Transcription
THE PUBLIC COMPANY HANDBOOK:A Corporate Governance and DisclosureGuide for Directorsand ExecutivesStewart M. LandefeldAndrew B. MooreJens M. FischerBrian J. Eitingwith additional contributing authors fromPerkins Coie LLPANCHORAGE · BEIJING · BELLEVUE · BOISE · CHICAGO · DALLAS · DENVER · LOS ANGELES ·MADISON · NEW YORK · PALO ALTO · PHOENIX · PORTLAND · SAN DIEGO · SANFRANCISCO · SEATTLE · SHANGHAI · WASHINGTON, D.C.www.perkinscoie.com
Fourth EditionDecember 2011 2002–2011,Perkins Coie LLP. All rights reserved. No part ofthis book may be reproduced or transmitted in any form by anymeans, electronic or mechanical or otherwise, including withoutlimitation photocopying, recording, or by any information storageand retrieval system, without prior written permission.
About this HandbookPerkins Coie is pleased to share with you this Fourth Edition ofThe Public Company Handbook: A Corporate Governance Guide forDirectors and Executives.We have designed this practical and easy to digest guide fordirectors and executives of public companies. Directors and officerscan face a bewildering task in understanding the myriad SEC,NYSE, Nasdaq and state law issues that apply to their organizations. The first step in fulfilling the duties of being a director orofficer is getting a “lay of the land,” and that is what this slimvolume seeks to provide. We’ve written this guide in a “plain English” style to discuss topics such as: The best “In the Board Room” corporate governancepractices NYSE and Nasdaq requirements and guidelines Insider reporting obligations and trading restrictions fordirectors and officers Public disclosure obligations, including those underRegulations FD and G How to set up a Rule 10b5-1 Trading Plan How to establish an Annual Meeting/Proxy Calendar How to manage the Dodd-Frank Act rules and regulations
[THIS PAGE INTENTIONALLY LEFT BLANK]
About RR Donnelley Financial Services GroupAs the world’s largest provider of integrated communications,RR Donnelley successfully leverages our global platform, industryleading service organization and enduring financial stability to helpour clients achieve their goals.With over 147 years of experience, RR Donnelley works collaboratively with thousands of clients worldwide to provide a range ofsolutions to address all of their business communications needs.Our unparalleled print capacity, innovative technologies anddeep industry expertise make RR Donnelley the partner of choicefor corporations and their advisers. Compliance and EDGAR filings Notice and Access Flexible XBRL solutions Judgment-dependent outsourcing services Global financial and commercial printing Self-service filing solution Single-source composition services Translations and multilingual communications VENUE Virtual data room services Enhanced digital outputRR Donnelley is a reliable single-source solution for all of yourbusiness communication needs. As a Fortune 250 company, we areeager to put our strength, scale and expertise at your disposal. Tolearn more, please visit www.financial.rrd.com.
[THIS PAGE INTENTIONALLY LEFT BLANK]
DedicationWe dedicate this to our families. Margaret Breen, Hackett,Jamie and Owen Landefeld, Cori Gordon Moore, Toby andMargaret Moore, Susanne Wagner-Fischer, Maximilian andSebastian Fischer, Jessica, Johanna and Rebecca Eiting, and Markand Chris VanYe gave us patient support throughout the draftingand editing process.Stewart M. LandefeldAndrew B. MooreJens M. FischerBrian J. EitingKatherine A. VanYe
[THIS PAGE INTENTIONALLY LEFT BLANK]
EditorsStewart M. Landefeld, editor in chief and co-author, is a partner in Perkins Coie’s Seattle office.Andrew B. Moore, founding editor and co-author, is a partnerin Perkins Coie’s Seattle office.Jens M. Fischer, co-editor and co-author, is a partner in Perkins Coie’s Seattle office.Brian J. Eiting, co-editor and co-author, is a partner in PerkinsCoie’s Seattle office.Other ContributorsThe authors gratefully acknowledge the contributions of thefollowing Perkins Coie colleagues:Alvaro M. Alvarez, SeattleRalph “Buddy” L. Arnheim, Palo AltoLance Bass, SeattleDanielle Benderly, PortlandAndrew Bor, SeattleFiona Brophy, Palo AltoKanika Chander, SeattleSusan J. Daley, ChicagoJason Day, DenverEric A. DeJong, SeattleIveth P. Durbin, SeattleTimothy J. Fete, Jr., DenverRyan Glant, SeattleSteven M. Glasgow, SeattleJikizizwe “Jika” Gqiba-Knight, Seattle
Gina K. Hagedorn, PortlandStephanie A. Hirano, SeattleRebecca Hoskins, SeattleDonald E. Karl, Los AngelesDavid J. Katz, Los AngelesSean C. Knowles, SeattleJaclyn N. Lasaracina, SeattleElizabeth Lee, SeattleLaura Marie Lintner, SeattleDavid S. Matheson, PortlandDavid F. McShea, SeattleJ. Sue Morgan, SeattleBradley Owens, SeattleKelly J. Reinholdtsen, SeattleGail P. Runnfeldt, SeattleMartha Sandoval, SeattleEvelyn Cruz Sroufe, SeattleDavid E. Taylor, SeattleJohn R. Thomas, PortlandM. Ellen Torvik, SeattleRoy W. Tucker, PortlandMartha J. Vallely, SeattleKatherine A. VanYe, SeattleMeredith F. Weisshaar, PortlandWillie J. White, SeattleFaith M. Wilson, Seattle
