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Shutterfly chairman resigns

January 09, 2007|From Reuters

Online photo site Shutterfly Inc. said Monday that Chairman Jim Clark, co-founder of Web pioneer Netscape Communications, had resigned, saying securities regulations had "gone too far."

In a letter to management released in a regulatory filing, the Silicon Valley veteran said he was resigning from the board both because the company had matured from a technology developer into a manufacturer and because of constraints imposed on major shareholders by the Sarbanes-Oxley securities law.

Shutterfly made an initial public offering of shares in September, and Clark held about 30% of the outstanding shares after the IPO, according to the shareholder prospectus.

Sarbanes-Oxley "dictates that I not chair any committee due to the size of my holdings, not be on the compensation committee because of the loan I once made to the company, not be on the governance committee," Clark wrote.

"It even dictates that some other board member must carry out the perfunctory duties of the chairman," he wrote in a letter dated Jan. 1. "What's left is liability and constraints on stock transactions, neither of which excite me."

Clark is echoing a chorus of Silicon Valley critics of the Sarbanes-Oxley law who argue that regulations introduced after the accounting scandals at Enron Corp. and WorldCom Inc. have discouraged venture-backed companies from going public on U.S. markets. Shutterfly was founded in 1999 and is based in Redwood City, Calif. The firm competes in the online photo finishing market with Eastman Kodak Co., Hewlett-Packard Co. and others, including Wal-Mart Stores Inc. and Best Buy Co.

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