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Here’s news from Davis Polk’s Ning Chiu from this blog:

New York State Comptroller Thomas DiNapoli on Friday issued a press release announcing that the New York State Common Retirement Fund has withdrawn the lawsuit it filed in early January against Qualcomm over political spending disclosure, after Qualcomm implemented and publicly posted what the release calls an “industry-leading” Political Contributions and Expenditure Policy. The lawsuit, which we previously discussed, sought Qualcomm’s books and records under Section 220 of the Delaware corporation law.

The press release includes statements from both Qualcomm’s CEO and Chairman and Mr. DiNapoli extolling the importance of increased transparency about corporate political spending. According to the release, the company’s policy will include information on contributions to political candidates and parties, and expenditures to trade associations and Section 501(c)(4) organizations, as well as contributions to influence ballot measures. 501(c)(4) groups, whose primary purpose must be focused on “social welfare” in order to stay tax-exempt, have come under increasing attention for their involvement in the political process while being able to maintain donor anonymity.

The Center for Political Accountability weighed in and in the same release announced that the Qualcomm disclosure “puts it near the top” of its CPA-Zicklin Index, which we described here. According to the CPA, 107 large public companies have agreed to disclose corporate political spending so far.

The 4-page Qualcomm policy indicates that political expenditures require the approval of certain members of management and oversight by the board’s governance committee. The company plans to update the policy twice a year for information on specific political contributions, dues to U.S.-based trade associations that received payments of at least $25,000 (and the portion of those dues and special assessments that were used for activities that are not deductible if such information is available after making reasonable efforts), payments of $10,000 or more to social welfare organizations, and contributions to influence the outcome of ballot measures. The policy states that the company does not plan to make independent expenditures on behalf of federal candidates.

While some had expected a decrease post-election, ISS reported that, like last year, it is tracking more than 110 shareholder proposals on the topic this season.

Is a Guy on a Couch Commenting on Your Defective Auditor Consents?

Just received this important lesson learned from a member:

There is a guy who is reviewing 10-K auditor’s consents and sending emails to the CEO and CFO pointing out deficiencies (wrong date, unsigned) within 30 minutes of the 10-Ks hitting EDGAR. I have had a couple clients receive these emails in the past week and based on the slew of 10-K/As filed in the last week to correct the same sort of deficiencies, I have to imagine he is sending them to other companies too.

I think it’s a good lesson that someone actually reads these things and outside counsel often does not review the final auditor’s consent – but a mistake can be problematic. Although an 8-K can work to get a corrected Exhibit 23 on file I understand the SEC prefers a 10-K/A (which can be exhibits only but still requires SOX certifications). Not sure what his motivation is for these emails but the fact that someone is reading these consents so closely and quickly is an eye-opener.

The Apple Unbundling Saga

Been a lot of press about last Friday’s court decision about Apple’s battle with David Einhorn’s Greenlight Capital (posted in our “Unbundling” Practice Area). But the most interesting piece I have seen is from Marty Lipton entitled “Bite the Apple; Poison the Apple; Paralyze the Company; Wreck the Economy.”

It’s also worth highlighting this excerpt from Davis Polk’s blog:

It is also worth noting that, while all the reports on the recent lawsuit against Apple’s proxy statement in the Southern District of New York focused on the unbundling claim made by Greenlight for the charter amendment proposal, as we previously discussed, little known is that the judge in that case also dismissed efforts by another plaintiff to enjoin the say-on-pay proposal. That plaintiff had claimed that Apple’s use of terms like “experiences,” “input” and “peer group data,” when describing the compensation committee’s judgment in granting long-term equity, failed to provide sufficient information. The judge found, however, that since the plaintiff did not identify any material omission in the proxy and since the compensation discussion and analysis section included in the proxy statement was compliant with the SEC rules, the plaintiff was unlikely to succeed on the merits.

Nonetheless, the Symantec and, in the say-on-pay preliminary injunction context, Apple successes do not mean that U.S. public companies should relax and assume that the plaintiffs’ bar will be deterred. At least one law firm that has been particularly active in filing these types of lawsuits has recently identified several more companies which it is investigating for potential breaches of directors’ fiduciary duties in connection with say-on-pay proposals. Given that the proxy season is upon us, we continue to recommend that companies pay extra attention to their executive compensation disclosure.

– Broc Romanek