8110 Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 

persons may present data, information, 

or views, orally or in writing, on issues 

pending before the committee. Oral 

presentations from the public will be 

scheduled between approximately 11:15 

a.m. to 11:30 a.m. and 4:00 p.m. and 

4:15 p.m. on March 9, 2015 and between 

11:15 a.m. and 11:30 a.m. on March 10, 

2015. Time allotted for each 

presentation may be limited. Those 

desiring to make formal oral 

presentations should notify the contact 

person and submit a brief statement of 

the general nature of the evidence or 

arguments they wish to present, the 

names and addresses of proposed 

participants, and an indication of the 

approximate time requested to make 

their presentation on or before March 2, 

2015. 

General Information: NIC welcomes 

the attendance of the public at its 

advisory committee meetings and will 

make every effort to accommodate 

persons with physical disabilities or 

special needs. If you require special 

accommodations due to a disability, 

please contact Shaina Vanek at least 7 

days in advance of the meeting. Notice 

of this meeting is given under the 

Federal Advisory Committee Act (5 

U.S.C. app. 2). 

Robert M. Brown, Jr., 

Acting Director, National Institute of 

Corrections. 

[FR Doc. 2015–02428 Filed 2–12–15; 8:45 am] 

BILLING CODE 4410–36–M 

LEGAL SERVICES CORPORATION 

Sunshine Act Meeting Notice 

DATE AND TIME: The Legal Services 

Corporation’s Board of Directors and 

Finance Committee will meet 

telephonically on February 19, 2015. 

The Finance Committee meeting will 

commence at 4:00 p.m., EDT, and upon 

its adjournment, will immediately be 

followed by the Board of Directors 

meeting. 

LOCATION: John N. Erlenborn Conference 

Room, Legal Services Corporation 

Headquarters, 3333 K Street NW., 

Washington, DC 20007. 

PUBLIC OBSERVATION: Members of the 

public who are unable to attend in 

person but wish to listen to the public 

proceedings may do so by following the 

telephone call-in directions provided 

below. 

CALL-IN DIRECTIONS FOR OPEN SESSIONS: 

• Call toll-free number: 1–866–451– 

4981; 

• When prompted, enter the 

following numeric pass code: 

5907707348. 

• When connected to the call, please 

immediately ‘‘MUTE’’ your telephone. 

Members of the public are asked to 

keep their telephones muted to 

eliminate background noises. To avoid 

disrupting the meeting, please refrain 

from placing the call on hold if doing so 

will trigger recorded music or other 

sound. From time to time, the Chair may 

solicit comments from the public. 

STATUS OF MEETING: Open. 

MATTERS TO BE CONSIDERED: 

Finance Committee 

1. Approval of agenda 

2. Consider and act on management’s 

proposed reorganization plan 

D Jim Sandman, President 

D Lynn Jennings, Vice President for 

Grants Management 

3. Public comment 

4. Consider and act on other business 

5. Consider and act on adjournment of 

meeting 

Board of Directors 

1. Approval of agenda 

2. Consider and act on the report of the 

Finance Committee regarding 

management’s proposed 

reorganization plan 

3. Public comment 

4. Consider and act on other business 

5. Consider and act on adjournment of 

meeting 

CONTACT PERSON FOR INFORMATION: 

Katherine Ward, Executive Assistant to 

the Vice President & General Counsel, at 

(202) 295–1500. Questions may be sent 

by electronic mail to FR_NOTICE_

QUESTIONS@lsc.gov. 

ACCESSIBILITY: LSC complies with the 

Americans with Disabilities Act and 

Section 504 of the 1973 Rehabilitation 

Act. Upon request, meeting notices and 

materials will be made available in 

alternative formats to accommodate 

individuals with disabilities. 

Individuals needing other 

accommodations due to disability in 

order to attend the meeting in person or 

telephonically should contact Katherine 

Ward, at (202) 295–1500 or FR_

NOTICE_QUESTIONS@lsc.gov, at least 

2 business days in advance of the 

meeting. If a request is made without 

advance notice, LSC will make every 

effort to accommodate the request but 

cannot guarantee that all requests can be 

fulfilled. 

Dated: February 11, 2015. 

Katherine Ward, 

Executive Assistant to the Vice President for 

Legal Affairs and General Counsel. 

[FR Doc. 2015–03112 Filed 2–11–15; 11:15 am] 

BILLING CODE 7050–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–31452; 812–14300] 

The Adams Express Company and 

Petroleum & Resources Corporation; 

Notice of Application 

February 9, 2015. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

sections 6(c), 17(d) and 23(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) and rule 17d–1 under the Act to 

permit certain joint transactions 

otherwise prohibited under section 

17(d) of the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order to permit them, subject 

to shareholder approval, to adopt new 

equity-based incentive compensation 

plans to replace equity-based incentive 

compensation plans adopted in 2005. 

APPLICANTS: The Adams Express 

Company (‘‘Adams’’) and Petroleum & 

Resources Corporation (‘‘Petroleum’’). 

FILING DATES: The application was filed 

on April 22, 2014, and amended on 

September 12, 2014 and January 20, 

2015. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on March 6, 2015, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Pursuant to rule 0–5 under the 

Act, hearing requests should state the 

nature of the writer’s interest, any facts 

bearing upon the desirability of a 

hearing on the matter, the reason for the 

request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

writing to the Commission’s Secretary. 

