North Dakota

I don't know that this blog has ever been visited by anyone from North Dakota. But if you drop by in the future and see this message: Hail!

I understand that last year your state enacted a remarkable corporate-governance statute.

It creates a new chapter of the state's corporations law, 10-35, by which a company chartering in that state can opt to be governed. If it does, it will get a low franchise fee, only half of what it would pay if it incorporated in Delaware, but it will have to abide by various rules designed to keep the management responsive to the shareholders.

For example: the term of directors shall not exceed one year and will not be staggered into different classes. So every annual meeting will involve the re-election (or not) of the entire board.

The chairman of the board will be ineligible from holding any executive office. We've become accustomed to seeing the phrase "chairman and CEO" after a bigwig's name. The new 10-35 corporations will have two people for those two distinct posts.

Provision is made for access to the company's proxy materials by major shareholders -- provisions analogous to those recently considered, but never adopted, by the SEC.

Shareholders must approve of certain public issuances of shares: in other words, they can veto actions that would dilute their voting power.

There are other important provisions in 10-35, but those examples will give you an idea of the direction of the whole package.

What difference might this make? Are a lot of firms going to beat down the door to re-charter in North Dakota, either for the low franchise fee or because their shareholders are pressuring them to do so or for any other reason?

More on this tomorrow.

Panera Bread

I love Panera! Their stuff is delicious.

But that isn't enough to get them an entry in Proxy Partisans. There has to be some corporate tumult. As, indeed, there is.

Shamrock Activist Value Fund is demanding that the company declassify its staggered board, separate the roles of chairman and chief executive, and expand the board to include new members. "Ah, an' the Shamrock fund itself be demanding that Panera kiss the blarney stone, sure'n."

Panera is listed on Nasdaq, with the sticker symbol: PNRA. A quick perusal of its stock price shows me no obvious reason for dissatisfaction. It has held its value over the last year, even advancing a bit -- which is impressive in the present climate.

In percentage terms, it is now valued at 112% of what it was a year ago. The Nasdaq-100 index is at 93% of where IT was. The Dow Jones is at only 85%.

This doesn't mean the stock couldn't do better, of course. This does seem to be an odd time for Shamrock to launch a challenge. Panera held its annual meeting in May. So why raise these issues in July? I'll look into it, and see if I can tell you more.

GenCorp meeting date set

GenCorp's shareholder's meeting is now set for March 26 at the Ritz-Carlton in Washington, DC. The record date is February 1.

To their credit (in my humble opinion) the board of GenCorp has made some moves over the last couple of years to modernize their system of governance. It has separated the role of chairman from that of chief executive; it has allowed the expiration of an old "poison pill" provision; and it has declassified its board.

Of course, it has done these things under pressure. Still, it has done them.

Also, over the same two year period the price of a share of GenCorp (NYSE: GY) has been in decline. It was worth about $19 two years ago, and is worth somewhat less than $11 today.

The dissident slate available to voters at this month's meeting is backed by hedge fund Steel Partners.