Breaking News: Reuters Distributes Press Releases in Editorial Feed

I'm trying real hard not to blog this week, but just can't resist pointing out this excellent piece of investigative journalism by Dominic Jones of IR Web Report about how Reuters is now distributing press releases of its parent company's corporate clients in its editorial feed to Yahoo! Finance, the world's most popular investing website.

Not only does Dominic expose this unconventional move, but he proposes a theory as to why Reuters has gone this route - as well as pointing out that "the inclusion of news releases in Reuters' feed to Yahoo! Finance is also likely to create regulatory headaches for Thomson Reuters' European corporate clients whose securities are not registered with the SEC and cannot be promoted or sold in the US."

Although I know many are worried that the demise of traditional mass media will result in the death of investigative reporting, I like to think that the opposite is true - the Web has created thousands of worthy journalists who have the expertise and will take the time to fill the shoes of the many reporters that have been laid off or taken early retirement...

- Broc Romanek

Big SEC Filing Fee Hike to (Finally) Become Effective Later Today!

Yesterday, President Obama signed a continuing resolution that will fund the SEC for two more months. In an unusual twist, this resolution states that it is deemed to be the SEC's "regular appropriation" for fiscal year 2011. Thus, it will trigger changes in the fee rates as noted in this SEC press release.

As a result, effective December 27th, the filing fee rate applicable to the registration of securities will increase from $71.30 to $116.10 per million dollars, a 63% hike as I blogged back when it was first announced. Since tomorrow is a federal holiday - and the SEC is closed - this filing fee hike takes effect after 5:30 pm eastern today (except filings pursuant to Rule 462(b) get the current rate until 10:00 pm eastern).

To track Santa Claus on his travels, you may wish to try the following:

- Business-like tracking system map starting at the North Pole

- NORAD Santa page

- NORAD "Kid's Countdown" with interactive games and other things

- Broc Romanek

The Mighty Holiday Disclaimer: One That Any Lawyer Could Love!

In yesterday's blog, I noted the heavy volume of electronic holiday cards and I was remiss in not highlighting this hilarious card from Manatt. The whole darn thing is funny - but probably the best part is the disclaimer at the end that I reproduce for you here:

The wishes provided herein represent the sentiment of the sender as of the date written and may not reflect the sender's sentiments on the date this is first received or anytime thereafter. The sender reserves the right to deny the sender ever wished the recipient wishes, whether warm, cold or any temperature whatsoever. Also, the wishes are not dependent on warmth and may just be wishes, with all of the privileges accorded to the state of wishing, including grandiosity but not excluding practicality. The wish, whether warm, neutral or cold, is under no obligation to come true, but that does not exclude the possibility that it may come true.

A trained eye will recognize that the disclaimer is based on typical safe harbor language pulled from a press release or other writing...and this video ain't bad either...

- Broc Romanek

My New-Fangled Holiday Card: What a Year It Was!

Recently, I have received a slew of e-mailed holiday cards, far more than ever before. While one can chalk that up to popularity, the likely reason is that I subscribe to every list under the sun due to my efforts to pretend to be a reporter. Thanks to those who have sent them - although some wonder whether "should you send holiday cards to analysts and investors?" In return, I offer you a silly video recapping the year (you'll want your audio turned up for this):

Create your own video slideshow at animoto.com.

And one member notes: In Miracle on 34th Street (1947 version), Susan Walker explained to an associate that she fired Santa Claus because he was crazy. The associate did not want her to fire him and responded with "But... but maybe he's only a little crazy like painters or composers or... or some of those men in Washington." I suppose some things are timeless.

- Broc Romanek

Another Corporate Poem: "Twelve Days of Christmas"

Friday's poem on this blog - "Twas Two Weeks Before Quarter's End" - elicited strong member feedback. Not to be outdone, here is a capital markets poem crafted by Anna Pinedo of Morrison & Foerster:

Twelve Days of Christmas

On the first day of Christmas my lovely client sent to me, A bought deal off an S-3

On the second day of Christmas my lovely client sent to me, Two NDAs and A bought deal off an S-3

On the third day of Christmas my lovely client sent to me, Three ASRs Two NDAs and A bought deal off an S-3

On the fourth day of Christmas my lovely client sent to me, Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3

On the fifth day of Christmas my lovely client sent to me, Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3

On the sixth day of Christmas my lovely client sent to me, Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3

On the seventh day of Christmas my lovely client sent to me, Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3

On the eighth day of Christmas my lovely client sent to me, Eight fixed-to-floaters Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3

On the ninth day of Christmas my lovely client sent to me, Nine autocallables Eight fixed-to-floaters Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3

On the tenth day of Christmas my lovely client sent to me, Ten call spreads Nine autocallables Eight fixed-to-floaters Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3

On the eleventh day of Christmas my lovely client sent to me, Eleven F/X swaps Ten call spreads Nine autocallables Eight fixed-to-floaters Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3, and

On the twelfth day of Christmas my lovely client wired to me, the remainder of this year's fee.

