We’ve observed before that the lawyers drafting Securities and Exchange Commission filings can be a little slow to adopt the latest trends, or adapt to the latest cultural developments — see our January post on Wikileaks in the filings, for example, or Michelle’s look at “double-dip” fears in September last year. So when something starts cropping up in the filings, you know it has truly arrived, at least on some level.

And so it is with Occupy Wall Street, the quirky demonstration against corporate misdeeds, greed and inequality that has spawned parallel protests and spoofs across the country, as well as a bunch of smart, and not-so-smart, signs. (The funniest moment so far, as brought to us by the Canadian Broadcasting Corporation: Occupy Whitehorse has become a “virtual occupation” with the onset of winter — propane doesn’t come cheap, after all.)

As far as we can tell, Occupy Wall Street made its SEC-filing debut yesterday, at least by name, in two separate filings. The first, in an 8-K from Strategic Hotels & Resorts (BEE) — a $943-million market-cap real-estate investment trust that concentrates on luxury hotels — landed on the SEC’s virtual desk a few minutes before noon. More on them in a moment.

The second instance came not two hours later, when CME Group (CME) filed its 10-Q. CME Group, of course, runs the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange. So it’s not surprising that it would take a dim view of the protests in New York’s financial district and see itself as a potential target of any nefarious foes of the financial system.

In disclosing a new risk factor for investors to consider, the company warns that “Our role in the global marketplace may place us at greater risk for a cyber attack and other cyber security risks.” It continues:

“In connection with the continued economic uncertainty, groups such as Occupy Wall Street and Anonymous, have targeted the financial services industry as part of their protest against the perceived lax regulation of the financial sector and economic inequality.”

The filing then goes on to explain how Anonymous – the online organization perhaps best known for retaliating against businesses that cut off financial and other support for Wikileaks – “called on its supporters to launch a ‘distributed denial of service’ attack to overwhelm website traffic on NYSE Euronext’s external Web site,” succeeding in causing a “brief outage.” The disclosure concludes,

“While we have no evidence at this time that we are a specific target of a cyber attack, our role in the global marketplace places us at greater risk.”

We’re not sure if CME really means to lump Occupy Wall Street together with Anonymous so indiscriminately, or if it’s a kind of rhetorical sleight of hand. For our part, we haven’t heard of any Occupy Wall Street-linked cyber-attacks — beyond suggestions that Anonymous members supporting the movement might try to hack the New York Stock Exchange — and to our eye the two groups seem pretty different, except perhaps for a penchant for pseudo-revolutionary sloganeering and a generally anti-corporatist attitude.

Strategic Hotels seems to have had a more practical and indirect reason for addressing Occupy Wall Street, and did so in response to an analyst’s question. In an accompanying transcript of the company’s quarterly results, Enrique Torres, an analyst with Green Street Advisors, asks:

“Laurence, if I look at the headlines, I see a lot of corporations having now to balance between some job cuts and then their budgets for rewards spending. In addition, you also see the Occupy Wall Street headlines. Combining these two elements, what do you think the perceived risk is of a revisit or return of the AIG effect on corporate luxury spending?”

You’ll recall that American International Group  (AIG) drew buckets of scorn from lawmakers after feting a hundred advisers at a luxury resort in California not long after securing a federal bailout. The backlash led other companies to rein in their own travel and entertainment efforts — at least for a little while; it looks like even AIG is back at it, according to Bloomberg News.  Strategic Hotels’ chief executive, Laurence Geller, says he’s heard “no noise about it, no rumblings” either “politically” or “at the corporate level.” Companies are being a little more careful about appearances, but Geller suggests it’s not a problem:

“It’s got to do with prudence, given the headlines. So instead of a divisional president making his decision, it may need a signature from a group CFO or group COO, for example, but that has had no negative impact on it at all.”

In any case, the two filings mark a milestone of sorts, both for Occupy Wall Street and for the SEC.

Image source: Tony the Misfit via Flickr

Data source: Morningstar Document Research

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That announcement was last Tuesday. On Friday afternoon, Marsh filed an 8-K with both the press release and this agreement with Burns. To us,  the only thing missing was the giant bow. Under the agreement, Burns, will continue to collect her Mercer base salary of $900K a year until the end of the year. After that, it drops to $850K. Burns will also get a $1.5 million bonus for 2011 (but none for 2012). The agreement also notes that Marsh will spend $650K to fund the center in 2012 (not including Burns’ salary) and $1.5m in 2013.

