Shareholders, watch your language…
If you read enough SEC filings, you begin to recognize certain sections like they’re old friends. You might think, “Oh! There’s the section on Executive Compensation Discussion & Analysis!” or “Hi, Forward-Looking Statements. How are the Risk Factors looking today?”
But occasionally – perhaps rarely – something pops out that you’ve never noticed before.
Such was the case when we read the proxy statement that vitamin and nutritional supplement producer NBTY, Inc. (NTY) filed recently. At the top of page 10, a passage in the “Communications to Directors” section gave us pause:
“…After the mail is opened and screened for security purposes, it will be logged in, and (other than mail that our General Counsel determines to be trivial or obscene) then forwarded to the particular Director identified, or to the Board as a whole, as requested in the stockholder’s correspondence. Trivial items will be delivered to the Directors at the next scheduled Board meeting. Obscene items will not be forwarded.”
Really? Do the directors receive a lot of obscenity-laced mail, or is this just one of those boilerplate sections that legal counsel adds to protect the directors just in case the company ever receives an abusive letter that – if read aloud – would turn the air in the board room blue?
Frankly, we expected to find out that it was boilerplate. But it turns out that a search on variations of the paragraph above yielded only NBTY, Inc., which has included similar language in its proxy every year since 2004.
[As an aside, one might understand shareholder concern – if not ire – at some of the disclosures in the proxy. For example, in the Related Transactions section on p. 31, we noticed that in FY 2009, six family members of two of the top executives received either commissions or “aggregate compensation and fringe benefits” ranging from just under $500,000 to $1.5 million.]
Now we’re curious, though. To those of you who see or receive letters from shareholders, is obscene mail addressed to the company’s directors or top executives really a problem? Feel free to discuss… politely, of course.
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Posted in Tags: odd filings |
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February 4th, 2010 at 11:55 am
Funny writing.
Used to be named Nature’s Bounty. Vitamins.
Odd this beast has risen from $12.22 to 46 +/- and has a high 83% Institutional ownership, with short interest only 1.37, beta 1.7.
Not exactly a day trader or large public ownership, 450 shareholders. Employees?
14K employees so maybe some of them found out about the lack of love at the top.
Past 6 months Insider Sells 1.8M to 21K buys.
February 4th, 2010 at 3:20 pm
Check out the S-1 for a private Series A offering filed a few days ago. Probably one of the few filings to: 1) contain a complete screenplay; 2) contain the words “F**k me heels,” among other less-repeatable (yes, really) turns of phrase.
February 4th, 2010 at 3:21 pm
oops, the link: http://www.sec.gov/Archives/edgar/data/1474227/000146302810000002/ds1a.htm
February 5th, 2010 at 8:17 am
I’m wondering about those “trivial items” that don’t get forwarded right away to directors. Do you suppose they get a folder that says “trivial items” at the board meetings? That’d be a pretty strong message that the information is not really worthy of consideration.
Obviously there is a need to keep directors from being overwhelmed by inanities, but it’s interesting that management is there to do the filtering. Based upon history (in general, I don’t know this company specifically), I’d say that one of the governance problems companies face is that the agenda and information flow is shaped by management, not the board. This is just another example.
Which items critical of management end up in the “trivial” folder?
February 9th, 2010 at 2:53 pm
How much mail does a director normally receive? It seems foolishly short sighted to have someone screen director mail.