- Broc Romanek

Scorecard: Say-When-on-Pay So Far

It's still very early in the proxy season but I know many are interested in the proxy statements being filed and what those companies are recommending regarding the frequency of future say-on-pay votes. In his "Proxy Disclosure Blog" on CompensationStandards.com, Mark Borges has been blogging daily about what the most recent say-on-pay resolutions and disclosures look like - and he periodically is tallying up what the frequency recommendations look like so far.

Davis Polk also is tracking the frequency of say-on-pay recommendations internally - and here's their latest scorecard: "From November 19 through December 16, 2010, we have tracked the frequency of say on pay proposals for 19 companies, including 16 large accelerated filers. Thirteen have recommended triennial votes, one has recommended a biennial vote, and another has recommended an annual vote. One company made no recommendation, indicating that it has decided to consider the views of shareholders before making a determination. The three smaller companies included in our survey all proposed annual votes."

Unless something major happens over the next two weeks, this blog is taking a rare hiatus. Spend that extra time you will have not reading this blog by taking 30 seconds to cast a vote for us in the ABA's blog voting contest. Here are voting instructions. Voting doesn't end until December 31st.

Also don't forget to renew your membership to this site since all 2010 memberships expire at the end of this month. Looking forward to 2011! Enjoy your holidays...

Twas Two Weeks Before Quarter's End

Here is something cute penned by Gary Raven of Builders FirstSource:

Twas two weeks before quarter's end, when all through the company,
Every accountant worked late, preparing spreadsheets while sitting on their rumpy.
Debits and credits all filled the air,
In hopes that outside auditors would be acutely aware.

Most employees were into their third pitcher laughing at the bar,
While fantasies of raises and bonuses were coupled with dreaming of a shiny new car.
And the CFO in his green-visor and the Controller in his as well,
Knew nothing could replace their swiftly dwindling brain cells.

In the computer room there came such a sudden smell,
Were too many cached files burning, no one could tell.
The CIO made a run to the processor room,
Throwing the switch on the exhaust fan to avoid any doom.

The wisps of smoke could barely conceal,
The visage of something with which the mind had to deal.
When to the door the creature stepped into his dominion,
To reveal it was St. Sox and eight beleaguered minions.

Omnipresent, thorough and replete,
Everyone knew it would be difficult to compete.
Onward with bureaucracy, forward they came,
As St. Sox called them each by name.

Now Sarbanes! now Oxley! Now Tyco and Enron!
On Greenspan! On 404! On Arthur and Anderson!
Take general accounting and turn it on its head,
Make small companies wish they were dead!

As each measure resulted in more and more invented controls,
It became difficult to know which way a company could roll.
So to the accounting department St. Sox did go,
With all his minions, measures, cures, and fixes in tow.

With flurry and bravado he sat down to work,
Telling each employee to not understand was to be a jerk.
He pointed his fingernails to his book,
Exclaiming that to comply, all they had to do was look.

On to his head he placed two Bluetooth devices against each ear,
And when he was plugged in he was in great cheer.
His IPODs were maxed with memory and band,
So that today's case law was held in his hand.

A fanciful mirth replaced his mood, previously dreary,
He would show how compliance need not be teary.
With slickened hair greasy with pomade,
He just knew he had come to their aid.

His Italian suit, pleated in the back,
Cast a pall against the minions dressed off the rack.
Of bad breath and teeth of yellow,
He did not make his companions feel mellow.

As his LED screen turned on its light,
Perhaps we thought he really may be bright.
Importing the data he turned to his right,
Saying that Maestro was about to help their plight.

He spoke not a word but went right to work,
Then made all the printers go berserk.
"See there is the proof of the matter,"
The gleeful proclamation silencing all chatter.