On behalf of all contributors, the editors welcome your commentsand suggestions via e-mail:Stewart M. Landefeld:Andrew B. Moore:Jens M. Fischer:Brian J. Eiting:Katherine A. mvanye@stanfordalumni.orgPLEASE READ THIS DISCLAIMER: This Handbook isintended to provide an informational overview to nonlawyers andis not intended to provide legal advice as to any particular situation. The laws and regulations applicable to public companiesare complex and subject to frequent change. Experienced corporateand securities counsel should be consulted regarding theinformation covered in this Handbook. The views expressed in thisHandbook are those of the authors only and do not necessarilyreflect the views of Perkins Coie LLP.
[THIS PAGE INTENTIONALLY LEFT BLANK]
Table of ContentsChapter 1You’re a Public Company? What Does It Mean? . . . . . . . . . . .1934 Act Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Listing on an Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Meeting Size Thresholds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Concurrent Registration Under the 1933 and 1934 Acts . . . .1934 Act Periodic Reporting Requirements . . . . . . . . . . . . . . . . .Additional 1934 Act Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . .1112455Chapter 2The Basics: Public Company PeriodicReporting Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CEO and CFO Certifications and Disclosure Practices . . . . . . .Certifications by CEO and CFO . . . . . . . . . . . . . . . . . . . . . . . . .Disclosure Controls and Procedures . . . . . . . . . . . . . . . . . . . . .Internal Control Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . .Forms 10-K and 10-Q Filing Deadlines . . . . . . . . . . . . . . . . . . . . .Integrated Disclosure Under Regulations S-K and S-X . . . . . . .Scaled Disclosure for Smaller Reporting Companies . . . . . . . . .Interactive Data Exhibit Filings . . . . . . . . . . . . . . . . . . . . . . . . . . .Annual Report on Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Information Included in Form 10-K . . . . . . . . . . . . . . . . . . . . .Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .MD&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Through Your Eyes: The Purpose of MD&A . . . . . . . . . . . . . .Overall Presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Focus and Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Substantive Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . .Risk Factors and the Safe Harbor . . . . . . . . . . . . . . . . . . . . . . .Form 10-K Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Quarterly Reports on Form 10-Q . . . . . . . . . . . . . . . . . . . . . . . . . .Information Included in Form 10-Q . . . . . . . . . . . . . . . . . . . . .Signatures and Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . .Form 10-Q Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Missed Form 8-K Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Current Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Mandatory Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Optional Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Regulation FD Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Form 8-K Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133333434i
Confidential Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .SEC Review of 1934 Act Reports . . . . . . . . . . . . . . . . . . . . . . . . . .Amending 1934 Act Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Applying Plain English Rules to 1934 Act Disclosure . . . . . . . .Drafting in Plain English . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The EDGAR Filing System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Liabilities Relating to Periodic Reporting . . . . . . . . . . . . . . . . . .Chapter 3Finding Your Voice: Public Disclosure PracticesUnder Regulations FD, G and M-A . . . . . . . . . . . . . . . . . . . . . . .Mandatory and Voluntary Disclosures . . . . . . . . . . . . . . . . . . . .Regulation FD’s Mandate: Share and Share Alike . . . . . . . . . . .“Curing” Unintentional Disclosures . . . . . . . . . . . . . . . . . . . . . . .What’s Material? Is It Just “Market Moving”? . . . . . . . . . . . . . .Website Disclosure Can Satisfy Regulation FD . . . . . . . . . . . . . .Exemptions From Regulation FD . . . . . . . . . . . . . . . . . . . . . . . . .Liability for Selective Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . .Regulation G: GAAP and the Earnings Call . . . . . . . . . . . . . . . .SEC-Filed Documents: Reconciliation to GAAP,Prominence and Explanation . . . . . . . . . . . . . . . . . . . . . . . . . . .Corporate Disclosure Policy: Forward-LookingDisclosure and the Safe Harbor . . . . . . . . . . . . . . . . . . . . . . . . . . .Written Forward-Looking Statements . . . . . . . . . . . . . . . . . . .Oral Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . .Regulation M-A: Merger and Acquisition Communications . .Chapter 4Insider Reporting Obligations and InsiderTrading Restrictions; Rule 10b5-1 Trading Plans . . . . . . . . . . .Section 16 Reporting Obligations of Directors, ExecutiveOfficers and 10% Beneficial Shareholders . . . . . . . . . . . . . . . . . .Who Is an Insider? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .What Do Section 16(a) Insiders Report? . . . . . . . . . . . . . . . . . .How Does an Insider Report Beneficial Ownership? . . . . . . .Consequences of Late Filing: Embarrassment,Publicity and Fines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Mandatory Electronic Filing and Website Posting ofBeneficial Ownership Reports . . . . . . . . . . . . . . . . . . . . . . . . . .Section 16(b) – Short-Swing Profit Liability . . . . . . . . . . . . . . .Transactions Exempt From Section 16(b) Liability . . . . . . . . .Calculating Profit Realized in a Short-Swing Transaction . . .Schedules 13D and 13G Reporting Requirements for 5%Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Initial Schedule 13G Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 9808184848687889090
Schedule 13D or 13G Filings Once the Company IsPublic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rule 144 Restrictions on Trading Restricted Stockand Stock Held by Directors, Executive Officers and OtherAffiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Securities Subject to Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . .Who Are Affiliates? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rule 144 Requirements for Both Affiliates and NonAffiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other Rule 144 Requirements for Affiliates . . . . . . . . . . . . . . .Rule 144 and Shell Companies . . . . . . . . . . . . . . . . . . . . . . . . . .Rule 144 Compliance Chart for Reporting Companies . . . . .Insider Trading and Rule 10b-5 . . . . . . . . . . . . . . . . . . . . . . . . . . .Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Company Insider Trading Policy . . . . . . . . . . . . . . . . . . . . . . .Rule 10b5-1 Trading Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Insider Trading During Pension Plan Blackout PeriodsProhibited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Get With the Program: Rule 10b5-1 Trading Plans . . . . . . . . . . .Benefits to the Company and Its Insiders on Adopting Rule10b5-1 Trading Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Three “Legs” of a Rule 10b5-1 Trading Plan . . . . . . . . . .Drafting a Rule 10b5-1 Trading Plan . . . . . . . . . . . . . . . . . . . . .Review by the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Public Disclosure; Filing the Right Forms . . . . . . . . . . . . . . . .Chapter 5Proxy Solicitation and the AnnualReport to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Annual Meeting of Shareholders . . . . . . . . . . . . . . . . . . . .Special Shareholders’ Meetings . . . . . . . . . . . . . . . . . . . . . . . . .Regulations Governing the Proxy Statement . . . . . . . . . . . . . .Information Included in the Proxy Statement . . . . . . . . . . . . .Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Analysis of Risk Related to Compensation for AllEmployees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Say-on-Pay and Say-on-Frequency . . . . . . . . . . . . . . . . . . . . . .Board and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . .Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Filing and Distributing Proxy Materials . . . . . . . . . . . . . . . . . . . .E-Proxy Rules: No Cookies! . . . . . . . . . . . . . . . . . . . . . . . . . . . .Filing the Notice of Internet Availability . . . . . . . . . . . . . . . . .Filing Preliminary Proxy Statements . . . . . . . . . . . . . . . . . . . .Distributing the Proxy Statement to Shareholders . . . . . . . . 7107107108108111113113115119120120121121121iii
The Proxy Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Filing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Shareholder Proposals Submitted for Inclusion in ProxyMaterials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Procedural Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Substantive Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .No-Action Letter Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Statement in Opposition to Qualifying Proposal . . . . . . . . . .Identification of Proponent . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Shareholder Proposals Not Submitted for Inclusion inProxy Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Proxy Contest: Election Contests and TakeoverTransactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .D&O Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Annual Report to Shareholders . . . . . . . . . . . . . . . . . . . . . . .Content Requirements of the Annual Report toShareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Format Requirements of the Annual Report toShareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Timing of the Annual Report to Shareholders . . . . . . . . . . . .Chapter 6Annual Meeting of Shareholders . . . . . . . . . . . . . . . . . . . . . . . .Premeeting Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Setting