1112007 Informal Interpretation

Date:
Rule:
801.10
Staff:
Michael Verne
Response/Comments:

  – (Redacted) -I think that he can do a FMV based on the current trading price. He knows how many shares he is going to get, just not what the price per share will be on the day of vesting. If he determines that the value of the shares is currently more than $66 million, he should file. If he determines that the FMV is less than $66 million, he can rely on that for 60 days. If he files and at the time of vesting the actual value based on either market price or FMV is less than $66 million, there would be no refund of the fee, because the transaction was represented to satisfy the size of transaction test at the time of filing. Conversely, if the determined that no filing was required and at the time of vesting determines that the value exceeds $66 million, he can still close without filing as long as he is still within 60 days of doing the FMV. K Walsh concurs.

Question

From: (Redacted)
Sent: Monday, December 19, 2011 4:00PM
To: Verne,B. Michael
Subject: an HSR question

Mike, I hope you arewell. I have a question relating to the grant of RSU's and the issue ofvaluation to determine whether a filing would be required.

An executive was awardedan RSU several months ago worth $50 million. In other words, on the day ofvesting (next month), he will get that number of shares that he would havereceived at the time of the grant, valued at the trading price of those shareson the day of the grant. (e.g. "x") Assume that vesting will happenon some day in mid to late January, when he will get x number of shares. Howcan we determine today if he will have to file? X shares on vesting(closing)day will be possibly valued at greater than $66 million, or it might be lessthan $66 million. However, we cannot really use a market price calculation aswe do not know from what day we start counting back to get the lowest closingprice. Would we count back 45 days from the time of the anticipated vesting?The one thing we do not want to happen is for the vesting to happen on a daywhen the stock jumps in value to put him over $66 million. That date is not inhis control. If we say that the value is undetermined, how do we calculate thefmv? If he determines that fmv would put him over $66 million, and on theactual day of vesting, the x number of shares he will receive is less than $66million, would the filing have been deemed unnecessary as under the size oftransaction threshold, and he would receive his filing fee back? Now you seewhy we wanted to eliminate filings for acquisitions of voting stock as part ofcompensation awards.

From: Verne, B. Michael
Sent: Tuesday, December 20,2011 10:39 AM
To: (Redacted)
Cc: Walsh,Kathryn
Subject: RE: an HSR question

(Redacted) -I think that he can do a FMV based on the currenttrading price. He knows how many shares he is going to get, just not what theprice per share will be on the day of vesting. If he determines that the valueof the shares is currently more than $66 million, he should file. If hedetermines that the FMV is less than $66 million, he can rely on that for 60days. If he files and at the time of vesting the actual value based on eithermarket price or FMV is less than $66 million, there would be no refund of thefee, because the transaction was represented to satisfy the size of transactiontest at the time of filing. Conversely, if the determined that no filing wasrequired and at the time of vesting determines that the value exceeds $66million, he can still close without filing as long as he is still within 60days of doing the FMV.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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