The filing is a bit vague on what happens in 2014 — presumably it will take longer than two years to study the various problems associated with retirement — noting “The Company may provide financial support in 2014 and later years at the discretion of the Chief Executive Officer of the Company.” Burns gets to choose where she’ll do this heavy thinking, though Marsh has to approve it (personally we’d go for Bali, where $850K can really go far). Marsh will also “provide support in the form of office space for you, a workstation for an administrative assistant, basic office services, communications and legal support”, the filing notes.

A quick breeze through the filings shows that this isn’t Burns’ first run at retirement. In 2005, Burns “retired” from Mirant, and received another plush package, according to this agreement. A year earlier — in 2004 — Burns “retired” from Delta Air Lines (DAL) and agreed to serve as a consultant for the next five years. While no money changed hands, Burns did manage to get “unlimited positive space travel” for herself, her partner and her dependent children for the rest of her life. (So the airfare to Bali would actually be free).

Keep in mind that while Burns may know something about retirement, she continues to sit on the boards of both Cisco (CSCO) and Wal-Mart Stores (WMT), where she makes close to $200K in cash compensation and collects several hundred thousand more in stock. According to Wal-Mart’s proxy, Burns is just 53, significantly younger than most of the retirees she’ll presumably be studying. In fact, a recent OECD study found that the average retirement income for Americans is just above $40K a year — considerably less than Burns’ retirement package. And the retirement age to get full Social Security benefits is now 67.

Image source: Wikipedia Commons

Then again, it was just a few short weeks ago that PPDI announced the appointment of Hill as the company’s CEO via this 8-K that was filed on Sept. 22. We didn’t pick Hill or PPDI out of the blue. Yesterday, the company announced that it was being taken private in a $3.9 billion deal by private equity firms, The Carlyle Group and Hellman & Friedman. If you read the press release carefully, you’ll notice that there was no mention of Hill at all, which seems kind of odd to us, given that he is the company’s CEO. We think it’s a pretty safe bet that some PR person would have whipped up a nice quote for Hill if he was planning on sticking around.

Because the Sept. 22 filing did not include Hill’s employment contract, we only have the broad-brush outline to try and parse. Still, it looks like his 2 1/2 weeks on the job could be one of the most lucrative (not to mention shortest) stints we’ve seen here in 8 years of footnoted. As spelled out in the 8-K, Hill’s salary was set at $575,000. In addition, he received 30,000 RSUs and 150,000 options. While this Form 4 notes that the 150,000 options vest in three equal increments starting next year, the Sept. 22 filing seems to indicate that the options vest immediately upon a change in control. Doing some quick back-of-envelope math, we calculate that Hill stands to make over $5 million just on the stock and options. Did we mention that this was for 2 1/2 weeks of work?

There’s also 2.99 times his salary, or $1.7 million, and two years of benefits, if he is let go after the deal. Granted, the numbers may change a bit once the contract is actually filed. But it appears that Hill’s 2 1/2 week stint as CEO could be worth close to $8 million. With that kind of money, Hill should be able to hire one of the many LinkedIn service companies that offer to update the profiles of busy, but social-media conscious executives, including CEOs looking for their next lucrative gig.

Image source: Inkwell Bookstore

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By way of background, Wright Medical is an orthopedic medical-device maker that last fall settled [PDF] a U.S. Justice Department investigation into its relationship with surgeons, involving the company’s hip and knee products. In addition to paying $7.9 million, the company entered into a deferred prosecution agreement, admitting no wrongdoing but promising to keep to the straight and narrow in return for seeing charges dropped at the end of four years. Since then, Wright Medical’s CEO quit, and it forced out another executive. To all appearances, these problems seemed to be receding into the past.

Then on Thursday last week, the company issued an earnings release and disclosed that three other executives had resigned “without cause” (and thus without severance). Maybe more significantly, it also said the U.S. Attorney that oversaw its settlement “believes that the Company has knowingly and willfully breached material provisions of the DPA.” The company, Wright Medical noted in the press release, has three weeks to respond before any action is taken — in other words, it can try to persuade the prosecutor not to come down on the company like a ton of bricks.

