LEGG MASON, INC. (NYSE:LM) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement.
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On December 19, 2016, Legg Mason, Inc. (the Company) and
Shanda Asset Management Investment Limited, a subsidiary of the Shanda Investment Group, Limited and the Companys largest shareholder (Shanda), entered into an Investor Rights and Standstill Agreement (the Agreement) under which the Company confirms that its Board of Directors has agreed to expand the size of the Board from 11 to 13 directors and to elect Shanda Group Chairman and CEO Tianqiao Chen and Robert Chiu, President of Shanda, as directors on or before June 1, 2017, with terms expiring at the 2017 Annual Meeting of Stockholders. |
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The Company and Shanda have agreed that Mr. Chen will be
appointed as Vice Chairman when he joins the Board. In that capacity, Mr. Chen will lead Shanda’s efforts to assist the Company in technology innovation, as well as business development and brand building in Asia, and China in particular. It is expected that Mr. Chen will also sit on the Nominating and Corporate Governance Committee, subject to satisfying applicable independence requirements under applicable law or listing rules. Shanda has the right to nominate a non-voting observer to the Board during any time it has the right to nominate two director designees but does not have two director designees serving on the Board. |
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If Shanda does not beneficially own for a period of 30
consecutive trading days shares of the Companys common stock equal to at least 10% of the outstanding shares of the Companys common stock (the 10% Minimum Percentage), the obligations of the Company with respect to the (x) appointment of a Shanda designee to a second Board seat, (y) appointment of Mr. Chen as Vice Chairman of the Board and (z) appointment of a Shanda designee as a member of the Companys Nominating and Corporate Governance Committee or any other committee of the Board shall terminate. If Shanda does not beneficially own for a period of 30 consecutive trading days shares of the Companys common stock equal to at least 5% of the outstanding shares of common stock (the 5% Minimum Percentage), the obligations of the Company under the Agreement with respect to the appointment to the Board of both Shanda director designees will terminate. If Shandas ownership drops below the 10% or 5% threshold, the Shanda director(s) whom the Company is no longer obligated to appoint to the Board, the Vice Chairman position or the Companys Nominating and Corporate Governance Committee, as the case may be, will not be required under the Agreement to resign from the Board or such committee prior to the expiration of the term he or she is then serving. |
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The Agreement further provides that if (i) the Company
becomes a party to a strategic transaction wherein the membership of the board of directors of a |
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publicly listed successor entity is split between the
directors of the Company and the directors of the other party to such transaction and (ii) the directors of the Company (including the Shanda directors) immediately prior to the effectiveness of such strategic transaction do not represent 75% or more of such surviving entitys board of directors, then the obligations of the Company under the Agreement with respect to the (x) appointment of a Shanda designee to a second Board seat, (y) appointment of Mr. Chen as Vice Chairman of the Board and (z) appointment of a Shanda designee as a member of the Nominating and Corporate Governance Committee or any other committee of the Board shall terminate; provided that upon the occurrence of the events described in this paragraph, the Shanda director(s) whom the Company is no longer obligated to appoint to the Board, the Vice Chairman position or the Companys Nominating and Corporate Governance Committee, as the case may be, will not be required under the Agreement to resign from the Board or such committee unless required to the terms of the strategic transaction. |
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Shanda has agreed to invest $500 million in
investment products offered by the Companys investment affiliates (other than liquidity products). If Shanda does not invest at least $350 million prior to July 31, 2017, the obligations of the Company will terminate with respect to the appointment of a second Shanda designee to the Board. If Shanda does not invest at least $500 million on or prior to October 31, 2018, the obligations of the Company with respect to the (x) appointment of a Shanda designee to a second Board seat, (y) appointment of Mr. Chen as Vice Chairman of the Board and (z) appointment of a Shanda designee as a member of the Companys Nominating and Corporate Governance Committee or any other committee of the Board shall terminate. In either event, the Shanda director(s) whom the Company is no longer obligated to appoint to the Board, the Vice Chairman position or the Companys Nominating and Corporate Governance Committee, as the case may be, will not be required under the Agreement to resign from the Board or such committee prior to the expiration of the term he or she is then serving. |
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The Agreement also contemplates additional purchases
of the Companys common stock by Shanda to increase Shandas investment up to 15% of the outstanding shares of the Companys common stock. Shanda also agrees, among other things and subject to certain limitations, that for a period of three years from the effective date of the Agreement, it will support the Board’s full list of nominees at the Companys annual meetings during the term of the Agreement, will not make acquisitions that result in Shanda and its affiliates owning more than 15% of the outstanding shares of the Companys common stock and will not take certain other specified actions. Notwithstanding the foregoing, Shandas ownership could exceed 15% of the outstanding shares of the Companys common stock as a result of actions taken by the Company including share repurchases. |
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From time to time, Shanda may sell shares of the
Companys common stock for regulatory or statutory purposes. If Shandas ownership of the Companys common stock is below 10%, the Board will consider, in its sole discretion, a |
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waiver of the applicability to Shanda and its
affiliates of the Maryland Business Combination Act as long as Shanda and its affiliates do not own more than 15% of the outstanding shares of the Companys common stock, although Shandas percentage ownership may exceed 15% as a result of subsequent share repurchases and other similar activity by the Company. |
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The term of the Agreement runs until December 19,
2019, subject to earlier termination in certain circumstances, with provisions regarding the nomination of a Shanda designated director lasting as described above. |
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Under a separate agreement, Shanda was granted
certain registration rights for the resale of shares of the Companys common stock. |
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The foregoing description of the Agreement does not
purport to be complete and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 10 hereto and is incorporated herein by reference. |
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A press release announcing the Agreement is
attached hereto as Exhibit 99 and is incorporated herein by reference. |
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Item 9.01
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Financial Statements and Exhibits.
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(d)
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Exhibits
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Exhibit No.
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Subject Matter
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Investor Rights and Standstill Agreement dated
December 19, 2016 between Legg Mason, Inc. and Shanda Asset Management Investment Limited. |
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Press Release of Legg Mason, Inc. dated December
19, 2016. |
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About LEGG MASON, INC. (NYSE:LM)
Legg Mason, Inc. is a holding company. The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities. The Company operates through Global Asset Management segment. Global Asset Management provides investment advisory services to institutional and individual clients and to the Company-sponsored investment funds. The Company, through its subsidiaries, provides investment management and related services to institutional and individual clients, Company-sponsored investment funds and retail separately managed account programs. It offers its products and services directly and through various financial intermediaries. It has operations principally in the United States and the United Kingdom and also has offices in Australia, Bahamas, Brazil, Canada, Chile, China, Dubai, France, Germany, Italy, Japan, Luxembourg, Poland, Singapore, Spain, Switzerland and Taiwan. LEGG MASON, INC. (NYSE:LM) Recent Trading Information
LEGG MASON, INC. (NYSE:LM) closed its last trading session up +0.38 at 31.26 with 1,676,219 shares trading hands.