June 13, 2007
This Year’s Sleeper: E-Proxy
Even though it’s voluntary, many of you will soon be evaluating whether the costs savings promised by e-Proxy truly exist. In my opinion, that issue actually is a drop in the bucket compared to some of the other issues that you need to learn about when it comes to e-Proxy. For example, even if your company doesn’t use e-Proxy, dissidents can use it if they contest a director election or another matter on the annual meeting ballot.
To learn more, tune in to tomorrow’s webcast – “How to Implement E-Proxy: Avoiding the Surprises and Making the Calculations” – which has just been bumped up to 90 minutes since there is so much material to cover. With e-Proxy effective at the end of this month, this will be a very timely – and practical – webcast. Join these experts:
– Tom Ball, Senior Managing Director, Morrow & Co.
– Joe Frumkin, Partner, Sullivan & Cromwell
– Carl Hagberg, Independent Inspector of Elections and Editor of The Shareholder Service Optimizer
– Dominic Jones, Editor, IR Web Report
– Alan Singer, Partner, Morgan Lewis & Bockius
– Sid Rodrigue, Vice President, Broadridge (formerly known as ADP)
Among the topics to be discussed are:
– What does voluntary e-Proxy involve? Will voting patterns change?
– What should be considered in determining whether to forego paper next proxy season?
– How third-parties might use e-Proxy to wage proxy campaigns?
– What are the latest drafting tips to design “usable” proxy materials for the Web?
– How should your proxy solicitation and IR strategies change in the wake of e-Proxy?
E-Proxy Webcast: Important Course Materials to Print
For tomorrow’s e-Proxy webcast, please print these two sets of course materials:
– Morrow & Co.’s Sample Calculation of Potential E-Proxy Costs
– Broadridge on Issuer Options and Concerns
You can print all of these off from here.
NYSE Finally Revises Its Corporate Governance Proposal
Last Friday, the NYSE filed Amendment No. 1 to its proposal to modify the corporate governance listing standards set forth in Section 303A of the Listed Company Manual with the SEC. The original proposal, filed way back in late 2005, provided clarifications to the current standards and codified certain NYSE and SEC interpretations.
The most significant change in the original proposal related to the Section 303A.02(a) independent director disclosure requirements. However, last August, the SEC adopted amendments to Item 407 of Regulation S-K that consolidated director independence and related corporate governance requirements under a single disclosure item. Since the SEC’s new rules sometimes duplicate (or require more detailed disclosures) than the NYSE’s governance standards, the amended proposal seeks to eliminate those disclosure requirements currently set forth in Section 303A that are also required by Item 407. Here are some of the highlights of the amended proposal:
1. Eliminate the controlled company exemption disclosure requirement to avoid duplication with Item 407.
2. Add a new component to Section 303A.00 regarding disclosure requirements to give a listed company the option of providing the required disclosures in its annual proxy statement or, if it does not file a proxy, in its annual report filed with the SEC; or on or through its website.
3. Eliminate the original proposal that required disclosures may not be summarized or incorporated by reference.
4. Eliminate the NYSE requirement that a company disclose in its proxy (or Form 10-K) that its audit, nominating and compensation committee charters, code of business conduct and ethics and corporate governance guidelines are available on its website and in print to any shareholder who requests them to avoid duplication with Item 407.
5. Eliminate the Section 303A.02(a) independent director disclosure requirements to avoid duplication with Item 407.
6. Increase the Section 303A.02(b)(ii) direct compensation bright line test dollar threshold from $100,000 to $120,000 to bring the standard in line with Item 404 of Regulation S-K.
7. Amend the Section 303A.02(b)(iii) external and internal auditor bright line test as it applies to a director with an immediate family member so that it applies only to an immediate family member who:
– is a current partner of such a firm;
– is a current employee of such a firm and personally works on the listed company’s audit; or
– was within the last three years a partner or employee of such a firm and personally worked on the listed company’s audit within that time.
8. Clarify that all interested parties, not only shareholders, must be able to communicate their concerns regarding the listed company to the presiding director or the non-management/independent directors as a group.
9. Eliminate the Section 303A.05(b)(i)(C) requirement relating to the preparation of the compensation committee report to avoid duplication with Item 407.
10. Eliminate the Section 303A.07(c)(i)(B) requirement relating to the preparation of the audit committee report to avoid duplication with Item 407.
11. Redesignate the Section 303A.14 website requirement, adopted in August 2006, as Section 307.00 of the Listed Company Manual and eliminate the current Sections 307.00 and 314.00 regarding related party transactions.
In the amended proposal, the NYSE is also proposed changes to Section 203.01 – the annual financial statement requirement – to provide that a listed company that is subject to the SEC’s proxy rules, or is a foreign private issuer that provides its audited financial statements (as included on Forms 10-K, 20-F and 40-F) to beneficial shareholders in a manner that is consistent with the physical or electronic delivery requirements applicable to annual reports set forth in the SEC’s proxy rules, is not required to issue the press release or post the undertaking required by Section 203.01.
– Broc Romanek