Posts Tagged ‘Regina Olshan’

The Landscape of CEO Succession Issues

Posted by Brian Breheny, Skadden, Arps, Slate, Meagher & Flom LLP, on Tuesday July 23, 2013 at 9:10 am
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Editor’s Note: Brian V. Breheny is a partner at Skadden, Arps, Slate, Meagher & Flom LLP. The following post is based on a Skadden memorandum by Mr. Breheny, Regina OlshanNeil M. LeffMarc S. GerberMichael R. Bergmann.

A board’s decision as to whether, when and how to terminate the employment of a CEO and hire a successor is among the most critical decisions facing the board of any company—large or small, public or private, established or start-up. In most cases, however, a CEO termination is a rare event and one with respect to which—as would be expected—the board, the company’s general counsel and its human resources professionals may have little or no experience. In addition, the situation is further complicated by contractual, regulatory and personal factors.

This post describes the substantive and procedural considerations that boards will want to take into account when there is a change of CEO. In it, we assume that the board has made the business decision relating to CEO succession and is focused on strategy, implementation and minimizing potentially costly and/or embarrassing oversights and errors. Many but not all of the same considerations apply in respect of executive officers other than the CEO, and some additional considerations may apply to such other officers; in any event, their relative significance likely will differ from the case of the CEO.

…continue reading: The Landscape of CEO Succession Issues

Emerging Say-on-Pay Trends and Litigation Developments

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday May 13, 2013 at 9:19 am
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Editor’s Note: The following post comes to us from Regina Olshan, partner in the executive compensation and benefits practice at Skadden, Arps, Slate, Meagher & Flom LLP, and is based on a Skadden alert by Barbara R. Mirza.

Early Lessons from the 2013 Proxy Season

As Skadden monitors the initial weeks of the 2013 proxy season, we are seeing the following preliminary trends:

Vote Results

Of the first 279 companies of the Russell 3000 to report the results of say-on-pay proposals, approximately:

  • 72 percent have passed with over 90 percent support;
  • 22 percent have passed with between 70.1 percent and 90 percent support;
  • 4 percent have passed with between 50 percent and 70 percent support; and
  • 2 percent (six companies) obtained less than 50 percent support.

…continue reading: Emerging Say-on-Pay Trends and Litigation Developments

How to Prepare for Annual Meeting Litigation

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday February 7, 2013 at 9:32 am
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Editor’s Note: The following post comes to us from Regina Olshan, partner in the executive compensation and benefits practice at Skadden, Arps, Slate, Meagher & Flom LLP, and is based on a Skadden alert by Ms. Olshan, Neil Leff, Erica Schohn and Joseph Yaffe.

As the 2013 proxy season is now underway, companies should be aware of the recent wave of lawsuits alleging breaches of fiduciary duties by management and directors in connection with compensation-related decisions. These suits allege deficient disclosure with respect to compensation-related proxy proposals and seek to enjoin the company’s annual meeting until supplemental disclosures are made. They primarily target proposals to increase the amount of shares reserved for equity compensation plans and advisory votes on executive compensation (say-on-pay). There also have been a handful of suits relating to proposals seeking to amend certificates of incorporation to increase the total number of authorized shares.

More than 20 such cases were filed in 2012, and the plaintiffs’ law firm predominantly initiating these suits has announced that it is investigating nearly 40 additional companies. These cases are typically filed shortly after a company files its definitive proxy statement and make generic accusations of inadequate disclosure. Some companies concerned about potential disruption to their annual meetings have been willing to settle these claims. There have been at least six reported settlements, all involving proposals to increase the number of shares authorized under equity plans. These settlements have generally involved supplemental disclosure and payment of up to $625,000 of plaintiffs’ attorneys’ fees. Other companies have settled prior to the filing of a formal lawsuit. Although a preliminary injunction has been granted in only one of these cases, Knee v. Brocade Communications Systems, Inc., many cases in which preliminary injunctions were denied are still pending resolution regarding other relief requested by the plaintiffs, such as damages. An analysis of the claims made in filed cases to date may help companies decide whether to increase disclosure in their 2013 annual meeting proxy statements.

…continue reading: How to Prepare for Annual Meeting Litigation

PE Funds Are Not Subject to “Controlled Group” Liability

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday January 4, 2013 at 8:58 am
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Editor’s Note: The following post comes to us from Regina Olshan, partner in the executive compensation and benefits practice at Skadden, Arps, Slate, Meagher & Flom LLP, and is based on a Skadden alert.