ADDRESSES: Secretary, Commission, 100 

F Street NE., Washington, DC 20549. 

Applicants, c/o Lawrence L. Hooper, Jr., 

Vice President, General Counsel and 

Secretary, The Adams Express 

Company, 7 Saint Paul Street, 

Baltimore, MD 21202. 

FOR FURTHER INFORMATION CONTACT: 

Courtney S. Thornton, Senior Counsel, 

at (202) 551–6812, or David P. Bartels, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Chief Counsel’s Office). 


tkelley on DSK3SPTVN1PROD with NOTICES
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1Applicants state that Adams first acquired an 

ownership interest in Petroleum in 1929 and 

subsequently increased its ownership interest by 

means of stock dividends and participations in 

rights offerings. Section 12(d) of the Act restricts the 

purchase or other acquisition by investment 

companies of securities issued by other investment 

companies under specified circumstances. 

However, section 12(d) excepts securities received 

as dividends from the restriction on acquisitions 

and purchases. Applicants represent that, as noted 

above, Adams’ initial acquisition and ownership of 

shares of Petroleum pre-dated the Act. Applicants 

further state that, since the Act became effective, 

Adams has not purchased or otherwise acquired 

shares of Petroleum other than through stock 

dividends, with the exception of acquisitions made 

in 1956 and 1969 in connection with certain rights 

offerings by Petroleum, each of which was made 

pursuant to exemptive orders issued by the 

Commission. See The Adams Express Company, 

Investment Company Act Release Nos. 2363 (May 

28, 1956) (order) and 5744 (July 16, 1969) (order). 

2The Adams Express Company et al., Investment 

Company Act Release Nos. 26759 (Feb. 10, 2005) 

(notice) and 26780 (Mar. 8, 2005) (order). 

Applicants represent that the 2005 Incentive Plans 

replaced stock option plans adopted by Adams and 

Petroleum in reliance upon the 1985 order obtained 

by the Association of Publicly Traded Investment 

Funds (‘‘APTIF’’) of which Adams and Petroleum 

were both members. Applicants note that the APTIF 

order exempted APTIF’s internally-managed, 

closed-end investment company members from the 

provisions of sections 17(d), 18(d), and 23(a)(b), and 

(c) of the Act and permitted them to offer their key 

employees deferred equity compensation in the 

form of stock options or stock appreciation rights. 

Association of Publicly Traded Investment Funds, 

Investment company Act Release Nos. 14541 (May 

28, 1985) (notice) and 14594 (June 21, 1985) (order). 

3The exercise price of Options must be at least 

100% of the fair market value (‘‘Fair Market Value’’) 

of a share of an applicant’s stock on the date of the 

grant. For purposes of the Plans, Fair Market Value 

would equal the mean of the high and low sale 

prices per share of the stock of the applicant as 

reported on the New York Stock ExchangeComposite Transactions (or such other national 

securities exchange or automated inter-dealer 

quotation system on which the stock has been duly 

listed and approved for quotation and trading) on 

the date on which the value is to be determined, 

or if no sale of the stock is reported for such date, 

the next preceding day for which there is a reported 

sale. Options issued under the Plans will expire no 

later than 10 years from the date of grant. 4A Stock Appreciation Right is a right to receive, 

upon exercise, the excess of (i) the Fair Market 

Value of one share of an applicant’s stock on the 

date of exercise over (ii) the stock appreciation 

right’s grant price. Stock Appreciation Rights issued 

under the Plans will expire no later than ten years 

from the date of grant. 

5Restricted Stock is stock that is subject to 

restrictions on transferability, risk of forfeiture, or 

other restrictions. 

6Restricted Stock Units are rights to receive stock 

and are subject to certain restrictions and a risk of 

forfeiture. 

7A Deferred Stock Unit is a right to receive stock, 

cash or a combination thereof at the end of a 

specified deferral period. 

8Except as otherwise determined by the 

applicable Committee, Bonus Stock would vest 

immediately and would not be subject to any 

restrictions. 

9To the extent that a Cash Award is settled in 

cash, the applicants are not requesting any relief. 

10The principal difference between the Plans and 

the 2005 Incentive Plans is that the Plans would 

permit Awards in the form of Bonus Stock and Cash 

Awards in addition to the Award types provided in 

the 2005 Incentive Plans. However, Awards that 

could be issued under the Plans would be subject 

to the same limitations, including the limit of 4% 

of the outstanding shares of each applicant, as the 

2005 Incentive Plans. Applicants note that this is 

less than the 4.4% limit that was approved in a 

similar order obtained by Central Securities in 

2012. Central Securities Corporation, Investment 

Company Act Release Nos. 29915 (Jan. 6, 2012) 

(notice) and 29940 (Feb. 1, 2012) (order) (the ‘‘2012 

Order’’). 

11Such Awards would be payable in cash or stock 

of the relevant applicant, conditioned on 

satisfaction of performance criteria established by 

the relevant Committee. 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. Adams and Petroleum, both of 

which are Maryland corporations, are 

registered under the Act as closed-end 

management investment companies. 

