Tuesday, June 22, 2010

Three brief items

1. Deal Struck at Landry's

Landry's Restaurants Inc., a seafood chain operation, says that Pershing Square Capital Management has agreed to drop its resistance to the buyout of tghe company by its chief executive, Tilman Fertitta.

In order to obtain this agreement, as you mnight expect, Feritta had to sweeten his offer for the 45 percent of the shares of Landry's (LNY.N) that he doesn't already own, up from $24 a share to $24.50 a share. The bidding was at $14.75 a share back in November.

Pershing Square and related entitied own together a little less that 10 perecent of the outstanding shares.

2. Incumbents win at First Franklin

Two incumbent board members at First Franklin Corp., of Cincinnati, Ohio, the holding company for Franklin Savings and Loan Co., have held on to their seats despite a challenge from Lenox Wealth Management Inc.

Also, a nonbinding referendum on the declassification of the board failed to muster the necessary majority.

This fight illustrated one common feature of proxy fights that I believe I have so far left largely undiscussed on this blog: the disputes over what constitutes the relevant peer group. One commonly hears dissidents challenge a management on the theory that it has failed to keep pace with the performance of similarly placed corporations, the peer group. One often hears management deny that assertion -- by defining itself against another peer group.

In this case, Glass Lewis used a small list of other banks as a peer group and came to the conclusion that First Franklin is even with the pack. RiskMetrics used a larger group and said First Franklin is lagging behind.

3. Chesapeake Energy: Say on Pay

A vote at the June 11 annual meeting of the shareholders oif Chesapeake Energy ended with 55.6 percebt approval of a resolution that would provide for regular shareholder advisory votes on executive pay.

Chesapeake, an oil company that, despite a name that smacks of the Atlantic Ovcean, is actually based in Oklahoma City, Oklahoma.

The board of directors' argument against say-on-pay had been the rather lame contention that the company and its shareholders should wait and see what Congress will come up with this year. Or, to quote:

Because the Board is unable to predict whether federal legislation will be enacted or the form it might take, the Board believes that it would be premature for the Company to implement an advisory shareholder vote on executive compensation prior to knowing the ultimate disclosure requirements of the Stability Act or any other federal legislation pertaining to say-on-pay.

I'm not surprised that an argument like THAT failed to carry the day!

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