Private equity funds (PE funds) and their advisors long have been concerned that a fund (or its other portfolio companies) may be liable for unfunded pension plan liabilities of one of its portfolio companies. However, in a decision published last month, the U.S. District Court of Massachusetts held that three PE funds sponsored by Sun Capital were not liable for any portion of the withdrawal liability incurred by a portfolio company in which the funds collectively held a controlling interest. In reaching this decision, the court expressly rejected the analysis contained in a 2007 Pension Benefit Guaranty Corporation (PBGC) Appeals Board opinion, which found that the investment activities of a PE fund constitute a “trade or business” and thus subjected the PE funds to joint and several liability under Title IV of the Employee Retirement Income Security Act (ERISA) for a portfolio company’s unfunded pension liabilities.

Although the Sun Capital Partners case provides a foundation for cautious optimism on the issue of whether PE funds can be held jointly and severally liable for the pension-related liabilities incurred by portfolio companies in which they invest, it remains to be seen whether its analysis will be adopted by other courts and whether the district court’s decision will be upheld on appeal to the First Circuit. PE funds should continue to view control group liability as a potential risk in the acquisition context and, in order to minimize exposure to unfunded pension liabilities, PE funds should consult counsel when encountering these issues.

…continue reading: PE Funds Are Not Subject to “Controlled Group” Liability

Lessons Learned from the 2012 Proxy Season

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday October 18, 2012 at 9:11 am
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Editor’s Note: The following post comes to us from Stuart N. Alperin and Regina Olshan, partners at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on a Skadden, Arps memorandum by Mr. Alperin, Ms. Olshan, Neil M. Leff, Erica Schohn, Joseph M. Yaffe and Barbara R. Mirza.

2012 Results

Having reached the conclusion of the 2012 proxy season, we can report that approximately:

  • 69 percent of say-on-pay proposals passed with more than 90 percent support;
  • 21 percent passed with between 70.1 and 90 percent support;
  • 7 percent passed with between 50 and 70 percent support; and
  • 3 percent (53 companies) obtained less than 50 percent support.

While the overall proportions generally are similar to last year’s results, it should be noted that in 2011 only 37 say on pay proposals obtained less than 50 percent support. Please note that these percentages follow the (For/(For + Against + Abstain)) formulation and have been rounded to the nearest percentage.

We have analyzed ISS reports and supplemental proxy filings throughout the 2012 season, and our reporting and analysis can be found in our four prior say-on-pay client mailings. [1]

…continue reading: Lessons Learned from the 2012 Proxy Season

Lessons Learned So Far During the 2012 Proxy Season

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday July 12, 2012 at 9:20 am
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Editor’s Note: The following post comes to us from Regina Olshan, partner in the executive compensation and benefits practice at Skadden, Arps, Slate, Meagher & Flom LLP, and is based on a Skadden alert by Ms. Olshan, Stuart N. Alperin, Neil M. Leff, Erica Schohn, Joseph M. Yaffe, and Barbara R. Mirza.

As we reach the peak of the 2012 proxy filing season, we are continuing to monitor the following developments:

What are the overall vote results?

Of the first 1,656 companies to report the results of say-on-pay proposals, approximately:

  • 70 percent have passed with more than 90 percent support;
  • 21 percent have passed with between 70 percent and 90 percent
    support;
  • 7 percent have passed with between 50 percent and 70 percent
    support; and
  • 3 percent (45 companies) obtained less than 50 percent support.

While the overall proportions are generally not dissimilar to 2011 results, we have already seen more companies fail their say-on-pay votes this year than in the entire season last year. Four companies have seen failed votes in both 2011 and 2012.

…continue reading: Lessons Learned So Far During the 2012 Proxy Season

Continuing Developments in the 2012 Proxy Season

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday May 8, 2012 at 10:33 am
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Editor’s Note: The following post comes to us from Stuart N. Alperin and Regina Olshan, partners in the Executive Compensation and Benefits group at Skadden, Arps, Slate, Meagher & Flom LLP, and is based on a Skadden alert. This alert is the second in a series; the prior alert is available here.

As we continue to monitor developments in the unfolding 2012 proxy season, here are some key themes that have emerged thus far:

What are the overall vote results?

Of the first 180 companies of the Russell 3000 to report the results of say-on-pay proposals, approximately:

  • 65 percent have passed with more than 90 percent support;
  • 25 percent have passed with between 70.1 percent and 90 percent support;
  • 8 percent have passed with between 50 percent and 70 percent support;
  • 2 percent (three companies) obtained less than 50 percent support — Actuant and International Game Technology were discussed in our prior mailing and KB Home is discussed below. In a vote result reported after the cutoff date for the calculations above, news reports indicated that Citigroup Inc.’s say-on-pay proposal received 45 percent of votes cast, making it the fourth company (and the largest company) whose say-on-pay proposal has received less than 50 percent support this year.

Thus far, these percentages are not materially different from the full-year results for the 2011 proxy season.

…continue reading: Continuing Developments in the 2012 Proxy Season

 
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