Adams’ principal business is the 

ownership and management of its 

investment portfolio, which consists 

predominantly of equity securities. 

Petroleum’s principal business also is 

the ownership and management of its 

investment portfolio, which consists 

predominantly of equity securities and 

emphasizes investments in energy and 

natural resources companies. Each 

company is internally managed. Each 

company’s stock is listed on the New 

York Stock Exchange. Adams presently 

owns approximately 8% of the 

outstanding voting shares of Petroleum.1

2. Adams has eight directors, seven of 

whom are neither Employees (as 

defined below) nor ‘‘interested persons’’ 

of the company as defined in section 

2(a)(19) of the Act (‘‘Non-Interested 

Directors’’), and twenty Employees. 

Petroleum has eight directors, seven of 

whom are Non-Interested Directors, and 

eighteen Employees. The boards of 

directors (‘‘Boards’’) of Adams and 

Petroleum are comprised of the same 

individuals. Sixteen Employees serve 

both Adams and Petroleum. 

3. In 2005, the Commission issued an 

order granting applicants exemptions 

from sections 17(d), 18(d), and 23(a), (b), 

and (c)(3) of the Act (the ‘‘2005 

Order’’).2 At their respective annual 

meetings held in April 2005, the 

applicants’ shareholders approved the 

Adams 2005 Equity Incentive 

Compensation Plan (the ‘‘2005 Adams 

Plan’’) and the Petroleum Equity 

Incentive Compensation Plan (the ‘‘2005 

Petroleum Plan,’’ and together with the 

2005 Adams Plan, the ‘‘2005 Incentive 

Plans’’). The 2005 Incentive Plans were 

adopted in reliance on the 2005 Order. 

The 2005 Incentive Plans will expire by 

their terms on April 27, 2015. 

5. Applicants state that, because the 

investment management business is 

highly competitive, they believe their 

successful operation depends on their 

continued ability to attract, motivate 

and retain their Employees with 

competitive compensation packages 

similar to those offered by their 

competitors. Applicants are requesting 

relief to permit, subject to shareholder 

approval, the adoption of The Adams 

Express Company 2015 Incentive 

Compensation Plan and Petroleum & 

Resources Corporation 2015 Incentive 

Compensation Plan (the ‘‘Plans’’). Each 

Plan, if approved by shareholders, 

would be administered by a 

compensation committee (the 

‘‘Committee’’) composed of three or 

more directors who (a) are NonInterested Directors of the relevant 

applicant, (b) are ‘‘non-employee 

directors’’ within the meaning of rule 

16b–3 under the Securities Exchange 

Act of 1934 (the ‘‘Exchange Act’’), and 

(c) are ‘‘outside directors’’ as defined 

under section 162(m) of the Internal 

Revenue Code of 1986 (the ‘‘Code’’). 

Applicants represent that each 

Committee is currently composed of 

four directors, each of whom satisfies 

these criteria. 

6. The Plans, if approved by 

shareholders, would permit the 

applicants to issue stock options 

(‘‘Options’’),3 stock appreciation rights 

(including freestanding and tandem 

stock appreciation rights) (‘‘Stock 

Appreciation Rights’’),4 restricted shares 

of stock (‘‘Restricted Stock’’),5 restricted 

stock units (‘‘Restricted Stock Units’’),6

deferred stock units (‘‘Deferred Stock 

Units’’),7 shares of common stock 

granted as a bonus (‘‘Bonus Stock’’),8

and awards denominated in cash (‘‘Cash 

Awards’’) 9 (collectively, ‘‘Awards’’) to 

Eligible Persons (defined below), subject 

to the terms and conditions discussed 

below.10 In addition, the Plans would 

permit dividend equivalents to be 

awarded in connection with any 

Awards under the Plans while the 

Awards are outstanding or otherwise 

subject to a restriction period on a like 

number of shares of applicants’ common 

stock. Furthermore, certain Awards may 

be subject to performance conditions as 

may be specified by the respective 

Committee.11

7. Existing awards made under the 

2005 Incentive Plans would remain 

outstanding and would remain subject 

to the terms and conditions of the 2005 

Incentive Plans. However, no further 


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12 In addition, any amendment to a Plan would 

be subject to the approval of the applicable 

applicant’s stockholders to the extent such approval 

is required by applicable laws or regulations, 

including exchange rules, or as the relevant Board 

otherwise determines. Each Applicant’s Board is 

required to review the applicable Plan at least 

annually. 

13Employees who serve both Adams and 

Petroleum on a combined full-time basis would be 

eligible to receive Awards under both Plans. 

Employees who primarily serve one company 

would only be expected to receive Awards from 

that company. Applicants expect that Employees 

who serve both Adams and Petroleum may receive 

Awards from both companies if such Employees 

make significant contributions to the success of 

both companies. The Compensation Committee of 

each company will consider separately, for each 

company, the work performance, value 

contribution, and alignment with the interests of 

the stockholders of the company when determining 

the appropriate Award amounts for Employees of 

the company, including Employees who serve both 

companies. 

