflect a desire on the part of the firms to cash in on some of their wealth. See NYTimes, Equity Firm Is Seen Ready to Sell a Stake to Investors ; WSJ, Apollo Explores Sale of 10% Stake In a Private Deal.
Wednesday, April 4, 2007
At an open meeting today, the SEC's Commissioners today endorsed the recommendations of the agency's professional staff to eliminate waste and duplication in the Sarbanes-Oxley compliance exercise, in a move that will particularly benefit smaller companies. The Commissioners urged the SEC staff to continue to work closely with the Public Company Accounting Oversight Board (PCAOB) to make the internal controls provisions of Section 404 of the Sarbanes-Oxley Act of 2002 more efficient and cost effective. The Commission expects the new PCAOB standard will be submitted for SEC review by the end of May or early June, in time for the 2007 financial statement audits.
"These needed improvements in the Sarbanes-Oxley process are especially urgent for smaller companies, who will begin complying with Section 404 this year," said SEC Chairman Christopher Cox. "The result of the new auditing standard for 404, together with the SEC's new guidance to management, should make the internal control review and audit more efficient by focusing the effort on what truly matters to the integrity of the financial statements," he added. See SEC Commissioners Endorse Improved Sarbanes-Oxley Implementation To Ease Smaller Company Burdens, Focusing Effort On 'What Truly Matters' release 2007-62.
The NYSE announced that the shares of NYSE Euronext (NYSE Euronext: NYX) began trading today, first on Euronext in Paris at 9:00 a.m. (CET) and soon to follow in New York on the NYSE at 9:30 a.m. (EST). The opening share price on Euronext Paris for the newly merged company was €75. A total of 257,598,971 NYSE Euronext shares were admitted to listing. On the basis of the first price traded on Euronext, the market capitalization of NYSE Euronext stands at €19.32 billion/$25.81 billion, making the company the world's largest listed exchange group.
The Overnment Accountability Office issued a report on April 3 to discuss issues identified during its fiscal year 2006 audit of the SEC concerning internal controls and accounting/operational procedures that could be improved. The report contains six recommendations to improve internal controls and procedures in addition to those previously provided to the SEC. See Internal Control: Improvements Needed in SEC's Accounting and Operational Procedures. GAO-07-482R, April 3.
News Corp. shareholders approved a deal where News Corp. would buy back Liberty Media's 16.3% interest in the company and transfer its controlling interest in DirecTV Group to Liberty. The deal would increase Rupert Murdoch's interest in News Corp. from 31% to 38%. See NYTimes, News Corp. Shareholders Accept Liberty Deal ; WSJ, Liberty Media Swap Is Approved.
Rule 10b5-1 plans may replace backdating stock options as the next big scandal. The insider trading trial of Joseph Nacchio, former Qwest CEO, may focus on allegations that he had inside information when he made advance plans to sell his shares in 2005. An academic study provides evidence that some insiders entered Rule 10b5-1 plans before a drop in the market prices of theier company's shares. Rule 10b5-1 plans are common among executives and allow them to trade in their shares provided they are done under a prearranged plan made when they had no inside information. Linda Chatman Thomsen, head of SEC Enforcement, recently announced that the agency was looking hard at these plans. See WSJ, SEC Now Takes a Hard Look At Insiders' 'Regular' Sales. For other news on the Nacchio trial, see NYTimes, Qwest’s Ex-President Can’t Recall Remarks on Finances.