Yet if you had read Wright Medical’s filings carefully — or saw our FootnotedPro report on the subject Wednesday evening — you would have been prepared for this, and had nearly a day’s head-start on other investors. Just glancing at the company’s press releases (as every news outlet we could find seems to have done), would have left you flat-footed.

Here’s why: The company issued an earlier press release and 8-K the previous day. This Wednesday press release disclosed the company’s preliminary quarterly results — and mentioned in an offhand sort of way that it had received the results of an internal investigation, which it passed along to the authorities. Here’s the bulk of that section:

“The Board received a report on the investigation and notified the independent monitor and the U.S. Attorney’s Office for the District of New Jersey (USAO) pursuant to the Deferred Prosecution Agreement (DPA). The same notice was also provided to the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG). The Board also took a number of measures to enhance the Company’s compliance environment.”

It goes on to say that “communications” with the authorities “are ongoing.” No mention of, for example, potentially willful breaches of the settlement agreement. Yet, in the 8-K that accompanied that press release, Wright Medical warned precisely that prosecutors might have reason to be suspicious. Here’s the key sentence, missing entirely from the press release, that caught our attention in the 8-K:

“On May 4, 2011, pursuant to Paragraph 20 of the DPA, WMT provided written notice to the independent monitor and the USAO of ‘credible evidence of serious wrongdoing.’”

Passing along the results of an internal inquiry “pursuant” to a prior settlement  vs. notifying the authorities of “credible evidence of serious wrongdoing” — strikes us as being pretty different. Moreover, in Wednesday’s 8-K, Wright Medical went on to warn that, should the U.S. Attorney’s office conclude that the company “has knowingly and willfully breached” the agreement, it

“could expose us to significant liability including, but not limited to, extension of the term of the DPA by up to 6 months, exclusion from federal healthcare program participation, including Medicaid and Medicare, which would have a material adverse effect on our financial condition, results of operations and cash flows, potential prosecution, including under the previously-filed criminal complaint, civil and criminal fines or penalties, and additional litigation cost and expense.”

In other words, Wright Medical found serious new problems, prosecutors could conclude (as they did, within a day) that the problems were willful, and all of this could have dire consequences for the company. None of that was in the press release, or in the articles based on the press release that we found.

Armed with that kind of knowledge, you might have been able to avoid some of the 6.4% decline in Wright Medical’s shares on Thursday. In fact, in after-hours trading last Wednesday, the stock was actually up 2% as we put together our report; it opened down 5% on Thursday morning. The stock only recovered a little of that ground on Friday.

Nor are we convinced the company is really being much more transparent than earlier in the week. For one thing, even the second press release skipped over the fact that the company could see serious repercussions if it can’t convince prosecutors to back off. And Wright Medical also managed to omit another detail. Specifically, (emphasis ours)

“that the USAO believes that WMT has knowingly and willfully committed at least two breaches of material provisions of the DPA.”

Where did we find that bit if it wasn’t in the press release? You guessed it: in the 8-K that Wright Medical filed with Thursday’s press release. (Scroll down to near the bottom of the last page to find it.)

As we said, it pays to read the fine print in addition to the spin.

Image source: Wright Medical website

Even when you’re doing “God’s work,” it turns out, a little deft marketing is in order.

Goldman Sachs (GS), of course, put out its annual proxy filing on Friday afternoon, cordially inviting shareholders to a morning of procedural formalities and largely predetermined balloting. True to form, the dollar figures in the summary compensation table are eye-popping, and got plenty of coverage — $14.1 million in total compensation for Chief Executive Lloyd Blankfein, and just a couple hundred thousand dollars less for his lieutenants. Even Blankfein’s top-notch driver saw his pay double, as the WSJ noted.

But it’s easy to miss the forest for the trees. Taken as a whole, the proxy screams out that this is the new, sleeker, more publicity-conscious Goldman. Just look at the reader-friendly, two-column layout! (And the drabber 2010 edition.) Check out the smiling, color photographs of Lloyd & the gang on the company’s board, with their many good works in easier-to-find bullet lists (trustees of Harvard Law School, Harlem Children’s Zone, Carnegie Endowment for International Peace!) — and contrast it with last year’s dense, pictureless expanse of gray.