14Section 18(d) permits a fund to issue only 

warrants or rights, ratably to a class of stockholders, 

that have an exercise period of no more than 120 

days or in exchange for warrants in connection with 

a reorganization. 

grants would be made under the 2005 

Incentive Plans following the earlier of 

April 27, 2015, and approval of the 

Plans by each applicant’s stockholders 

at its respective annual meeting, which 

applicants expect to hold in April 2015 

or as soon thereafter as practicable. 

8. Each Plan, in its proposed form, has 

been approved by the relevant 

applicant’s Board, including a majority 

of the Non-Interested Directors of each 

applicant. Subject to receipt of the 

order, applicants expect that their 

respective Boards will approve the 

submission of the respective Plan to 

stockholders for approval at each 

applicant’s annual meeting. Each Plan 

would become effective if approved by 

stockholders. In addition, each 

applicant would submit its Plan to 

stockholders for approval once every 

five years.12

9. Grants under each Plan may be 

made only to ‘‘Eligible Persons,’’ which 

is defined, with respect to an applicant, 

to mean any person, including officers, 

in the regular employment of the 

applicant and/or its subsidiaries on a 

full-time basis, or of both Adams (and/ 

or any subsidiary thereof) and 

Petroleum (and/or any subsidiary 

thereof) on a combined full-time basis 

(‘‘Employees’’) and the respective 

directors of the applicant who at the 

time an Award is to be granted are not 

Employees (‘‘Non-Employee 

Directors’’).13

10. Immediately following each 

annual meeting of stockholders, each 

Non-Employee Director who is elected a 

director at, or who was previously 

elected and continues as a director after, 

that annual meeting would receive 750 

Restricted Stock Units of Adams and 

400 Restricted Stock Units of Petroleum, 

as applicable, which amounts may be 

adjusted to reflect certain corporate 

transactions. In addition, at the effective 

date of such Non-Employee Director’s 

initial election to the Board, the NonEmployee Director would be granted 

750 Restricted Stock Units of Adams 

and 400 Restricted Units of Adams, as 

applicable, which amounts may be 

adjusted to reflect certain corporate 

transactions. Non-Employee Directors 

would also receive dividend equivalents 

in respect of such Restricted Stock Units 

equal to the amount or value of any cash 

or other dividends or distributions 

payable on an equivalent number of 

shares of common stock. The Restricted 

Stock Units and related dividend 

equivalents would vest (and become 

non-forfeitable) and be paid (in the form 

of shares of common stock) one year 

from the date of grant. In addition, NonEmployee Directors may elect each year, 

not later than December 31 of the year 

preceding the year as to which the 

annual grant of Restricted Stock Units is 

to be applicable, to defer to a fixed date 

or pursuant to a specified schedule 

payment of all or any portion of the 

annual grant of Restricted Stock Units. 

Under the Plans, Non-Employee 

Directors may also elect each year, not 

later than December 31 of the year 

preceding the year as to which deferral 

of fees is to be applicable, to defer to a 

fixed date or pursuant to a specified 

schedule all or any portion of the cash 

retainer to be paid for Board service in 

the following calendar year through the 

issuance of Deferred Stock Units, valued 

at the Fair Market Value of the relevant 

applicant’s stock on the date when each 

payment of such retainer amount would 

otherwise be made in cash. 

11. The total number of shares of each 

applicant’s stock reserved and available 

for delivery in connection with Awards 

under the applicable Plan (other than 

any shares of Adams stock or Petroleum 

stock issued in payment of dividend 

equivalents) is 4% of the outstanding 

shares of the applicable applicant as of 

the effective time of the Plan. As of 

January 14, 2015, this represents 

3,850,570 shares of Adams stock and 

1,095,752 shares of Petroleum stock. 

12. Applicants state that, in the event 

that a dividend, capital gain distribution 

or other distribution, recapitalization, 

forward or reverse stock split, 

reorganization, merger, consolidation, 

spin-off, combination, repurchase, share 

exchange, liquidation, dissolution or 

other similar corporate transaction 

affects the common stock of an 

applicant, then the relevant Committee 

would, in such manner as it may deem 

equitable, adjust any or all of (i) the 

aggregate number of shares subject to 

the relevant Plan; (ii) the number and 

kind of shares which may be delivered 

under the relevant Plan; (iii) the number 

and kind of shares by which per-person 

Award limitations are measured; (iv) the 

number and kind of shares subject to or 

deliverable in respect of outstanding 

Awards; and (v) the exercise price or 

grant price relating to any Award. In 

addition, after the occurrence of any 

such corporate transaction, the relevant 

Committee would also have the 

authority to make provision for payment 

of cash or other property in respect of 

an Award. Applicants state that, in the 

event a capital gains distribution is 

made to applicants’ stockholders, the 

exercise price of outstanding Options 

and the grant price of outstanding Stock 

Appreciation Rights issued under the 

Plans may be reduced to reflect any 

such distribution made after the date of 

grant (provided that no such reduction 

will be made that would reduce the 

exercise price or grant price below zero). 

No adjustments will be made in the case 

of a cash income dividend. 

Applicants’ Legal Analysis 

Sections 18(d), 23(a) and 23(b) of the 

Act 

1. Section 18(d) of the Act generally 

prohibits a registered management 

investment company from issuing rights 

to purchase the company’s shares.14

Applicants state that section 18(d) 

would prohibit the issuance of certain 

Awards to Eligible Persons because no 

corresponding warrants or rights would 

be issued to shareholders, and such 

Awards would not be issued in 

connection with a reorganization. 