"For a yearly retainer I can show you the ropes,
You'll pass all audits until new laws hit the books."
With that, the accounting department, not meaning to be redundant,
Hung him with a rope and placed him next to all the other consultants.

- Broc Romanek

A "Wow": Corp Fin Allows Exclusion of Golden Parachute Shareholder Proposal

I just learned of this recent Corp Fin no-action response to Navistar, in which the Staff allows the company to exclude a proposal from the Teamsters General Fund. This shareholder sought inclusion of a proposal for shareholder approval of future severance agreements with senior executives that provide benefits in an amount exceeding 2.0x the sum of salary plus bonus.

The Staff response relies on Rule 14a-8(i)(10) to permit exclusion on the basis that the company will soon substantially implement the proposal because the company intends to include a say-on-golden-parachute vote as part of its say-on-pay vote for the upcoming proxy season (thus, taking advantage of the Dodd-Frank "exception" that allows for this combination).

Among other arguments, the shareholder unsuccessfully argued that the SEC's pending say-on-pay rule proposal would render shareholder proposals seeking a more specific vote on particular elements of compensation non-excludable. The shareholder also argued that giving shareholders a triennial vote on the entirety of executive compensation practices is different than giving shareholders an opportunity to weigh in on a company paying out 2x salary and bonus as a severance package.

Interestingly, a few months back, Navistar settled a SEC Enforcement action regarding years-long accounting fraud (see this article). The CEO Dan Ustain that presided over this alleged fraud was the subject of a relatively rare Section 304 clawback action from the SEC - but he still runs the company (see this blog from Francine McKenna). Thus, one can understand why shareholders might want to limit the severance packages at this company.

I haven't had time yet to confer with the usual shareholder proposal experts to fully analyze this development - but will do so and provide some gloss on this after the holidays...

SEC Proposes Disclosure Rules on Conflict Minerals, Mine Safety and Resource Extraction

Just writing the title for this entry feels strange. "Conflict minerals"? "Mine safety"? Is it April Fool's Day? Anyways, the SEC released these three proposing releases after yesterday's open Commission meeting:

- Conflict Minerals
- Mine Safety
- Resource Extraction

By the way, we have posted a great conflict materials flowchart - one that can be used by lawyers to explain to management how the Dodd-Frank provision works - courtesy of Melissa Greenspan of Owens Corning.

Data Handling & Digital Forensics

In this podcast, John Reed Stark of Stroz Friedberg discusses how to handle important data, including:

- What do you perceive as the greatest threat to companies when it comes to their data?
- What do you do if you're "hit" by a data breach?
- What is a "bad leaver"?
- What sort of data can you uncover from a "forensic deep dive"?

- Broc Romanek

Say-on-Pay: What Four Frequency Choices Looks Like

A few days ago, I blogged on CompensationStandards.com's "The Advisors' Blog" about a sample voting instruction form to illustrate how the four frequency choices can be displayed on a proxy card (note the names of the directors). Mike Andresino of Posternak Blankstein & Lund weighed in that if management is recommending triennial as the frequency, then instead of ordering the choices, reading left to right, as "1-yr / 2-yr / 3-yr / abstain," he would put the one the company wants first, like this: "3-yr/ 2-yr /1-yr / abstain" (this obviously would be tricky if management recommended biennial).

I confirmed with Broadridge that their systems could indeed process this type of change in order for all of its voting formats: paper, telephone, ProxyVote.com, and ProxyEdge. Whether transfer agents and tabulators can handle that remains to be seen.

And don't forget that Mark Borges is maintaining a daily recap of the latest proxy statement filings and a scorecard of what frequency companies are recommending in his "Proxy Disclosure Blog."

I am wrapping up the Winter 2011 issue of the Compensation Standards newsletter that will be posted right after New Year's Day (available to all 2011 members of CompensationStandards.com). This issue will contain more practical guidance on say-on-pay preparation, supplementing the July-August 2010 issue of The Corporate Counsel that I wrote a few months back. One topic I tackle is what you need to check now to ensure that Broadridge's systems work properly with other players in the meeting process so that tabulation is done correctly.

Since all memberships expire at the end of this month, renew now to receive this issue as soon as it's out. Or try a no-risk trial if you are not yet a member to receive this issue as soon as it's up.

