Much discussion of corporate governance in the last few years has centered on reforms advocated by ISS and CII and indices of good corporate governance practice created and maintained by such groups. A new study by Roberta Romano, Sanjai Baghat, and Brian J. Bolton, however, concludes that there is “no consistent relation between governance indices and measures of corporate performance.” The authors continue,

[T]here is no one “best” measure of corporate governance: the most effective governance institution appears to depend on context, and on firms’ specific circumstances. It would therefore be difficult for an index, or any one variable, to capture critical nuances for making informed decisions. As a consequence, we conclude that governance indices are highly imperfect instruments for determining how to vote corporate proxies, let alone for portfolio investment decisions, and that investors and policymakers should exercise caution in attempting to draw inferences regarding a firm’s quality or future stock market performance from its ranking on any particular corporate governance measure. Most important, the implication of our analysis is that corporate governance is an area where a regulatory regime of ample flexible variation across firms that eschews governance mandates is particularly desirable, because there is considerable variation in the relation between the indices and measures of corporate performance.

The paper is entitled The Promise and Peril of Corporate Governance Indices and the full text is available on SSRN.

U of Chicago Law Professors Douglas Baird and M. Todd Henderson (my very smart, very tall law school classmate) recently posted a provocative paper on SSRN. The paper, Other People’s Money, contends that “the oft-repeated maxim that directors of a corporation owe a fiduciary duty to the shareholders” is an “almost-right principle that has distorted much of the thinking about corporate law in recent decades.” Baird and Henderson argue that we should scrap this “almost-right” but mischief-causing principle in favor of a principle that would ground duties to all investors in contract.

Given innovations in corporate finance, the lines among shareholders, debtholders, and creditors have become quite blurred. Accordingly, Baird and Henderson argue, “[i]dentifying only shareholders as investors, as opposed to all providers of capital, is misleading.” Moreover, giving common stockholders the most privileged spot in the pecking order, as the notion of fiduciary duties owed to shareholders seems to do, may be inappropriate. How, for example, could the directors of a distressed corporation ever file for bankruptcy, thereby harming shareholders at the expense of creditors? Baird and Henderson argue that theorists committed to “the sacred cow that the duty of the directors is owed solely to the shareholders” have “paint[ed] themselves into embarrassing corners” trying to address the filing of a bankruptcy petition and other situations where shareholder interests seem appropriately subordinate to those of other capital providers.

If we are to jettison the notion that fiduciary duties are owed to shareholders, what principle should replace it? The most obvious candidate, Baird and Henderson observe, would be a rule that “directors must adopt the course that, in their judgment, maximizes the value of the firm as a whole.” (And a strong business judgment rule would apply to directors’ decisions.) Under this approach, which resembles the approach Judge Easterbrook took in In re Central Ice Cream Co., 836 F.2d 1068 (7th Cir. 1987), “claims by one class of investor against another alleging breach of fiduciary duty would fail so long as the directors acted reasonably to enhance firm value.”

But Baird and Henderson maintain that this “maximize the value of the enterprise” approach is also deficient. In particular, it fails to account for common situations in which senior investors, such as venture capitalists who own preferred stock with voting rights, bargain for the right to “pull the plug” on a venture — even though doing so would leave common stockholders with nothing and wouldn’t maximize the value of the firm ex post. Such arrangements, Baird and Henderson argue, may be value-maximizing ex ante because they give managers (generally junior claimants) an incentive to manage well. But, of course, the provisions can’t have this value-enhancing effect if they can’t be enforced due to a fiduciary duty running to common stockholders. Baird and Henderson thus argue that courts shouldn’t “stand in the way” of this “contracting regularity.” Instead, courts should honor contracts among directors and capital providers — even those that would disadvantage common stockholders.

In all, a terrific paper. It’s consistent with my view (explained in detail here) that the contracts between corporate constituents should be freely tailorable by the parties, and with my argument (set forth in the last part of this paper) that fiduciary duties should not preclude corporations from authorizing certain forms of insider trading.

