Cascade Financial

Craig Skotdal, one of the twelve directors of Cascade Financial, is unhappy with his fellow members.

Twelve sounds like an unwieldy size for a corporate board, but so far as I can tell yet that is not one of Skotdal's points. Rather, he is unhappy because his fellow board members don't know enough about banking (Cascade is the 8th largest community bank in Washington State) and as a consequence they are too subservient to bank management.

Skotdal has put forward his own slate: three nominees whose presence on the board would improve this situation: Tom Rainville, Arnold Hoffman, and Christian Sievers. The next annual meeting takes place next month.

David Duce, who chairs the corporate governance and nomination committee of the board, has sent a rather snippy letter to Skotda's lawyer, Gary F. Linden, expressing wonder that these candidates were willing "to be interviewed only as a group and only with your law firm present. As Mr. Skotdal is well aware, this is not consistent with the Nominating Committee's practices for evaluating board candidates...in light of your clients' recent actions, the disregard for procedures with which Mr. Skotdal is charged as a sitting Director with enforcing, and the lack of cooperation we have received in trying to assess the qualifications of your candidates, we are left to conclude you have no interest in working cooperatively."

In news that may be related, the SEC also recently refused Cascade's request for a no-action letter, in connection with a shareholder proposal submitted by Ed C. McRory. [A no-action letter is a more-or-less informal green light for a contemplated corporate action. A corporation asks the agency -- if we do X, can we proceed on the understanding you will take no enforcement action? So in this case the SEC said that it could not proceed on that understanding.]

Ed McRory, a shareholder, wants the next meeting to vote on a resolution requesting a compensation policy that "restricts the future granting, enlargement or enhancement of any golden parachute plan...."

Cascade, in a letter December 29, 2009, asked for no-action go-ahead concerning its planned exclusion of this proposal from the proxy materials, because it is (a) vague and indefinite, (b) relates to the company's ordinary business operations, and (c) has already been substantially implemented.

In a response March 4, 2010, the SEC said that it does not believe that the proposal is vague, or that it has been substantially imlemented. Accordingly, it can not be omitted from proxy materials on either of those grounds. The case with the claim of "ordinary business operations" is a little more complicated. If the proposal is meant to apply only to "senior executive compensation," then it is not an interference with ordinary business relations, and this contention too fails. The company was required to give McRory a chance to amend the proposal making clear that it is so restricted, and it can proceed with its proposed exclusion if and only if he refuses to do so.

Amylin fight: Byetta fall-out

Amylin Pharmaceuticals Inc., a Delaware chartered company with its headquarters in San Diego, Calif., will hold its annual shareholders meeting May 27.

It could be a contentious affair. On March 30, the SEC gave "no action" relief to each of two activist shareholders that will allow them to include each other's nominees on their own proxy cards -- to present a unified opposition slate, so to speak. So that unified opposition slate now includes 10 nominees for the 12 seats on the board.

Last year, Amylin's diabetes drug Byetta (which the company co-markets with Eli Lilly) became the subject of highly publicized safety concerns. The FDA said that it was working on a stronger warning label for the drug, and the value of Amylin stock, which had been moving close to $35, dropped to below $20 within the month.

Here's a link to a stock chart that includes that that precipitous drop.

You'll also see from that chart that though the price briefly regained its equilibrium at $20, it resumed a downward drift by early October. That can' really be held against the leadership of the company, though, because all US equities headed south last October.

More recently, good news about Byetta has enabled the stock to make a modest recovery.

I'll say something about the blow-by-blow of the proxy fight tomorrow.

Regions Financial

The staff at the Securities and Exchange Commission has denied a "no action" request from Regions Financial relating to proxy access.

"No action" requests are a fairly routine part of regulatory proceedings in such contexts. A company writes to the SEC, saying, "We are thinking about doing A, B, and C," -- can you assure us this would result in no enforcement action?"

The staff's no-action assurance is always heavily qualfied ("given all the facts and conditions as you have outlined them, etc.") and has no precedential significance.

But that Regions Financial sought and failed to receive a no-action assurance in this area is, just possibly, a straw in the wind concerning the post-Madoff, Obama era SEC.

Shareholder activists have sought to get a proxy vote at Regions -- a participant in the government's TARP Capital Purchase Program -- concerning restrictions on executive compensation there. The management wanted to exclude that proposal. Now, though, since the SEC won't promise that it would take no action against them over the exclusion, there will likely be a vote on the proposed compensation restrictions.

Here's a link to the staff's letter.

Hain Celestial

Yes, some stockholders at some corporations are interested in pressing for the re-incorporation of the corporations out of Delaware and into North Dakota in order to get what they see as the advantages of the ND new-model corporate charter.

Among the few corporations where this issue has arisen so far is health-food concern Hain Celestial Group. Its best known for its Celestial Seasoning tea, it is headquartered in NYS and ... chartered in Delaware.

Here's a link for more.

The shareholders proposed a non-binding resolution on this subject in July. In October, Hain Celestial asked the SEC for permnission to ignore it on procedural grounds (via a no-action letter). They were denied. So it appears there will have to be a vote.