The SEC's Enforcement Logo: Now You See It, Now You Don't

For a few months, the SEC's home page contained an Enforcement "stamp" symbol, essentially an icon for the Enforcement Division. This icon was prominent on the upper right-hand corner of the home page, with links to the Division's "headline" cases. Personally, I never understood why the Enforcement Division needed to be branded separately from the SEC itself - so I'm happy to see that iall has now disappeared.

An In-House Guide to Internal Investigations

In this podcast, Dan Bookin of O'Melveny & Myers explains his firm's new handbook on internal investigations entitled, "In-House Counsel's Guide to Conducting Internal Investigations":

- Why did the firm write the guide?
- Should in-house counsel consult the guide when a need for an internal investigation arises? Or is that too late?
- What are your favorite pieces of guidance in the guide?

- Broc Romanek

Survey Results: More on Compensation Committees and Compensation Consultants

Here are the survey results from our most recent Quick Survey, repeated below (compare to an identical survey we conducted three years ago):

1. Does your compensation committee:

- have a policy that it will not employ any compensation consultants who perform services for management - 30%
- not have such a policy, but does not intend to employ any of the same compensation consultants as management - 50%
- employ some (or all) of the same compensation consultants used by management - 20%

2. In practice, how does your compensation committee go about hiring an expert for making recommendations regarding CEO compensation?

- Management offers up a consultant to the compensation committee that it finds acceptable, subject to committee approval - 55%
- Compensation committee left completely on its own to find and hire whatever consultant it wants - 40%
- Compensation committee has not hired an expert for setting CEO compensation - 4.9%

3. Assume the company already is using consultant A for general compensation advisory purposes, will your compensation committee:

- Use the same consultant to help set executive compensation - 10%
- Use a different consultant to help set executive compensation - 70%
- Too early to tell what the compensation committee will do going forward - 20%

4. Regarding compensation committee charters, the committee has:

- A charter that states that the compensation committee will be the sole entity in the company to hire compensation consultants specifically related to CEO compensation - 80%
- A charter that states that both the compensation committee and management have the authority to hire compensation consultants specifically related to CEO compensation - 0%
- A charter that does not address who hires compensation consultants - 20%

Please take a moment to participate on this "Quick Survey on Regulation FD Practices."

Social Media Within IR Web Pages

In this podcast, Darrell Heaps of Q4 Web Systems explains how companies can incorporate social media elements within their IR web pages, including:

- What is the Q4 platform?
- How is social media integrated into the platform?
- Can you give an example of a company using your platform so folks can see what it looks like?

More on our "Proxy Season Blog"

With the proxy season gearing up once more, we are posting new items regularly on our "Proxy Season Blog" for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- U.S. Proxy Season Review: Withhold Votes
- Is ISS Too Powerful?
- Seven Smart Practices for Shareowner Meetings
- Symantec Done With All-Virtual Shareholders Meetings
- Tabulators in the News

- Broc Romanek

The ABA Blawg 100: We Still Need Your Help

As I blogged last week, we are in the midst of a voting campaign among the ABA Journal's Blawg 100. We've moved up to 4th place, behind two intellectual property blogs and the SCOTUS blog. We really need your support. If you value what you read all year long here, please repay us with 30 seconds of your time.

To help you navigate the ABA Journal's voting framework, here are the steps you need to take:

a. If you voted last year:

1. You likely need to recover your password by simply inputting your email address. You will promptly receive an email with your password and screen name in it.

2. Once you have your password, you should login to their site

3. Once logged in, go to the "Niche" category and scroll down to TheCorporateCounsel.net Blog (it's second from the bottom) and click on the "Vote" symbol to the left of that. Thanks!

b. If you didn't vote last year:

1. Register to vote - it's free. You don't have to be an ABA member to vote nor do you even have to be a lawyer. When you pick a password, it must be at least 5 characters long (but it can be any 5 characters - eg. 11111). If you're an ABA member, your ABA id/password won't work for the ABA Journal's site unfortunately as they are separate.

2. Once you activate your registration by clicking on the link emailed to you, you should login using the screen name and password that you picked when you registered.

3. Once logged in, go to the "Niche" category and scroll down to TheCorporateCounsel.net Blog (it's second from the bottom) and click on the "Vote" symbol to the left of that. Thanks!