My only quibble with the paper is that it seems to suggest in a couple of places that we should junk altogether the notion of fiduciary duties owed to shareholders. (See, e.g., page 8: “Hence, it may make sense to eliminate the concept of fiduciary duty from corporate law altogether.”) I wouldn’t go that far. Fiduciary duties running to shareholders exist because the cost of drafting contracts that would expressly state the constraints on managers’ conduct is simply too great. Because managers and shareholders can’t envision all the various contingencies that will arise, decide up front how those issues should be resolved, and memorialize those decisions in an express contract, the law polices manager conduct by positing amorphous duties of diligence and loyalty — duties whose precise content is fleshed out ex post. As Easterbrook and Fischel put it, “The only promise that makes sense in such an open-ended relation [as that between managers and shareholders] is to work hard and honestly.” The fact is, we need fiduciary duties running to shareholders to act as contractual gap fillers; we shouldn’t jettison them altogether.

That said, we should recognize that fiduciary duties owed to shareholders are nothing more than contractual gap-fillers. That is, they are contract terms that exist absent some provision to the contrary. Thus, to quote Easterbrook and Fischel again, “Because the fiduciary principle is a rule for completing incomplete bargains in a contractual structure, it makes little sense to say that ‘fiduciary duties’ trump actual contracts.”

If fiduciary duties are so construed, the concern that animates Baird and Hnderson becomes easy to remedy. Suppose a corporate charter were to include some provision stating that fiduciary duties to shareholders shall not be violated by executing or performing contracts with other capital providers as long as those contracts were in the best interests of the firm, measured from the perspective of the ex ante bargain among investors. The fiduciary duties owed shareholders — important contractual terms in the bargain between shareholders and managers — would still exist but wouldn’t be violated by actions authorized by contracts with other capital providers. This, I think, is a better outcome than scrapping altogether the notion of fiduciary duties running to shareholders.

Despite some language that might suggest otherwise, I believe this is the outcome Baird and Henderson are ultimately advocating. The penultimate paragraph of the paper suggests as much:

Board decisions should follow control rights, wherever and in whatever form they are manifest, and courts should largely get out of the way. This means courts should refuse to give creditors fiduciary duties (say in the zone of insolvency), refuse to allow shareholders to use fiduciary duties as a mechanism for upsetting director decisions that increase firm value or are conceivably part of the investors’ ex ante bargain, and refuse to perpetuate the inefficient link between disclosure and fidicuary duties. Directors should take from court decisions the simple maxim that they should do what is in the best interest of the firm, measured from the perspective of the ex ante bargain among investors. This will mean maximizing the firm value in nearly every case, but…sometimes acting in ways that seem selfish but are really just efficient and, when viewed ex ante, value-maximizing.

The Glom book club takes a look at Frank Partnoy’s “FIASCO” ten years later here and here.

Per Securities Law Daily:

Under pressure from congressional leaders, institutional investors and business groups, Securities and Exchange Commission Chairman Christopher Cox Nov. 1 said he thinks the SEC “should go back to the drawing board” in early 2008 on the controversial “proxy access” issue.

“I agree that we should go back to the drawing board and think of this problem anew,” Cox said to reporters after an SEC Historical Society program at the agency’s headquarters.

See here.

At least they bothered to show up at the meeting.

The Glom’s Junior Scholars Workshop, on Location, at TOTM.com:

For the Conglomerate’s Annual Junior Scholars Workshop, I agreed to comment on a paper by Loyola University Professor Trey Drury that revisits director liability-limiting opt-in statutes such as DGCL Section 102(b)(7).  The title of the paper is “What’s the Cost of a Free Pass?  A Call for the Re-assessment of Statutes that Allow for the Elimination of Personal Liability for Directors.”  The paper is super – the first draft of the review that I wrote actually began with the uber-articulate comment of “wow.”  (I have since refined my comments.)

I was all set to post my review of Professor Drury’s paper on the Glom yesterday, but, unfortunately, the Glom review actually took place LAST Monday.  (I continue to blame my visiting/moving/lateralling schedule for my inability to keep organized over the past few months.)  So Professor Drury will have his own little TOTM Junior Scholar’s Forum right here, right now.  As background, please check out the comments on Drury’s paper on the Glom from last Monday.  

Nowicki’s review of Drury’s “What’s the Cost of a Free Pass?”

As one might conclude from the prior reference to my original kick-off comment of “wow,” I really like Professor Drury’s paper revisiting director liability-limiting opt-in statutes such as DGCL Section 102(b)(7).  I am a huge fan of reevaluating the corporate governance status quo, and Professor Drury’s thoughtful paper forces us to do so with respect to the aspect of director liability for fiduciary duty breaches.Professor Drury’s paper provides a much needed reexamination of statutes that allow for essentially the total elimination of personal liability for fiduciary duty breaches by directors.  (Drury uses DGCL Section 102(b)(7) for reference purposes.)  Among the several great things Professor Drury offers in his paper is a provocative, well-advised review of suggestions for changing the current scheme of liability-limiting legislation such as 102(b)(7).  It is this practical aspect of his paper on which I want to focus. 