There’s more to the redesign than snazzy visuals. There’s also a new two-page letter to shareholders — after the usual terse invitation to the meeting, but before the table of contents – signed by “The Board of Directors of The Goldman Sachs Group, Inc.” (oh, those stiffly formal bankers!) and vowing that “[o]ur most important responsibility is to protect shareholders’ interests.” They summarize the company’s financial results and tout the company’s commitment to “effective governance practices,” “our culture of teamwork, excellence and client service,” “[e]nsuring that pay is tied to performance, especially at the most senior levels,” and “[a]ctively engaging with our broader community through environmental, social and governance practices, in addition to philanthropic efforts.” The second page is devoted to the many laudable things the board has done, under headings like “Accountability and Leadership,” renewing a vow to review the board’s leadership structure each year, and describing an “extensive review” of the business’s practices and 39 (unspecified)

“recommendations for change spanning client service, conflicts and business selection, structured products, transparency and disclosure, committee governance, training and professional development and employee evaluation and incentives.”

And we’re just a few pages into the 95-page document — which was filed along with a 47-page presentation on corporate governance, and a 17-page presentation on pay practices. There’s much more of the same throughout. It’s breathtaking, really — hopefully the folks in Goldman’s investor relations, legal and/or communications departments got extra bonuses for producing such a comprehensive body of work.

There are, in fact, a few signs of concrete change. For one thing, the company stake held by Goldman’s partners seems to have finally dipped below 10%, to 9.94%, after being just above that threshold only a few weeks ago.

Plus, the board met 17 times last year, up from a dozen meetings in 2009. (We’d assume last year’s Wells notice alone, along with the subsequent brouhaha, would add a couple meetings.) The compensation committee met 13 times last year, as opposed to just six times in 2009, though last year’s proxy says four of the 2010 meetings were about 2009 pay.

Other details in the proxy were less impressive. For example, while the company formed a new Risk Committee in September last year — “We believe that the Board and the firm benefit from having a committee that can focus specifically on risk-related issues and our firm’s risk management structure,” the board tells us in its new front-of-the-proxy letter — the panel met just twice in the final four months of the year.

As has been previously reported, the company has ramped up base pay for the top brass, giving salaries of $2 million to Blankfein and Chief Operating Officer Gary Cohn, and $1.85 million to other top executives, from $600,000 across the board in 2009. (We have to assume that $150,000 gap is pretty much symbolic, in the grand scheme of things.) In addition, Goldman has joined lesser firms in offering a long-term incentive plan, to “further ensure a clear and direct link between the firm’s performance and our executives’ compensation…” Yes, that’s one more layer of compensation, and one calculated in part on an adjusted version of return on equity that includes or excludes items determined by the board’s comp committee “in its sole discretion.” It’s almost enough to make Goldman’s pay structure positively ordinary in its largesse.

Goldman also emphasizes the forfeiture and recapture provisions of its equity awards, which apply for five years and kick in if an executive gives the company “cause” for dismissal, engaged in “improper risk analysis” or didn’t “raise concerns sufficiently about risk” that leads to “a material adverse effect impact on our firm or the broader financial system…” (or could reasonably be expected to do so). Nice of them to be looking out for the rest of the world, but there’s a lot of flexibility in there. The acid test: Would these provisions have led to anyone losing pay during 2006 through 2008? We may never know until the next crisis. At the same time, the company’s penalty for partners who go to work for competitors — also forfeiture of equity awards — appears to have gotten harsher for those doing so within a year of an award (100% forfeiture, as opposed to 60%), but less harsh three years out (33% forfeiture, as opposed to 60%).

Finally, Goldman Sachs Gives, the charitable initiative that the company called much attention to last year with $500 million in donations straight from the company’s compensation pool, has slipped to $320 million. Granted, Goldman’s comp expense fell as well — by 5%, Bloomberg News reported – but Goldman’s giving feeling fell by more than three times as much.

All in all, we give Goldman high marks for marketing sizzle. As for substantive change, the jury’s still out.

Image source: click-see via Flickr

Though the news about Apple (AAPL) CEO Steve Jobs was released early in the morning on a day when both the markets and the SEC were closed, it certainly generated plenty of attention. Now Apple is known for its precision-like approach to getting news — any news, whether financial, about its different products or even the health of the CEO — out to the public. So it’s hard to chalk it up as a coincidence that this happened on a day when the markets were closed.