Here is this year's promotional video that I taped during a conference in Chicago last week. It reflects the lethargic mood of our community during this year's campaign - if we received the number of votes that we had last year, we would win again handily. Compare to last year's promotion. If you're having troubles voting, please shoot me an email and let me know and I can help you. Thanks for the support!

Corp Fin Fills Some Leadership Positions

Last week, Corp Fin announced the following promotions:

- Amy Starr, Chief, Office of Market Trends
- Kathy Hsu, Chief, Office of Structured Finance
- Mike McTiernan, Assistant Director, AD8 Real Estate and Business Services
- Amanda Ravitz, Assistant Director, AD10 Electronics and Machinery
- Suzanne Hayes, Assistant Director, AD12 Financial Services (this is the new 2nd financial services group that is not officially named yet)

We've updated our "Corp Fin Organization Chart." Congrats to all five, it's been quite a while since an Assistant Director slot was open so I know those spots were widely coveted...

Proxy Access Lawsuit: Two Amicus Curiae Briefs Filed

Last week, two amicus curiae briefs were filed in the lawsuit filed by the Business Roundtable and US Chamber of Commerce against the SEC's proxy access rule - these briefs from the State of Delaware and the Investment Company Institute were filed in support of the plaintiffs. This is in addition to the initial brief filed by the plaintiffs a few weeks ago.

Meanwhile, the United Brotherhood of Carpenters' approach to access this season is a letter writing campaign to 100 companies, where the union is seeking access to the company's nominating committee. In addition, this union is still seeking triennial votes for say-when-on-pay, as noted in this comment letter from Ed Durkin to ISS.

- Broc Romanek

The Future is Here: Easy-to-Do Animated Reg FD Training

In this podcast, Melissa Gleespen of Owens Corning explains how she made this Reg FD training video, including:

- How much effort did it take to create the video?
- Did you get help on the technology side?
- How has it been received by those that have been trained with it?

More on "Dodd-Frank: An Unintended Consequence?"

Since I received such strong member feedback to my blog about silly SEC filings being forced upon some companies by Section 1503(b)(1) of Dodd-Frank (the miner safety provision), I thought I would share another one - this Form 8-K from Westmoreland Coal Company. I wish the reader response to my "Jimmy from Legal" was as strong! Real life always beats fiction...

On Wednesday, the SEC will hold an open Commission meeting to propose rules on mine safety and conflict materials, among other non-Corp Fin related items.

More on "The Mentor Blog"

We continue to post new items daily on our blog - "The Mentor Blog" - for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- FASB Delays Proposed Multiemployer Postretirement Plan Disclosures
- Congress: The Mid-Term Election's Impact on the Corporate Community
- Corp Fin Accounting Comments: What's on the Radar?
- More on " An Insider's View of the SEC: Principles to Guide Reform"
- The Goldman Case and the Inspector General: The Costs
- Microsoft Latest to Dump PR Wires for Earnings Releases

- Broc Romanek

What Financial Crisis? The SEC Has to Fight For Its Budget Per Usual

Unfortunately, Congress eliminated a SEC self-funding provision from Dodd-Frank during the reconciliation process, as noted in this blog. As I've said before, I don't understand how people expect the SEC to be truly independent if they have to constantly bow to political pressures, of which there are more lately than ever before. Note that the SEC has revised it's "Dodd-Frank Implementation Timeline" to delay creating all the new Offices that Dodd-Frank requires - and here is the SEC's detailed justification for this year's budget request.

Given all the nonsense in Congress these days, I guess we shouldn't be surprised to hear this latest news from Lynn Turner: Recently, the Consumer Federation of America and Americans for Financial Reform sent letters urging Congress to provide funding to the SEC and CFTC in amounts that will enable them to do their jobs (neither letter is posted online; but see this blog). In the past, Congress has provided insufficient funding for technology acquisitions, market specialists, and other tools necessary to do their job. Congress has also failed then to oversee the agencies and ensure they are getting their job done.

Congress is once again debating whether or not to fund these agencies adequately. This comes after Congress in the Dodd-Frank legislation required these agencies to carry out hundreds of rule makings, dozens of in-depth surveys and reports, and create new Divisions and Offices within the agencies. Yet some in Congress are now suggesting that while telling the SEC and CFTC they must implement the legislation, they must do it without any further resources.