Before focusing on this aspect, however, let me note that Professor Drury’s paper is very much worth reading as a general matter.  As other commentators on this paper have accurately observed, Professor Drury covers a lot of ground in his paper, and, for that reason, I consider the paper valuable in keeping alive the “good faith,” “D&O insurance ‘crisis,’” “abdication of duties,” etc. discourse.  While I might be inclined to consider agreeing with my fellow commentators that Drury re-hashes a bit much (by way of background) in too few pages, I am still overwhelmingly grateful on the whole that he revisits the basic hot topics surrounding director liability for fiduciary duty breaches.  The more thoughtful the scholarly discourse that we have on these topics - even if a bit repetitive - the better.  Professor Drury does himself justice, and his article is a super contribution to the exchange.

Professor Drury examines three solutions to address the fact that the current director liability limiting legislative regime “is in need of improvement.”  He mentions “periodic re-approval by the shareholders of any [charter-based] exculpatory provision,” using “the current shareholder proposal system[under Exch. Rule 14] to adopt or repeal exculpatory provisions,” and repealing opt-in (or perhaps all?) exculpatory statutes. I favor most his suggestion of periodic re-approval by shareholders of corporate charter provisions limiting the personal liability exposure of directors, and I applaud Professor Drury for his novel and intuitively appealing (to a corporate governance wonk) suggestion. 

In support of this suggestion, Professor Drury notes that giving shareholders the ratification choice is a sound contractarian option that is easy to administer within the existing mandatory annual meeting regime.  Professor Drury observes that, while it might be unclear whether current “exculpatory clauses reflect the true wishes of the shareholder,” requiring periodic reaffirmation would address that concern by “overcom[ing] the collective action problems of shareholders who are unable to get the matter onto the ballot themselves.”  I commend Professor Drury for making this point, and I urge him to do more with it.  Recall the fairly recent debates regarding readopting poison pills.  Poison pills that were adopted in the late 1980’s through mid-1990’s were expiring in the late 1990’s and early 2000’s (these pills were generally adopted with a 10-year lifespan), and this energized several activist investors to begin questioning the otherwise assumed economic value of these pills.  The resulting dialogue and debate was important in the evolution of corporate governance, and I believe a similarly resultant exculpation provision exchange would be beneficial.  Drury could and should pen a more specific exposition of these potential benefits.

Also to that end, I urge Drury to do more with his proposal of requiring periodic ratification in terms of justifying and defending it against likely attacks by naysaying director primacists.  While it seems that Drury (accurately) anticipates the argument that requiring re-authorization is nothing but a formalistic exercise, he can and should say more to detail the benefits of having these sorts of provisions exposed to re-authorization discussion in the boardroom.  For example, in most instances, an incumbent board will not be the board that initially adopted the liability-limiting provision, such that it is entirely possible that a corporation’s current board will never have had a candid, open boardroom exchange about what they are protected from (basically any liability if they have a 102(b)(7) charter provision)) and what they should be protected from (mere negligence liability).  Even if the shareholders blindly re-approve a liability-limiting charter provision like a gaggle of lemmings, the reality is that hopefully the directors will have spent at least a few minutes discussing why, if it all, they think they should have basically total liability insulation.  Even if all that Professor Drury’s proposal ultimately garners is a bit more boardroom introspection on a periodic basis, that is a good thing.

I thank www.theconglomerate.org (and Junior Scholars Workshop organizer Christine Hurt) for the opportunity to participate in their workshop (albeit belatedly and remotely), and I congratulate Professor Drury on a well-written paper.  I look forward to reading more of his work in the future.

As we know, News Corp. has made a bid for Dow Jone, offering $60/sh for the outstanding Dow Jones stock.  The Bancroft family, however, who controls at least a majority of the Dow Jones voting stock, has indicated clearly that it will not vote in favor of this offer, such that the offer, as it currently stands, has no chance of coming to fruition.  News Corp. can up the offer, change the offer, make the offer again, but, without the majority vote from Bancroft (or some percentage of the 52% of votes controlled by the Bancroft block), the News Corp. offer is dead in the water.