2. Section 23(a) of the Act generally 

prohibits a registered closed-end 

investment company from issuing 

securities for services. Applicants state 

that because Awards are a form of 

compensation, the issuance of stockbased Awards to Eligible Persons would 

constitute the issuance of securities for 

‘‘services’’ and, therefore, absent an 

exemption, would fall within the 

prohibitions of section 23(a). 

3. Section 23(b) of the Act prohibits 

a registered closed-end investment 

company from selling its common stock 

at a price below its current NAV. The 

applicants state that, because Adams 

stock and Petroleum stock have often 

traded at a discount to their NAV and 

Awards under the Plans will be valued 

at the current market price of the stock, 

section 23(b) would in most cases 

prohibit the issuance of the Awards. 


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Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 8113 

15These limitations are separate limitations under 

each Plan. Cash Awards that are settled in cash 

would not count against the limit described in the 

preceding sentence. 

16Applicants represent that the maximum 

potential dilution to an applicant’s stockholders (in 

terms of net asset value per share (‘‘NAV’’)) that 

would result from grants of Awards under a Plan 

would be approximately 3.85%. Applicants submit 

that the limitations on the requested exemptive 

order would provide protection to investors against 

dilution of their pro rata interests that are similar 

to those the Commission has previously found 

consistent with the purposes and policies of the Act 

and are even greater than those that Congress 

imposed on stock options issued by BDCs. 

Applicants state that less dilution could occur 

under the Plans than from stock options issued by 

business development companies, on which 

Congress imposed a 25% limit on the maximum 

increase in the amount of voting securities that 

could result if all outstanding warrants, options and 

other rights were exercised. Applicants also note 

that less dilution would occur under the Plans than 

from stock awards that could be issued under the 

2012 Order, which allowed a 4.4% limit. 

4. Section 6(c) of the Act provides, in 

part, that the Commission may, by order 

upon application, conditionally or 

unconditionally exempt any person, 

security or transaction, or any class or 

classes thereof, from any provision of 

the Act, if and to the extent that the 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. The 

applicants request an exemption under 

section 6(c) from section 18(d) and 

sections 23(a) and (b) of the Act to the 

extent necessary to implement the 

Plans. 

5. Applicants state that the concerns 

underlying those sections include (i) the 

possibility that Options could be 

granted to persons whose interests 

might be contrary to the interests of 

stockholders; (ii) the potential dilutive 

impact of Awards on stockholders; (iii) 

the possibility that Options might 

facilitate a change of control; (iv) the 

introduction of complexity and 

uncertainty into the investment 

company’s financial structure, thereby 

making it more difficult to appraise the 

value of their stock; (v) possible 

obfuscation of the extent of management 

compensation; and (vi) encouragement 

of speculative portfolio investments at 

the insistence of the option holders (to 

increase the possibility of a rise in 

market price from which they might 

benefit). Applicants assert that these 

concerns would not apply to the 

Awards for the reasons discussed below 

and (in greater detail) in the application. 

6. Applicants state that, because 

Awards under each Plan may be issued 

only to Eligible Persons, Awards will 

not be granted to individuals with 

interests contrary to those of the 

applicants’ stockholders. Applicants 

also assert that the Plans would not 

become a means for insiders to obtain 

control of Adams or Petroleum because 

the number of shares of stock issuable 

under the Plans would be limited to 4% 

of the outstanding shares of Adams or 

Petroleum. Moreover, as a condition to 

the requested order, no Eligible Person 

could be issued more than 35% of the 

shares reserved for issuance under the 

Plans. In addition, in no event may the 

total number of shares of Adams stock 

or Petroleum stock, with respect to 

which all types of Awards may be 

granted to a Participant under the 

applicable Plan, exceed 300,000 shares 

of stock within any thirty-six month 

period during which the relevant Plan is 

in effect.15

7. The applicants further state that 

each Plan will be submitted to 

stockholders for their approval. The 

applicants represent that a concise, 

‘‘plain English’’ description of the Plans, 

including their potential dilutive effect, 

will be provided in the proxy materials 

that will be submitted to their respective 

stockholders. The applicants also state 

that they will comply with the proxy 

disclosure requirements in Item 10 of 

Schedule 14A under the Exchange Act. 

The applicants further note that the 

Plans will be disclosed to investors in 

accordance with the standards and 

guidelines adopted by the Financial 

Accounting Standards Board and the 

requirements of Item 402 of Regulation 

S–K, Item 8 of Schedule 14A under the 

Exchange Act, and Item 18 of Form N– 

2. In addition, applicants will comply 

with the disclosure requirements for 

executive compensation plans 

applicable to operating companies 

under the Exchange Act. Applicants 

conclude that the Plans will be 

adequately disclosed to investors and 

appropriately reflected in the market 

value of their stock. 

8. The applicants acknowledge that 

Awards granted under the Plans would 

have a dilutive effect on the 

stockholders’ equity in Adams and 

Petroleum, but argue that the effect 

would not be significant and would be 

outweighed by the anticipated benefits 

of the Plans to Adams, Petroleum and 

their stockholders.16 The applicants 

believe that the flexibility to offer 

equity-based employee compensation is 

essential to their ability to compete for 

top quality personnel. The applicants 

also assert that equity-based 

compensation would more closely align 

the interests of Adams and Petroleum 

directors, officers and employees with 

those of the applicants’ stockholders. 

