Sunday, June 22, 2008

Companies Amend Advance Notice Requirements and Poison Pills To Include Financial Derivatives

Rather than wait for the the SEC to adopt new rules governing swaps and stock borrowing agreements in director elections (and more importantly during shareholder activist campaigns), Companies are beginning to implement changes to their bylaws and shareholder rights agreements on their own volition.

On June 18th the WSJ reported that two Companies: Louisiana-Pacific Corp. (LPX) and Micrel Inc. (MCRL), recently adjusted their shareholder rights plans to include derivatives when calculating the Pill's trigger.
See WSJ Story

On April 2nd 2008 MCRL announced an amendment to their advanced notice requirements shortly before activist investor Obrem Capital nominated a slate of directors to replace the current directors at the company's annual meeting. (On June 9th MCRL announced less than 18% of shareholders voted for Obrem's slate of nominees. See MCRL's Press Release

Micrel's new document requires shareholders to disclose any derivative contract entered into as of the date of the notice and include whether or not the derivative transaction will be settled before or after the record date. See Micrel's Certificate of Amendment of the Bylaws of the Company.

On May 23rd 2008 LPX renewed their Stockholder Rights Plan which was due to expire on June 6th 2008.

LPX's new document changed the definition of Beneficial Ownership to include "certain derivative or synthetic arrangements having characteristics of a long position in Common Shares." See LPX's Amended Rights Agreement