The WSJ reports that:
The [Dow Jones] board’s position is that to assess the offer at this point would be futile if the controlling shareholder would vote it down anyway. That is a safe haven — legal experts agree that the board has no obligation to act — but legal precedent indicates that the board could make a recommendation at any time.

Not quite right.  The board absolutely has the obligation to look at the offer.  The judiciary is very deferential only to boards as a presumptive matter.  If a complaining minority shareholder can show that the board did not act in good faith, was not grossly negligent in becoming informed, or acted irrationally, the board may find itself under close scrutiny.  Not assessing an offer at all does not seem to be an act in good faith.

I understand the point that the controlling shareholders have indicated that they would vote down the offer.  That, however, does not change the board’s obligation to do its job.  Mind you, I am not saying a company has to put itself up for play whenever a bid comes in, particularly if the majority of the s/h make clear they are not going to support the bid. Moreover, I am not saying that the DJ board needs to pull in a raft of investment bankers to do fairness opinions on the offer being made.  However, the board members cannot just e-mail each other and say “we’re not for sale, right?”  Even if the board cannot stop the majority s/h from acting or cannot force the majority s/h to support a bid, a board acting “in good faith” is going to at least keep an internal assessment of the offer ongoing, such that if the offer reaches a point where it is just too good too ignore, the board can speak up.  The question at that point then becomes how far the board has to go in agitating in favor of the bid….
Stay tuned.

Is available here. Here is the description:

Congress passed the Sarbanes-Oxley Act in response to major corporate and accounting scandals–and many consider the act to be the most significant change in corporate governance and securities regulations in the past seventy years.

SOX requirements have brought about far-reaching changes for public corporations, private corporations, and nonprofits. Every manager and director should be aware of how the business landscape will be affected.

The Complete Guide to Sarbanes-Oxley answers in nontechnical language such questions as:

• What does SOX mean to me now?

• Do I have to worry about it?
• How much legal and accounting help do I need?
• What information technology requirements will I face?

If you’re a business owner, you need The Complete Guide to Sarbanes-Oxley!

Interested readers may also want to take a look at Butler & Ribstein’s AEI analysis of the Sarbanes-Oxley Debacle as well as Kate Litvak’s latest empirical examination of the affect of SOX on the cross-listing premium.

Does a bid for Dow Jones implicate Revlon duties?  Can a board “just say no”?  What if the Board says nothing, b/c they know a majority of their s/h will not vote for the acquisition?  This is the stuff good Corporations or M&A exam questions are made of.  Luckily, counsel to the Dow Jones Board must have paid attention in class: 

DOW JONES STATEMENT
Dow Jones & Company today announced that a director who is a representative of the Bancroft family, Michael B. Elefante, informed the Dow Jones Board of Directors today that members of the family and the trustees of trusts for their benefit have advised him that they would vote shares constituting approximately 52% of the outstanding voting power of Dow Jones as of May 1 (excluding options) against the proposal submitted by News Corporation to acquire Dow Jones.  Approval of a merger under Delaware law requires approval of a majority of the outstanding voting power of the corporation. Accordingly, the Dow Jones Board of Directors has determined to take no action with respect to the proposal.

The 52% family block takes the DJ Board off the hook for now, for purposes of this particular proposal.  What happens if the water starts churning with hungry bidders?  At what point does the Board need to say to the 52% block “you are walking away from a super deal”?  Does the Board ever need to say that?  What about the minority s/h?  Who, if anyone, needs to advocate for them?  Stay tuned.

The governor of North Dakota recently signed into law the North Dakota Publicly Traded Corporation Act (ht: Broc Romanek). The Act resembles a shareholder activist wish list including majority voting for the election of directors, elimination of staggered boards, advisory shareholder votes on executive compensation, shareholder proxy access, proxy contest reimbursement, poison pill restrictions, etc.

While the Act is certainly groundbreaking, my view is that it was enacted as a publicity stunt. The practical effect of it is likely to be zilch. The Act only applies to public companies incorporated in North Dakota that affirmatively opt-in through provisions in their articles of incorporation. Hence, shareholders cannot unilaterally opt-in a company since an articles amendment requires board and shareholder approval. Additionally, a grand total of two public companies are incorporated in North Dakota (Dakota Growers Pasta and Integrity Mutual Funds of Minot), and there is no reason to suspect that they will opt-in.