9. In addition, applicants state that 

stockholders will be further protected 

by the conditions to the requested order 

that assure continuing oversight of the 

operation of the Plans by the applicable 

Board. Under these conditions, each 

applicant’s Board will review the 

relevant Plan at least annually. In 

addition, the applicable Committee 

periodically will review the potential 

impact that the grant, exercise or vesting 

of Awards could have on an applicant’s 

earnings and NAV, such review to take 

place prior to any decisions to grant 

Awards, but in no event less frequently 

than annually. Adequate procedures 

and records will be maintained to 

permit such review. The relevant 

Committee will be authorized to take 

appropriate steps to ensure that neither 

the grant nor the exercise or vesting of 

Awards would have an effect contrary to 

the interests of the stockholders of the 

applicant. This authority will include 

the authority to prevent or limit the 

grant of additional Awards. 

10. Applicants believe that the 

possibility that Awards would 

encourage speculative portfolio 

investments is minimized because the 

applicants have conservative investment 

philosophies and the Boards 

periodically monitor stock transactions 

for consistency with the applicants’ 

investment objectives. 

11. With regard to the standard for 

relief under section 6(c), applicants 

assert that the requested exemptions are 

necessary or appropriate in the public 

interest because of the recruiting and 

retention benefits noted above. 

Applicants further assert that the 

requested exemptions are consistent 

with the protection of investors because 

of the proposed limitations on the grant 

of Awards and the required Board and 

shareholder approvals. Finally, 

applicants argue that the Plans are 

consistent with the policies and 

purposes of the Act because the 

Commission and Congress have 

previously permitted certain companies 

regulated under the Act to issue stock 

options and to adopt incentive 

compensation plans similar to the Plans. 

Section 17(d) of the Act 

12. Section 17(d) of the Act and rule 

17d–1 under the Act generally prohibit 

an affiliated person of a registered 

investment company, or an affiliated 

person of such a person, from 

participating in a joint enterprise, joint 

arrangement or profit-sharing plan in 

which the company is a participant, 

unless the Commission by order 

approves the transaction. Rule 17d–1(c) 

defines a joint enterprise to include any 

stock option or stock purchase plan. 


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8114 Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 

17As noted above, applicants also assert that the 

Plans are consistent with the policies and purposes 

of the Act because the Commission and Congress 

have previously permitted certain companies 

regulated under the Act to issue stock options and 

to adopt incentive compensation plans similar to 

the Plans. 

18Applicants state this analysis could also apply 

in the case of shares withheld by applicants or 

delivery of shares by an Eligible Person in 

satisfaction of withholding taxes. 

Rule 17d–1(b) provides that, in 

considering relief pursuant to the rule, 

the Commission will consider (i) 

whether the participation of the 

registered investment company in a 

joint enterprise is consistent with the 

Act’s policies and purposes and (ii) the 

extent to which that participation is on 

a basis different from or less 

advantageous than that of other 

participants. Section 2(a)(3) of the Act 

defines an ‘‘affiliated person’’ of another 

person to include any officer, director, 

partner, copartner or employee of such 

other person. Because all Eligible 

Persons are either directors or 

Employees of applicants, Eligible 

Persons fall within the scope of section 

17(d) and rule 17d-1 and, consequently, 

are prohibited from participating in the 

Plans, absent the requested relief. 

13. Applicants request an order 

pursuant to section 17(d) and rule 17d– 

1 to permit the operation of the Plans. 

Applicants state that the Plans, although 

benefiting Eligible Persons and 

applicants in different ways, are in the 

interests of stockholders of the 

applicants because the Plans would 

help them attract, motivate and retain 

talented professionals and help align the 

interests of Employees with those of 

their stockholders. Thus, applicants 

assert that applicants’ participation in 

the Plans will be on a basis no less 

advantageous than that of Eligible 

Persons.17

Section 23(c) of the Act 

14. Section 23(c) of the Act generally 

prohibits a registered closed-end 

investment company from purchasing 

any securities of which it is the issuer 

except in the open market, pursuant to 

tender offers or under other 

circumstances as the Commission may 

permit to insure that the purchase is 

made on a basis that does not unfairly 

discriminate against any holders of the 

class or classes of securities to be 

purchased. 

15. Applicants state that the payment 

of a stock option exercise price with 

previously acquired stock of the 

applicants or with shares withheld by 

the applicants may be deemed a 

purchase by the applicants of their own 

securities within the prohibition of 

section 23(c).18 Applicants therefore 

request an order under section 23(c) to 

permit these purchases. Applicants state 

that each applicant will purchase its 

shares from Eligible Persons at their Fair 

Market Value, as defined in the Plans, 

on the relevant date, which would not 

be significantly different from the price 

at which all other stockholders could 

sell their shares in a market transaction. 

Applicants therefore submit that such 

transactions would not unfairly 

discriminate against other stockholders. 