There is at least one draft continuing resolution (CR) that shows an increase to $244 million in funding for the CFTC and no increased funding for the SEC. However, the House may do a full-year continuing resolution with funding for CFTC and SEC at the higher levels approved by appropriators - $285 million for CFTC and $1.3 billion for SEC. The Senate may come back with a part-year CR that includes no added funding for either agency. You may recall it was in the Senate that Senators Durbin and Inouye killed self-funding during the Dodd-Frank negotiations that would have alleviated this recurring annual problem and provided funding sufficient for the regulators to do their jobs.

As the one letter aptly says: "There is widespread agreement that our recent financial collapse was caused in part because regulators who had the authority to rein in bad practices did not do so. But just as regulators need the will to regulate, they also need sufficient funding so that their respective agencies can operate effectively and efficiently. It is not enough for Congress to increase the authority and responsibilities of these agencies without giving them the funding they need to fulfill those responsibilities. We therefore strongly urge Congress, as it finalizes its 2011 spending plans, to include the $286 million for the CFTC and $1.3 billion for the SEC included in Senate appropriations bills."

"Smaller Reporting Companies": A Surprising Number

In addition to breaking the news over the past few days about how the first batch of proxy statements filed with recommendations for "say-when-on-pay" looks, Mark Borges also blogged this gem recently on CompensationStandards.com's "Proxy Disclosure Blog":

A couple weeks ago, I participated in a panel on disclosure issues for smaller reporting companies at the ABA Business section Fall meeting in Washington D.C. Gerry LaPorte, the Chief of the Office of Small Business Policy in the SEC's Division of Corporation Finance, was one of my co-panelists. Of the many interesting items that Gerry discussed, one statistic really caught me and the rest of the panel offguard.

This statistic involves the number of companies that self-identify as a "smaller reporting company," For the period from October 1, 2009 through September 30, 2010 (the Commission's latest fiscal year for which data is available), the number of entities filing annual reports on Form 10-K fell into the following categories:

- Smaller reporting companies - 4,353 (48%)
- Non-accelerated filers - 1,184 (13%)
- Accelerated filers - 1,800 (20%)
- Large accelerated filers - 1,479 (17%)
- Other - 98 (1%)

Total Companies - 8,914 (100%)

This total does not include foreign private issuers, registered investment companies, registered employee benefit plans (which file on Form 11-K), and asset-backed issuers, which take the total of SEC-registered entities up to the "13,000" total which we often refer to when talking about the number of companies registered with the Commission.

I had no idea that nearly 50% of the entities that file Forms 10-K are smaller reporting companies. While these entities represent a sizeable number of the filings made on EDGAR, they make up significantly less than 10% of the total U.S. market capitalization. At least I now know why it's sometimes difficult to find proxy statements with a full-blown executive compensation disclosure section (particularly during the "off-peak" months).

Joint Ventures in India

In this DealLawyers.com podcast, Steven Goldberg of Baker Hostetler discusses Scripps Networks Interactive joint venture with New Delhi Television, including:

- Can you briefly describe the background of the deal?
- Did any unique issues arise in connection with this joint venture?
- What pointers do you have for companies when approaching a joint venture?

- Broc Romanek

Corp Fin Updates Its Financial Reporting Manual

On Monday, Corp Fin updated its "Financial Reporting Manual" for issues related to income averaging for significance testing, significance testing of equity method investees, reporting when there are both errors and changes in accounting, stock-based compensation in IPOs, internal control over financial reporting, selected financial data, MD&A, as well as other changes (see Topics 1600 and 9500). Corp Fin has been updating this Manual much more frequently than in the past - deciding to do minor tweaks here and there rather than overhauls every five years. Good idea.

Recently, Corp Fin Chief Accountant Wayne Carnall gave this slide presentation about common issues facing smaller issuers.

More on "The SEC's New PCAOB Appointment Procedures: Time for New Board Members?"

Last month, I blogged about the SEC's new procedures to appoint board members of the PCAOB - and then I went on to write about the three PCAOB board member openings (including the Chair) that have remained unfilled despite the Supreme Court removing the uncertainty that was hanging over the PCAOB's head for a few years during the pendency of Free Enterprise Fund v. PCAOB.

In this recent Bloomberg article, it is rumored that former SEC General Counsel Jim Doty and former Corp Fin Director John Huber are among the leading candidates to serve as the next PCAOB Board Chair. This article coincided with this speech by SEC Chair Mary Schapiro at the annual AICPA Conference in which she stated that the SEC is in the final stages of the selection process for all three openings. So I imagine it will be any day now...