Even if a corporation wanted to grant shareholders the rights provided for in the Act, it seems highly unlikely it would do so by reincorporating in North Dakota and opting-in. Instead, it could simply tailor its governing documents to strike what it believes to be the appropriate balance between board and shareholder power for its particular business and continue to enjoy the benefits of Delaware incorporation (business savvy judiciary, responsive legislature, etc.).

Of course, the genius of American corporate law may ultimately prove me wrong, but I doubt it.

Last month, at Tulane’s Corporate Law Institute, Delaware Vice Chancellor Leo Strine suggested that it might not be prudent for directors to consult “Mickey Mouse” investment banks when assessing a going private (or other) deal.  Normally I am a huge Strine fan.  But I think he missed the bus on this one. 

Let me first stipulate that I understood Strine’s Mickey Mouse comment to mean that boards of directors or special committees should not struggle to find a truly independent investment bank (e.g. one who has never done work for the company) to advise them when assessing proposed going private transactions.  Better to pick one of the big regular players: 

Goldman Sachs = Credible Bank; Nowicki & Damodoran = Mickey Mouse Bank

But Vice Chancellor Strine appears not to acknowledge that understanding how to value corporations and deals is not something on which Goldman et al. have a monopoly.  A small and/or no-name Mickey Mouse investment bank can certainly compete in terms of quality of advice given.  Perhaps it would be helpful to analogize:  Wachtell, Lipton, Rosen & Katz.  They started as a small shop, with no-name lawyers, all of whom graduated from NYU.  They are now one of the top three deal law firms.  It seems to me that clients who hired them in their Mickey Mouse law firm days were prescient, not ill-advised.

Going further, I recall that Vice Chancellor Strine said he favored investment banking repeat players because they were not starting from scratch – they knew the issuers, they had done work for the issuers.  He intimated that the Mickey Mouse bank would not be able to give the same good advice the regular players could give because the Mickey Mouse bank would not have the history and familiarity with the target corporation that the regular player had.  To that, I say, most respectfully, hogwash.

I am not a Goldman Sachs i-banker, but I can do a valuation.  With the right tools, I could make a fancy board book, and I could give a power point presentation on how to value a business.  Naysayers might respond with a scoff, saying that I lack “the insight” the big players have to do a really good valuation of any given business.  My response would be that there is nothing proprietary about insight.  If there is something special about the issuer that makes it more or less valuable than the comparables or the DCF or whatever would indicate, that can be revealed by talking to the CFO (or by talking to the special committee itself).  (I was going to suggest “by reading the public disclosure,” but I did not want the cynics to snort.)

I suppose Vice Chancellor Strine might reply that valuation is more an art than a science.  My response to that, however, is that this art is often expressed in favor of the regular client.  Phrased differently, the regular players do have more of a foundation from which to start an analysis of a proposed deal, but they *also* have more of a reason to reach a given decision on the deal in one direction or another.  They have more of a reason to be biased.  So I think things are a wash in that regard.

Mind you, I am not suggesting that hiring me to prepare a board book is a good option, but I am suggesting that there is likely a flood of Mickey Mouse investment banks out there staffed with super bankers who can certainly can do a quality job advising a board or a special committee on a deal.  With fewer conflicts than the big players.

Today’s WSJ had an article titled “Wal-Mart Apologizes to Groups That Were Focus of Surveillance,” which noted that Wal-Mart apologized for responding to large institutional shareholders as “threats.”  Obviously Wal-Mart realized a bit too late that it was absurd, from an investor relations standpoint (and a corporate governance standpoint), to refer to the owners of the corporation as “threats.”

That said, I am not shocked by the reference to large (activist) shareholders as “threats,” and I partially blame corporate lawyers for that perspective.  My view is that, too often, outside counsel forgets that, actually, the corporation is the client, not the CEO/GC who hired outside counsel.  My impression is that often outside counsel tries to “protect” executive officers and the board from large shareholders, as opposed to trying to agitate *for* the shareholders.  Of course, we all know why.  Who hires and fires outside counsel (outside accountants, investment banks, etc.)?  They know where their bread is buttered.  The savvy lawyer/accountant/banker is going to try to keep the person who hired her happy.

Perhaps, then, the solution is to have shareholder ratification of outside counsel….  (Just a random thought that came to me as I typed - no prior thought given.)  Kudos to Wal-Mart for at least recognizing their shareholder relations gaffe.