But what we found particularly interesting is that by the time that Apple filed this 8-K a little after 6 a.m. this morning, the news had already been out there for close to 24 hours. Needless to say, the 8-K didn’t have any new information — just an intro and a copy of the note that Jobs sent to employees.

It reminded us of why some people we talk to often criticize 8-Ks for being worthless since there’s a feeling that the news is already out there, and thus, baked into the price of the stock. This morning, Apple shares are trading about 4% lower on yesterday’s news.

Of course, we don’t subscribe to that view on 8-Ks. If we did, there would be absolutely no reason to read filings and look for hidden meanings and signals. Other companies can try to replicate Apple with their products and approach to both the media and the filings. But there really is only one of them, and we’re clearly thankful for that.

Image source: Apple Inc.

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Certainly, the FHL Bank of New York seems concerned, in the person of  bank President Alfred A. DelliBovi, despite reports that GOP ire may be cooling over the federally-controlled entities. In a monthly report to the bank’s owners that it filed with the SEC after 4:30 p.m. on Thursday — pretty close to the last moment possible in 2010 – DelliBovi included this in his “Washington Update” section:

“This Congress will grapple with, among other issues, the reform of Fannie Mae and Freddie Mac. It will be our task to help keep the D.C. policymakers informed and help them build on what works. Community lenders and the Federal Home Loan Bank System fall into this productive category. We are reaching out to the Members of the 112th Congress and their staffs so that they understand the full scope and importance of the FHLBank System and community lenders for both our communities and our economy.”

The country’s 12 FHL banks aren’t publicly traded, but they’re a pretty significant part of the country’s financial and mortgage-lending system as it exists now, and as it existed when it plunged into the financial crisis that culminated in the fall of 2008. A kind of lending society for their thousands of member banks, they nonetheless make filings with the SEC both individually and as a system. And despite their collective professions of success and rosy outcomes — “The System worked because it stuck to its mission,” the New York bank letter quoted another FHLB official as saying — they haven’t been without their problems.

In Spring 2009, for example, the chairman of the system’s office of finance resigned out of concern over its financial reporting. As Bloomberg’s Jonathan Weil put it when he broke the news,

“The job Bowsher left is a crucial one. The Office of Finance issues and services all the debt for the 12 regional Federal Home Loan Banks. That’s a lot of debt — $1.26 trillion as of Dec. 31 [2009], making the FHLBank System the largest U.S. borrower after the federal government.”

More recently, Weil also highlighted some questionable accounting at two of the banks in illustrating concerns over accounting rule-changes made during the heat of the crisis. As of this fall, the Seattle FHL bank was operating under a consent order from its regulator, the Federal Housing Finance Agency, that prevents it from paying dividends through mid-2011 or so.

Bank shareholders, of course, care what happens to it, because it underpins a lot of their borrowing and lending. Taxpayers should care too, since the system pretty much exemplifies the too-big-to-fail problem — few are under any illusions that the federal government would step in if the banks, which guarantee one another’s liabilities, began to topple domino-fashion.

And so, as the volume begins to rise again over Fannie Mae and Freddie Mac, we can join DelliBovi in keeping one ear cocked for what is, and isn’t, said about the FHLB system.

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Don’t forget to check out the winner (or is that loser?) of the 2010 Footnote of the Year contest.

Look no further than Walgreen Co. (WAG) the big pharmacy and drug-store chain, which filed a quarterly report with the SEC on Friday that underscored how much investors need to read between the lines when it makes public statements.

In the filing, Walgreen includes a new risk factor, supplementing those previously disclosed in its October annual report and subsequent quarterlies. Here’s the substance of it:

“We derive a significant portion of our sales from prescription drug sales reimbursed through prescription drug plans administered by pharmacy benefit management (PBM) companies. … If our participation in the prescription drug programs administered by one or more of the large PBM companies is terminated, we expect that our sales would be adversely affected, at least in the short term. If we are unable to replace any such lost sales, either through an increase in other sales or through a resumption of participation in those plans, our operating results may be materially adversely affected.”

