What with the generic names that hedge funds and private-equity shops adopt these days, it’s not too surprising that the suitor of Burger King Holdings (BKC) was confused briefly with 3i, the U.K. private-equity shop that boasts £9.6 billion under management.

But no, it appears that Burger King’s buyer, at $4 billion, is 3G Capital, a New York-based investment firm with ties to high-profile Brazilian financiers, and one that, until now, has contented itself with buying stakes in CSX, Coca-Cola and the like.

As it turns out, that the Brazilian connection is fitting: There seems to be something of a mutual love-fest going on between the Home of the Whopper and the home of samba, capoeira and feijoada. From the 10-K that Burger King filed late last week:

“We believe that there are significant growth opportunities in South America. For example, we entered the Brazil market five years ago, and, as of June 30, 2010, had 93 restaurants in the country with those open for more than 12 months having average restaurant sales of $1.8 million on a trailing twelve-month basis. We currently expect to open approximately 500 restaurants in Latin America over the next five years. For the fiscal year, we opened 72 new restaurants in Latin America.”

Going from zero to 93 in five years isn’t too shabby, and the prospect of 500 more restaurants across Latin America in the next half-decade can’t have passed 3G by.

Still, this is BK’s second foray into private-equity’s hands in recent years: It was taken private in 2002 by a TPG Capital, Bain Capital and others, and then went public again in 2006. Now, a mere four years later, it’s going private again.

When BK last went public, it shelled out a $12.1 million in dividends and related payments to executives, directors and various funds controlled by the private-equity shops that had bought it several years earlier. It also paid those shops a $30 million “sponsor management termination fee,” according to its registration statements at the time. Goldman Sachs, a unit of which was one of the private-equity owners, also got $5 million more for helping to run the public offering. And we’re pretty sure we missed some other fees.

And Burger King’s stock? It was down 3% since it went public, the WSJ reported. All of which makes us wonder just how much value this game of ownership ping-pong really creates, and how much is being siphoned off in the process.

Image source: Burger King Brazil

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See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

Lawyers are a cautious bunch, but when it comes to the corporate sort, they also have a reputation for a certain dullness: They’re not exactly supposed to get carried away with flights of fancy, especially not when drafting public disclosures.

So we were a little surprised to find a new risk factor listed on page 42 of the quarterly report that Aetna (AET) filed last week. In it, the health-insurance giant worries that it could be hit hard by the financial reform legislation signed into law on July 21. It said it seems to fit the law’s definition of a “nonbank financial company,” and that “we cannot predict whether the [government] will designate us a ‘systemically important’ company,” which would subject it to tighter regulation by the Federal Reserve and other agencies.

Mind you, Aetna doesn’t actually give any concrete reason to think it might be labeled a systemically important nonbank financial company, a category created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (aka the “Financial Reform Act” or, more colloquially, “the Wall Street reform bill.”) Instead, it muses:

“We believe that we fall within the Financial Reform Act’s definition of ‘nonbank financial company,’ but we cannot predict whether the Council will designate us a ‘systemically important’ company, which the Financial Reform Act identifies as those that could pose a threat to financial stability either due to the potential of material financial distress at the company or due to the company’s ongoing activities.”

The disclosure goes on to say that getting such a designation would require a two-thirds vote by a panel that doesn’t yet exist, based on criteria that are so far largely unknowable. “As a result,” Aetna’s attorneys fret, “it is difficult to predict the scope and content of systemic risk regulations or their effect on us, should we be designated a ‘systemically important’ nonbank financial company.”

Indeed. Does this mean every non-banking company on the Nasdaq and the New York Stock Exchange with significant financial activity should include a similar disclaimer, just in case they’re designated as systemically important?

Oddly, none of this seems to have been a specific concern while the financial reform legislation was wending its tortured way through Congress. The concept of regulating  nonbank companies that have the potential to threaten the financial system (think: AIG and its ilk) has been part of the thinking in Washington from early on. Yet In Aetna’s prior quarterly report, for example, an extensive, 1,073-word risk factor about the general risks of new regulation included nary a word about financial reform.

There’s no question that Aetna is pretty important to the country’s health-care system. But a systemically important nonbank financial company? It’s conceivable: Aetna clearly concluded it qualifies as a nonbank financial company under the new law, so it probably wouldn’t hurt to know why it came to that conclusion.

But if the company has reason to think its forays into the derivatives market — or some other facets of its financial life — may be significant enough to catch the eye of regulators, it should be more specific. And if it doesn’t, maybe it should spare its lawyers the hand-wringing — and its investors the empty boilerplate.

Image source: f-l-e-x via Flickr

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See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

Add Nike (NKE) to the growing list of companies that have adopted formal policies letting them claw back executive pay if things go badly wrong. And add it to the almost equally long list of those whose clawback policies risk being meaningless, either because they’re too narrow or too vague.

At Nike, the new policy is laid out in an exhibit to the 8-K the company filed late yesterday. To kick in, the company must first and foremost have restated its financials “due to the material noncompliance of the Company with any financial reporting requirement.”

In addition, the board must make a determination of “Misconduct,” defined as “willful commission of an act of fraud or dishonesty or recklessness in the performance of a person’s duties” — and conclude that the misconduct “contributed to the noncompliance which resulted in the obligation to restate.”

At that point, the board “may require” repayment of “all or part of” any bonus, long-term incentive pay, and even certain gains on option exercises — at least, to the extent they were base on the financial statements that were subsequently restated (or, in the case of option or stock-sale gains, made between the original financial mis-statement and the restatements).

That leaves the board with plenty of discretion, which is at once understandable and problematic. Recoupment, after all, is a tricky thing for corporate boards. If their policies are too broad and discretionary, it leaves open the risk that they’re never used. Ditto if the policies are too narrow.

Then there’s the whole question of due process — one of the bedrock principles of American society, and thus part of the fabric of corporate governance in this country as well. Rigid clawbacks would not only risk being unfair, they would invite lawsuits — we imagine boards would be pretty skittish about demanding repayment absent some real indication of culpability.

But how likely is a board to make that determination alone, pronouncing an executive guilty of willfully committing “an act of fraud or dishonesty or recklessness” without some outside (ideally judicial) confirmation of that conclusion? Trying to go it alone would probably give your average general counsel conniptions.

And so in the end, the language in Nike’s policy (and others we’ve seen) reminds us of the old definitions of dismissal “for cause,” which pretty much took a felony conviction or civil judgment of liability against the misbehaving executive to apply. And by that point, chances are pretty good the board would have sent him packing long before, paying him off under “involuntary termination without cause” provisions.

So we applaud Nike for adopting the policy; it’s a step in the right direction. We’ll have to wait to see how this policy, and others, actually work out when push comes to shove.

Image source: bobosh_t via Flickr

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See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.