the Annual Meeting Date . . . . . . . . . . . . . . . . . . . . . . .Determine the Annual Meeting Location . . . . . . . . . . . . . . . . .Virtual Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Setting the Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Notifying Shareholders and Exchanges . . . . . . . . . . . . . . . . . .Reaching Past “Street Name” to Contact BeneficialOwners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Who Attends the Annual Meeting? . . . . . . . . . . . . . . . . . . . . . .Board Meeting or Board Consent to Address MattersPertaining to the Annual Meeting . . . . . . . . . . . . . . . . . . . . . . .Script, Agenda and Rules of Conduct . . . . . . . . . . . . . . . . . . . .Materials to Bring to the Annual Meeting . . . . . . . . . . . . . . . .Voting and Quorum Requirements . . . . . . . . . . . . . . . . . . . . . . . .Voting in Person or by Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . .Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Broker Nonvotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Abstentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Effect of Abstentions and Broker Nonvotes . . . . . . . . . . .Shareholder Actions by Written Consent in Lieu of anAnnual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50152
Chapter 7Corporate Governance: Best Practices in the Boardroom . . . .Director Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Duty of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Duty of Loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Duties to Other Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . .Duty of Candor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Judicial Review: Business Judgment Rule . . . . . . . . . . . . . . . . . .Enhanced Scrutiny: The Unocal and Revlon Standards . . . . .Entire Fairness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Board Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Board Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Board Structure and Director Terms . . . . . . . . . . . . . . . . . . . . .Board Leadership and Structure . . . . . . . . . . . . . . . . . . . . . . . .Overboarding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Board Meetings and Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Regular Meetings of Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Special Meetings of Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Types of Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nominating & Governance Committee . . . . . . . . . . . . . . . . . .Other Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Board Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cash Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Equity Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Liabilities and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . .Limiting Director Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Indemnifying Directors and Officers . . . . . . . . . . . . . . . . . . . .Indemnification Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . .Directors’ and Officers’ (D&O) Insurance . . . . . . . . . . . . . . . .Chapter 8Governance on the “Big Board”: NYSE Listing Standards . . .Listing Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Initial Listing Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Continued Listing Standards . . . . . . . . . . . . . . . . . . . . . . . . . . .NYSE Corporate Governance Standards . . . . . . . . . . . . . . . . . . .A Majority of Directors Must Be Independent . . . . . . . . . . . .What’s Independence? The NYSE Describes What It IsNot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Executive Sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199200201202202204205206v
Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nominating & Governance Committee . . . . . . . . . . . . . . . . . .Corporate Governance Guidelines . . . . . . . . . . . . . . . . . . . . . .Code of Business Conduct and Ethics . . . . . . . . . . . . . . . . . . . .Annual CEO Certification of Compliance With CorporateGovernance Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .NYSE May Issue Public Reprimand Letters . . . . . . . . . . . . . . .Website Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Equity Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . .20% Stock Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Transactions (Including Issuances) With Related Parties . . .Change-of-Control Transactions . . . . . . . . . . . . . . . . . . . . . . . .Additional NYSE Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Communicate! NYSE Notices and Forms . . . . . . . . . . . . . . . . . . .Disclosure of Material News . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exceptions to Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . . .Procedures for Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . .Trading Halts or Delays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chapter 9To Market, To Market: Nasdaq Listing Standards . . . . . . . . . .Listing Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Initial Listing Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Continued Listing Requirements . . . . . . . . . . . . . . . . . . . . . . . .Nasdaq Corporate Governance Standards . . . . . . . . . . . . . . . . . .A Majority of Independent Directors . . . . . . . . . . . . . . . . . . . .Mandatory Executive Sessions of Independent Directors . . .Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Audit Committee Reviews and Oversees Related PersonTransactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Compensation Committee (or Compensation Decisions byIndependent Directors) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Nominating & Governance Committee (or Nominations byIndependent Directors) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Exceptional and Limited Circumstances Exception toCompensation Committee and Nominating & GovernanceCommittee Independence Requirements . . . . . . . . . . . . . . . . .Code of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Notification of Noncompliance With Nasdaq CorporateGovernance Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20% Stock Issuance (5% to Affiliates in an Acquisition) . . . . . .Additional Corporate Governance Standards . . . . . . . . . . . . . . .Keep Nasdaq Informed! Notices and Forms . . . . . . . . . . . . . . . 34235235236
Disclosure of Material News (Tell Nasdaq First) . . . . . . . . . . . .Exceptions to Nasdaq’s Disclosure Requirements . . . . . . . . .Procedures for Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . .Trading Halts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chapter 10Corporate Structural Defenses to Takeovers . . . . . . . . . . . . . . .Why Adopt Corporate Structural Defenses? . . . . . . . . . . . . . . . .Why Not Adopt Structural Defenses? . . . . . . . . . . . . . . . . . . . . .Staggered Boards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Supermajority Removal Provisions . . . . . . . . . . . . . . . . . . . . . .Filling Vacancies on the Board . . . . . . . . . . . . . . . . . . . . . . . . . .Shareholder Rights (Poison Pill) Plans . . . . . . . . . . . . . . . . . . . . .Recent Developments in Shareholder Rights PlanImplementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Evolution of Ownership Positions . . . . . . . . . . . . . . . . . . . . . . .Net Operating Loss Poison Pills . . . . . . . . . . . . . . . . . . . . . . . .State Statutory Antitakeover Provisions . . . . . . . . . . . . . . . . . . . .Delaware Section 203: A Business Combination Statute . . . .Authorized Common and Blank Check Preferred Stock . . . . . .Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Limitations on Shareholders’ Meetings and VotingRequirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Limitations on the Right to Call Special Shareholders’Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Advance Notice Bylaw Provisions . . . . . . . . . . . . . . . . . . . . . .Elimination of Shareholder Action by Written Consent . . . .Supermajority Vote on Merger or Sale of Assets . . . . . . . . . .Supermajority Vote on Amendments to Certificate ofIncorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other Actions: Change-of-Control or Golden ParachuteAgreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Best Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chapter 11Follow-On Offerings and Shelf Registrations . . . . . . . . . . . . .Primary Offerings and Secondary Offerings – What’s theDifference? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Shelf Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Common Types of Shelf Registrations . . . . . . . . . . . . . . . . . . .Registration Statements on Form S-1 . . . . . . . . . . . . . . . . . . . . . .Registration Statements on Form S-3 . . . . . . . . . . . . . . . . . . . . . .Eligibility Restrictions on Use of Form S-3 . . . . . . . . . . . . . . . .Unique Flexibility for WKSIs . . . . . . . . . . . . . . . . . . . . . . . . . . 267269vii
Use of Form S-3 by Small Public Companies . . . . . . . . . . . . . .Form S-4: The M&A Registration Statement . . . . . . . . . . . . . . . .The Acquisition Shelf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Registration Statements on Form S-8 . . . . . . . . . . . . . . . . . . . . . .Registrant Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Transaction Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Definition of Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Transferable Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Filings Relating to Employee Benefit Plan Amendments . . .Chapter 12Securities and Corporate Governance Litigation . . . . . . . . . . .Liabi
Editors Stewart M. Landefeld, editor in chief and co-author, is a part- ner in Perkins Coie's Seattle office. Andrew B. Moore, founding editor and co-author, is a partner in Perkins Coie's Seattle office. Jens M. Fischer, co-editor and co-author, is a partner in Per- kins Coie's Seattle office.
