The Form 8-K reported that the bylaws were revised to clarify the company’s obligations to indemnify its directors and officers, and that there were various other clean-up changes, including, grammatical and other typographical corrections and formatting changes. Still pretty routine stuff.
Two days after the Form 8-K was filed, Echo filed an amendment to supplement the disclosure regarding the revisions made to the bylaws. What was omitted from the disclosure in the original Form 8-K? Well, that the bylaws were also revised: (1) to provide that Delaware courts are the sole and exclusive forum for certain litigation; and (2) to provide for fee-shifting with respect to certain litigation brought against the company and/or any director, officer, employee or affiliate where the plaintiffs do not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought. Not routine.
I don’t know what is more surprising: that these two revisions were somehow omitted from the original Form 8-K or that a public company (the first of which I am aware) has adopted a loser pays provision in its bylaws. As previously discussed, many have cautioned against the adoption (by public companies in particular) of a loser pays provision. It will be interesting to follow what results from Echo’s actions.
As if that was not enough, Echo’s annual meeting involved a lengthy proxy contest. The director nominee nominated by the stockholder group was elected. I can think of less controversial items of business for an initial meeting. Welcome aboard.