Mainland From United States, joined Jun 2004, 262 posts, RR: 0 Posted (2 years 7 months 2 weeks 3 days 1 hour ago) and read 1296 times:
The door has been opened for things to get messier in the ongoing Midwest/AirTran saga. From AirTran's amended proxy filed on Friday:
"According to the Midwest definitive proxy statement for its 2006 annual meeting, filed with the SEC on March 28, 2006, shareholder proposals to be considered for inclusion in the proxy statement relating to the 2007 Midwest annual meeting pursuant to Rule 14a-8, had to have been received not later than November 23, 2006, and a shareholder who intended to present business, other than a shareholder's proposal pursuant to Rule 14a-8, at the 2007 Midwest annual meeting had to give written notice to the Secretary of Midwest no later than February 4, 2007. However, because Midwest has delayed the date of its 2007 annual meeting by more than 30 days beyond the date of the 2006 annual meeting under Rule 14a-8(e)(2), the deadline for stockholder proposals is now "a reasonable time before [Midwest] begins to print and send its proxy materials". Midwest stockholders wishing to submit proposals at the Midwest annual meeting must have continuously held at least $2,000 in market value, or 1% of Midwest common stock entitled to be voted on with respect to any such proposal at the Midwest annual meeting by the date such proposal is submitted and continue to hold such securities through the date of the meeting. Midwest stockholders desiring to submit proposals requesting Midwest to take action on AirTran's offer or otherwise should consult their own legal advisor with respect to the requirements of Rule 14a-8."
What I have put in bold is new, added text from the last time they filed the proxy.
So, basically, since Midwest had to delay its annual meeting, SEC rules allow extra time for shareholder proposals to be included as a voting item this year. As AirTran suggests in its proxy, a shareholder proposal may be put forward to push Midwest to the negotiating table. Relevant proposals may also request:
- Midwest dissolve the poison pill
- Midwest declassify its Board of Directors so all directors are elected at once, rather than the tiered system the company has now.
Obviously, both of these have been a thorn in AirTran's side and they'd certainly welcome changes to each.
Unfortunately for AirTran, the same SEC rule says they can not submit such a shareholder proposal. From the SEC:
C. Questions regarding the eligibility and procedural requirements of the rule
Rule 14a-8 contains eligibility and procedural requirements for shareholders who wish to include a proposal in a company's proxy materials. Below, we address some of the common questions that arise regarding these requirements.
1. To be eligible to submit a proposal, rule 14a-8(b) requires the shareholder to have continuously held at least $2,000 in market value, or 1%, of the company's securities entitled to be voted on the proposal at the meeting for at least one year by the date of submitting the proposal. Also, the shareholder must continue to hold those securities through the date of the meeting.
AirTran has not held Midwest shares for at least one year, so count them out. Other interested parties with prior histories such as institutional investors Octavian, Litespeed Management, and Market Street Securities are out too since it appears -- I can't find any evidence otherwise -- they all bought shares leading up to or during the merger negotiations. Shareholder Linda Garrett, who filed suit in January over the poison pill, may be eligible. Plus, any Midwest shareholder with around 150 shares or more -- plenty of those in shares that have already been tendered -- should be eligible as well.
Would a shareholder proposal have a chance of passing? Generally, chances are low -- but anything is possible. Proposals requesting getting rid of the poison pill or reclassifying the board have been put forward to varying success at other corporations. Regardless, they always make the shareholder meeting more fun!
Midwest should file and mail out their new proxy for the annual meeting within the first two weeks in May, so there's plenty of time to submit a proposal -- if shareholders are aware of this fact.
Mainland From United States, joined Jun 2004, 262 posts, RR: 0 Reply 4, posted (2 years 7 months 2 weeks 2 days 3 hours ago) and read 897 times:
Quoting JBo (Reply 3): I wonder if it was the simple fact that both MIdwest and AirTran had their annual meetings scheduled on the same exact date.
Merger partners have held their special shareholder meetings on the same date in the past, so I don't believe annual meetings would be any different. Each company sets the date, so I imagine the SEC cares little if they're the same date. However, if I were a betting man, here's what I think is holding up Midwest's annual meeting:
"On January 20, 2007, AirTran New York filed a motion with the Supreme Court of the State of New York in New York County seeking to compel Midwest to produce certain shareholder records pursuant to New York Business Corporation Law Section 1315. AirTran New York argued that since Midwest is registered to do business in New York, pays taxes in New York, maintains an office in New York, and owns slots at John F. Kennedy and LaGuardia airports that it is effectively "doing business" in the state and should have to abide by Section 1315 requiring foreign corporations doing business in New York to produce a record of shareholders upon written demand by a resident shareholder. On February 16, 2007, the New York Supreme Court, in an opinion by Judge Helen E. Freedman, held that Midwest was not "doing business" in New York sufficient for purposes of Section 1315 of New York Business Corporation Law and did not order Midwest to provide its current record of shareholders to AirTran New York. AirTran has appealed such order and moved for expedited consideration of such appeal."
*Emphasis added*
So, as expected, AirTran is appealing the New York ruling. The SEC wasn't going to let Midwest file and send out their definitive proxy until this legal matter, which has a direct impact on the proxy solicitation itself, is resolved. AirTran, therefore, should have its appeal heard before Midwest sends out its proxy -- so the SEC advised them to move the meeting back to give AirTran and the legal system time to hear the case.
Just like when the suit was brought the first time....if the appeal is successful, they'll get the shareholder list and directly solicit Midwest shareholders. If not, AirTran will have to resort to inspecting the shareholder list 2 business days after Midwest mails the proxy notice.
You don't need a passport to know what state you're in...
Cubsrule From United States, joined May 2004, 13605 posts, RR: 14 Reply 5, posted (2 years 7 months 2 weeks 2 days 3 hours ago) and read 894 times:
Quoting Mainland (Reply 4): Just like when the suit was brought the first time....if the appeal is successful, they'll get the shareholder list and directly solicit Midwest shareholders. If not, AirTran will have to resort to inspecting the shareholder list 2 business days after Midwest mails the proxy notice.
Is anyone familiar enough with New York laws (and/or the court system) to speculate on the success of this appeal? The Supreme Court ruling doesn't seem prima facie unreasonable unless there's some case law I don't know about...
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