As promised, I am reporting back from Tulane’s Corporate Law Institute qua “Who’s Who in the M&A World” gathering.  Leo Strine did indeed query today: “can you have angst without a soul?”  (He asked in response to the statement that initial bidders fear deal-jumpers when waiting out a go shop period.)  Though the WSJ was the first to give you the Strine quote, allow me to give you a few more substantive details from Strine’s panel, which was a super one.  The panel was titled “The Challenges of Representing a Private Equity Target,” and the panel included moderators Jim Morphy and Eileen Nugent, and speakers Vice Chancellor Leo Strine, Creighton Condon, Jesse Finkelstein, Robert Kindler, Ted Mirvis, and David Sorkin.  (Morphy sat next to Kindler, who sat next to Mirvis, who sat next to Strine – it is unclear to me how *that* seating chart got put together….)

One of the hot sub-topics on the panel was the question of whether or not a target BOD has to shop the target if it is considering a private equity offer.  As a general matter, the Revlon rule requires that, any time a sale or change of control is inevitable, the BOD of the target corporation has the obligation to “maximize shareholder value.”  When dealing with a “strategic” transaction, this obligation basically requires the BOD of the target to conduct an auction to try to get the highest possible bid for the target.  But when dealing with a going-private transaction, the BOD of the target has historically been held to an “entire fairness” standard.  That is to say, when a private equity bidder makes an offer for a target, and the target’s BOD moves forward on the bid, the courts will later review the BOD’s actions for the purpose of assessing whether the transaction was entirely fair: Was the transaction fair both in ultimate price paid and procedure used to review the offer and get to the price?  There is no obligation to basically conduct a public auction for the target. Yet a going-private transaction is clearly a change-of-control transaction (ala Revlon), such that one would *think* the Revlon rule of maximizing shareholder value should apply (instead of the entire fairness review).  The question came up on the panel, then, as to whether a target who was moving toward a private equity offer or who was retaining an investment bank to gauge interest from other private equity groups needed to publicly announce itself up for sale.  Kindler raised the very good point that often private equity groups come after the weak and sick targets.  So announcing that the target is weak and sick and considering bids really does not do a lot for the target in terms of market strength.  Moreover, if the private equity transaction falls through, the target will be left having admitted it was an injured animal.  Kindler then made the very good point – with which the entire panel seemed to concur – that sometimes conducting a true Revlon auction does not actually work to the s/h benefit.

Vice Chancellor Strine chimed in to say something like “Revlon is a reasonableness test.”  (I think that those were his exact words, actually.)  What I am hoping he meant was that the *way* a target BOD decides to maximize s/h value (with conducting a public auction, making focused inquiries to private equity groups, doing a market test, etc.) was up for business judgment rule protection.  If the way the BOD of the target chose to get the best value did NOT involve a public auction (to keep secret their compromised status or some such), as long as the process used – whatever it was - was designed to ensure maximization of s/h value,  assuring itself the price taken maximized s/h value, the BOD would be fulfilling their fiduciary duties.

Good to know, because, quite frankly, it has never been clear why Revlon comes up in strategic transactions and not going private transactions.  Hopefully, however, this does not lead to the Revlon rule losing its rigidity in the context of plain vanilla public strategic transactions.  It was nice to have a Delaware rule that was clear:  If up for sale, conduct an auction.

DealBook reports that Goldman Sachs has included the following shareholder proposal from Evelyn Davis in its 2007 proxy statement:

RESOLVED: “That the Board of Directors take the necessary steps so that NO future NEW stock options are awarded to ANYONE, nor that any current stock options are repriced or renewed (unless there was a contract to do so on some).”

REASONS: “Stock option awards have gone out of hand in recent years, and some analysts MIGHT inflate earnings estimates, because earnings affect stock prices and stock options.”

There are other ways to “reward” executives and other employees, including giving them actual STOCK instead of options.

Recent scandals involving CERTAIN financial institutions have pointed out how analysts CAN manipulate earnings estimates and stock prices.

I did a Westlaw search to see whether Goldman filed a no-action request with the SEC to exclude the proposal. It appears that it did not. However, Ms. Davis submitted the same proposal to Pfizer. Pfizer did file a no-action request arguing that the proposal is excludable under Rule 14a-8(i)(7) because it “pertains to matters of Pfizer’s ordinary business operations, namely general compensation matters.” The SEC concurred.