The most noteworthy part of this risk factor, of course, is its conspicuous absence while the company was pursuing its much-publicized spat with CVS Caremark (CVS) earlier this month. In fact, quite the opposite — in Walgreen’s June 7 press release announcing that it would bar new CVS pharmacy plans from its stores, the company quoted Chief Executive Greg Wasson as saying that

“Unfortunately, as a result of CVS Caremark’s pharmacy benefit management practices toward Walgreens, it no longer makes good business sense for Walgreens to be part of their network for new and renewed plans.”

When CVS responded by saying it would excise Walgreen pharmacies for all its plans, Walgreen quoted an executive vice-president saying that the company expected such a move — and that it was no big deal:

“We are disappointed but not surprised that CVS Caremark has taken this action. … Regardless of CVS Caremark’s decision, we are confident of our ability to continue to grow our business as a provider in hundreds of other pharmacy benefit networks and as a direct provider to employers.”

So which is it? Does being cut off from “one or more of the large PBM companies” threaten that “sales would be adversely affected” and ultimately that Walgreen’s “operating results may be materially adversely affected”? Or did Walgreen think keeping the CVS relationship “no longer [made] good business sense” and that the company was “confident of our ability to continue to grow our business” without it?

No doubt, any lawyer worth his or her salt can thread that needle and show both to be perfectly accurate. But should investors have to perform the same sort of mental gymnastics?

Image source: quapan via Flickr

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The 8-K that contained HP’s announcement was lacking much in the way of detail. So were subsequent conference calls, to judge from the press coverage. And over at CNBC, Herb Greenberg questioned the way HP plans to include the impact of the changes in its non-standard financial reports — or, rather, the way it plans not to do so. But other disclosures provide another kind of context for the company’s announcement.

For example, compensation for the company’s top five executives over the last three years has totaled some $251 million under the calculations in its Jan. 27 proxy filing — or roughly a quarter of what it plans to spend on the reorganization. (That includes $97.8 million for Chairman and CEO Mark Hurd.) On average, their compensation has totaled $83 million a year , or as much as 17% of the $500 million to $700 million in annual net savings that HP expects to reap from the changes.

Granted, HP likely couldn’t cut those costs to zero — someone needs to run the company, after all, and presumably they won’t work for free (though they might find a way to do without Hurd’s $175,776 in personal flights on the corporate airplane). Moreover, even if the board wanted to, it might think twice before jettisoning current management: Doing so could cost as much as $122.9 million in severance and other termination costs. Hurd alone would get $52.9 million, according to the proxy.

HP has starred on these pages often enough — including for a couple of mistaken perks and a curiously late 2007 filing — and has enough of a penchant for acquisitions and reorganizations, that we hope you’ll pardon us for being a little skeptical. As more details emerge, we’ll see what severance looks like for the workers HP lets go, as well as how much of the projected savings actually materialize — and how much winds up expanding those executive-pay numbers further still.

Image source: Wikimedia Commons

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Fast forward to yesterday when Boeing filed an 8-K with this consulting agreeement for Carson — something that we don’t recall reading about in the Aug. 31 press release. A quick scan of Boeing’s current releases also comes up empty, despite the fact that Boeing plans to pay Carson $1.5 million as a retainer over the next two years. As the contract notes, Carson will serve as a consultant through March 2012. In exchange for the fee, which essentially works out to his base compensation, he’ll be required to work “no more than 75 hours a month.”

Since it’s probably a pretty safe assumption that Carson was working 75 hours a week (if not more) when he was running the Commercial Airplanes unit, the consulting agreement works out to a pretty nice raise. We also didn’t see anything in the contract that precludes Carson from spending some of the non-Boeing hours — there’s roughly 730 hours in a typical month — consulting for anyone else.

That’s not to say the contract doesn’t have its restrictions. Boeing won’t pay for any alcoholic beverages and the contract won’t enable Carson to wine and dine on Boeing’s dime. Indeed, the agreement is pretty strict on this point, noting that “No entertainment is authorized under this Agreement and no entertainment expenses will be reimbursed. Entertainment includes the purchase of meals or refreshments for any individual (including Boeing employees) other than you.”

Still, given that this deal is essentially part-time work for full-time pay, we’re guessing that Carson won’t sweat too much having to dip into his pocket for some Glenlivet every now and then.

Image source: Glenlivet