Applicants’ Conditions 

Applicants agree that any order of the 

Commission granting the requested 

relief will be subject to the following 

conditions: 

1. Each Board will maintain a 

Committee, none of the members of 

which will be ‘‘interested persons’’ of 

the applicants as defined in the Act. 

Each Committee will administer the 

relevant Plan and will be composed of 

three or more directors of the relevant 

applicant who (i) are Non-Interested 

Directors of the relevant applicant, (ii) 

are ‘‘non-employee directors’’ within 

the meaning of rule 16b–3 under the 

Exchange Act and (iii) are ‘‘outside 

directors’’ as defined under section 

162(m) of the Code. 

2. A Plan will not be implemented 

unless it is approved by a majority of 

the votes cast by stockholders at a 

meeting called to consider the Plan. Any 

amendment to a Plan will be subject to 

the approval of the applicable 

applicant’s stockholders to the extent 

such approval is required by applicable 

law or regulation or the applicable 

Board otherwise determines. Unless 

terminated or amended, during the fifth 

year of each Plan (and each fifth year 

thereafter), each Plan shall be submitted 

for reapproval to the relevant 

applicant’s stockholders and all Awards 

made during that year shall be 

contingent upon stockholder 

reapproval. 

3. Awards are not transferable or 

assignable, except as the Committees 

will specifically approve to facilitate 

estate planning or to a beneficiary upon 

an Eligible Person’s death or by will or 

the laws of descent and distribution. 

Awards may also be transferred 

pursuant to a qualified domestic 

relations order. 

4. The maximum number of shares of 

stock available for delivery in 

connection with Awards under a Plan 

(other than any shares of Adams Stock 

or Petroleum Stock, as applicable, 

issued in payment of dividend 

equivalents) will be 4% of the relevant 

applicant’s stock outstanding on the 

effective date of the relevant Plan, 

subject to adjustment for corporate 

transactions. 

5. Each applicant’s Board will review 

the relevant Plan at least annually. In 

addition, the applicable Committee 

periodically will review the potential 

impact that the grant, exercise, or 

vesting of Awards could have on an 

applicant’s earnings and NAV, such 

review to take place prior to any 

decisions to grant Awards, but in no 

event less frequently than annually. 

Adequate procedures and records will 

be maintained to permit such review, 

and the relevant Committee will be 

authorized to take appropriate steps to 

ensure that neither the grant nor the 

exercise or vesting of Awards would 

have an effect contrary to the interests 

of investors in the applicant. This will 

include the authority to prevent or limit 

the grant of additional Awards. All 

records maintained pursuant to this 

condition will be subject to examination 

by the Commission and its staff. 

6. The 2005 Incentive Plans will 

expire on April 27, 2015 pursuant to 

their terms. No further grants would be 

made under the 2005 Incentive Plans 

following the earlier of April 27, 2015 

and the approval of the Plans by each 

applicant’s stockholders at the 

respective annual meetings expected to 

be held in April 2015 or as soon 

thereafter as practicable. Existing 

awards made under the 2005 Incentive 

Plans would remain outstanding and 

would remain subject to the terms and 

conditions of the 2005 Incentive Plans. 

7. Awards under the Plans are 

issuable only to Eligible Persons. No 

person will be granted Awards relating 

to more than 35% of the shares initially 

reserved for issuance under the relevant 

Plan (as such number of shares initially 

reserved for issuance may be adjusted 

under the terms of the Plans as 

described in Section IV.B of the 

application). Subject to the immediately 

preceding limitation, in any thirty-six 

month period during which a Plan is in 

effect, no person may be granted under 

that Plan more than 300,000 shares of 

stock in respect of Options, 300,000 

shares of stock in respect of Stock 

Appreciation Rights, 300,000 shares of 

stock in respect of Restricted Stock, 

300,000 shares of stock in respect of 

Restricted Stock Units, 300,000 shares 

of stock in respect of Deferred Stock 

Units, or 300,000 shares of stock in 

respect of Bonus Stock. In addition, in 

no event may the total number of shares 

of stock with respect to which all types 

of Awards may be granted to an Eligible 

Person under the applicable Plan exceed 

300,000 shares of stock within any 

thirty-six month period during which 

the applicable Plan is in effect, which 


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Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 8115 

amount may be adjusted to reflect 

certain corporate transactions or events 

that affect the applicant’s stock. Grants 

to Non-Employee Directors are limited 

to those described in condition 8 below. 

8. In each fiscal year, a Non-Employee 

Director will be granted 750 Restricted 

Stock Units of Adams and 400 

Restricted Stock Units of Petroleum, as 

applicable, which amounts may be 

adjusted to reflect certain corporate 

transactions. At the effective date of any 

Non-Employee Director’s initial election 

to the Board of an Applicant, such NonEmployee Director will be granted 750 

Restricted Stock Units of Adams and 

400 Restricted Stock Units of Petroleum, 

as applicable, which amounts may be 

adjusted to reflect certain corporate 

transactions. Non-Employee Directors 

will also receive dividend equivalents 

in respect of such Restricted Stock Units 

equal to the amount or value of any cash 

or other dividends or distributions 

payable on an equivalent number of 

shares of common stock. The Restricted 

Stock Units and related dividend 

equivalents will vest (and become nonforfeitable) and be paid (in the form of 

shares of common stock) one year from 

the date of grant. In addition, NonEmployee Directors may elect each year, 

not later than December 31 of the year 

preceding the year as to which the 

annual grant of Restricted Stock Units is 

to be applicable, to defer to a fixed date 

or pursuant to a specified schedule 

payment of all or any portion of the 

annual grant of Restricted Stock Units. 

