Some NYSE Listed Company Manual Section 309.00 (and 307.00) Pointers. . . .

As I just hinted a moment ago, below, it strikes me that the adequacy of the reverse merger process might also be questioned on a separate ground -- that being, whether CEO Hassan, and perhaps more importantly, the Board of Directors Compensation Committee, complied with NYSE Listed Company Manual policies -- in granting the Schering-Plough February 27, 2009 phantom deferred stock units.

Schering Plough is listed on the NYSE; thus it must comply with that exchange's so-called "corporate governance" policies -- not just the New Jersey state corporate law ones which apply, as well. Section 309.00 of the NYSE Manual, has this to say about the timing of grants of equity to officers:

. . . .Where a development of major importance [here, the Merck reverse-merger -- Ed.] is expected to reach the appropriate time for announcement within the next few months, transactions by directors and officers should be avoided. [These two events were only 11 days apart. -- Ed.]

. . . .Corporate officials should wait until after the release of earnings, dividends, or other important developments have appeared in the press before making a purchase or sale. This permits the news to be widely disseminated and negates the inference that officials had an inside advantage. Similarly, transactions just prior to important press releases should be avoided.

In granting stock options to directors and key officers, the same philosophy that relates to purchases and sales may well apply. . . .

. . . .the timing of a purchase is not usually critical as the price is set at the time the option is granted. The reasoning relating to stock options might also apply to employee stock purchase plans in which directors and officers may be entitled to participate. . . .

[Also consider this, from NYSE Manual Section 307.00:]

. . . .While no particular method of resolution is suggested, the Audit committee or a comparable body could be considered as the forum for review and oversight of potential conflicts of interest situations [Did the Audit Committe approve these February 27, 2009 deferred stock units? -- Ed.]. . . .

The Exchange expects the listed corporation and corporations applying to list to discharge their responsibility to monitor and review such situations in an appropriate fashion. . . .

Indeed.

Note well that, by all rights, the Merck reverse merger discussions had to be in "full-on high-dungeon" in late February 2009, and note that the Compensation Committee of the Schering-Plough board (chaired by one Hans Becherer -- who is already defending some excessive compenstion claims, personally, in Cain v. Hassan, et al.) granted Mr. Hassan an additional $4.3 million in stock units on February 27, 2009 -- while those discussions were progressing a-pace (else, how could a March 9, 2009 announcement have been logistically-possible?). CEO Hassan's Executive Management Team apparently all received the benefit of this arguable "related-party" transaction -- a gift of deferred stock-units, with no vesting schedule at all(!) -- while a complete take-over (by Merck) was being deeply-vetted, by these very same officers, in Kenilworth, and Whitehouse Station.

True enough, these NYSE matters may not create truly-private rights of action, in favor of the stockholders -- but they ought to be considered, when Judge Cavanaugh evaluates whether the Schering-Plough board (and Executive Officers team) adequately-discharged their fiduciary duties, in negotiating the Sch-Merck transaction.

That is, the Landesbank/LPERF federal putative class action cases may well not turn solely on the resolution of matters of internal New Jersey state corporate law. Here endeth the lesson.