Any modification of the deferral 

election may be made only upon 

satisfaction of any conditions that the 

relevant Committee may impose. NonEmployee Directors may also elect each 

year, not later than December 31 of the 

year preceding the year as to which 

deferral of fees is to be applicable, to 

defer to a fixed date or pursuant to a 

specified schedule all or any portion of 

the cash retainer to be paid for Board or 

other service related to Board activities 

in the following calendar year through 

the issuance of Deferred Stock Units, 

valued at the Fair Market Value of the 

relevant Applicant’s stock on the date 

when each payment of such retainer 

amount would otherwise be made in 

cash. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–03026 Filed 2–12–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–31451; File No. 812–14359] 

Pacific Life Insurance Company, et al; 

Notice of Application 

February 9, 2015. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order approving the substitution of 

certain securities pursuant to Section 

26(c) of the Investment Company Act of 

1940, as amended (the ‘‘1940 Act’’). 

Applicants: Pacific Life Insurance 

Company (‘‘Pacific Life’’), Pacific Life’s 

Separate Account A (‘‘Separate Account 

A’’), Pacific Life’s Pacific Select Variable 

Annuity Separate Account (‘‘Select VA 

Account’’ and, together with Separate 

Account A, the ‘‘Pacific Life Separate 

Accounts’’), Pacific Life & Annuity 

Company (‘‘PL&A’’), and PL&A’s 

Separate Account A (‘‘PL&A Separate 

Account A’’). Pacific Life, PL&A, and 

the Separate Accounts are referred to 

collectively as the ‘‘Applicants.’’ The 

Pacific Life Separate Accounts and 

PL&A Separate Account A are referred 

to individually as a ‘‘Separate Account’’ 

and collectively as the ‘‘Separate 

Accounts.’’ Pacific Life and PL&A are 

referred to herein individually as an 

‘‘Insurer’’ and collectively as the 

‘‘Insurers.’’ 

SUMMARY: Summary of Application: 

Each Insurer, on behalf of itself and its 

Separate Account(s), seeks an order 

pursuant to Section 26(c) of the 1940 

Act, approving the substitution of 

Service Shares of the Janus Aspen 

Balanced Portfolio, a series of Janus 

Aspen Series (the ‘‘Replacement 

Portfolio’’), for the Advisor Class shares 

of the PIMCO Global Multi-Asset 

Managed Allocation Portfolio, a series of 

the PIMCO Variable Insurance Trust 

(the ‘‘Replaced Portfolio’’) (the 

‘‘Proposed Substitution’’), under certain 

variable annuity contracts issued by the 

Insurers (collectively, the ‘‘Contracts’’). 

DATES: Filing Date: The application was 

filed on September 19, 2014, and 

amended on February 5, 2015. 

Hearing or Notification of Hearing: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on March 4, 2015, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Pursuant to Rule 0–5 under the 

Act, hearing requests should state the 

nature of the writer’s interest, any facts 

bearing upon the desirability of a 

hearing on the matter, the reason for the 

request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

writing to the Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090; 

Applicants: Brandon J. Cage, CLU 

Assistant Vice President, Counsel, 

Pacific Life Insurance Company, 700 

Newport Center Drive, Newport Beach, 

CA 92660; Richard T. Choi, Esq., 

Carlton Fields Jorden Burt, P.A., 1025 

Thomas Jefferson St. NW., Suite 400 

East, Washington, DC 20007. 

FOR FURTHER INFORMATION CONTACT: 

Laura L. Solomon, Senior Counsel, at 

(202) 551–6915, or Nadya Roytblat, 

Assistant Chief Counsel, at (202) 551– 

6825 (Chief Counsel’s Office, Division of 

Investment Management). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. The Insurers, on their own behalf 

and on behalf of their respective 

Separate Accounts, propose to 

substitute Service Shares of the 

Replacement Portfolio for Advisor Class 

shares of the Replaced Portfolio held by 

the Separate Account to fund the 

Contracts. Each Separate Account is 

divided into subaccounts (each a 

‘‘Subaccount,’’ collectively, the 

‘‘Subaccounts’’). Each Subaccount 

invests in the securities of a single 

portfolio of an underlying mutual fund 

(‘‘Portfolio’’). Contract owners (each a 

‘‘Contract Owner’’ and collectively, the 

‘‘Contract Owners’’) may allocate some 

or all of their Contract value to one or 

more Subaccounts that are available as 

investment options under the Contracts. 

2. Pacific Life is the depositor and 

sponsor of the Pacific Life Separate 

Accounts. PL&A is the depositor and 

sponsor of PL&A Separate Account A. 

3. Each of the Separate Accounts is a 

‘‘separate account’’ as defined by 

Section 2(a)(37) of the 1940 Act and 

each is registered under the 1940 Act as 

a unit investment trust for the purpose 

of funding the Contracts. Security 

interests under the Contracts have been 


tkelley on DSK3SPTVN1PROD with NOTICES