By the way, here is a nice speech from PCAOB Acting Chair Dan Goelzer about the PCAOB's recent accomplishments and upcoming agenda that he delivered at the AICPA Conference yesterday.

More on our "Proxy Season Blog"

With the proxy season gearing up once more, we are posting new items regularly on our "Proxy Season Blog" for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- How Disruptive Shareholders at Annual Meetings Can Go to Jail
- Transfer Agents Take Up the Proxy Plumbing Mantle
- Trend: Taking Annual Meeting Questions from the Web
- Study: Review of 460 Annual Shareholder Meetings
- Investment Clubs Get Moxie

- Broc Romanek

A Groovy Risk Assessment "Step-by-Step Action Plan" Chart

With much thanks to Mike Melbinger and Erik Lundgren of Winston & Strawn, we have posted their "Step-by-Step Action Plan" Chart that can be used by companies who are serious about risk assessment (it is posted in the CompensationStandards.com "Risk Assessment" Practice Area). By following the possible 20 steps, the chart provides guidance to help:

- impose a structure,
- assist board/committee in compliying with fiduciary duties,
- help ensure legal compliance, and
- give attorney-client privilege protection, when necessary.

Check it out and give Mike and Eric your feedback...

Study: Reissuance Restatements vs Revision Restatements

In this recent study, Audit Analytics conducted research about the various types of restatements and, among other things, found the following:

- In 2009, 44% of Reissuance restatements (those requiring an 8-K, Item 4.02 disclosure because past financial statements could no longer be relied upon) were issued in the subsequent Form 10-K instead of a 10-K/A.

- Since 2005, both Reissuance restatements and Revision restatements (those not requiring an 8-K, Item 4.02 disclosure) have declined, but Revision restatements have increased as a percentage of overall adjustments.

We have posted the study in our "Restatements" Practice Area.

Mailed: 2011 Executive Compensation Disclosure Treatise

We just mailed the hard copies of Lynn, Borges & Romanek's "2011 Executive Compensation Disclosure Treatise & Reporting Guide" to those that ordered it. As you can imagine, our members believe this is a critical resource for this proxy season. This hard copy of the 2011 Treatise is not part of CompensationStandards.com and must be purchased separately - however, CompensationStandards.com members can obtain a 40% discount by trying a no-risk trial now. We will then quickly deliver this 1000-plus page comprehensive Treatise as soon as you try the trial.

If you need assistance, please call our headquarters at (925) 685-5111 or email info@compensationstandards.com.

- Broc Romanek

The ABA Blawg 100: A Campaign Pitch

We are grateful that our blog has made the ABA Journal's Blawg 100 for the third year in a row. You may recall that our blog won the voting contest among the 100 last year, the first year that the Journal put the Blawg 100 head-to-head in a round of voting.

This year, the voting is much more competitive and we currently stand in 8th place, behind such players as TaxGirl and IP Watchdog (who is way out in front). So we really need your support, particularly since our blog is sort of hidden in the obscure "Niche" category. It's time for the corporate community to represent! If you value what you read all year long here, please repay us with 30 seconds of your time.

To help you navigate the ABA Journal's voting framework, here are the steps you need to take:

a. If you voted last year:

1. You likely need to recover your password by simply inputting your email address. You will promptly receive an email with your password and screen name in it.

2. Once you have your password, you should login to their site

3. Once logged in, go to the "Niche" category and scroll down to TheCorporateCounsel.net Blog (it's second from the bottom) and click on the "Vote" symbol to the left of that. Thanks!

b. If you didn't vote last year:

1. Register to vote - it's free (if you're an ABA member, your ABA id/password won't work for the ABA Journal's site unfortunately as they are separate)

2. Once you get your password, you should login emailed to you

3. Once logged in, go to the "Niche" category and scroll down to TheCorporateCounsel.net Blog (it's second from the bottom) and click on the "Vote" symbol to the left of that. Thanks!

If you're having troubles, please shoot me an email and let me know and I can help you. Thanks for the support!

Nugget #3: Board Evaluations - Individual Evaluations are More Important in Light of Proxy Access

Recently, I started dribbling out some of the gems that Alan Dye and I shared a number of years ago during a series of "50 Nuggets in 50 Minutes" webcasts. Here is #3:

Board Evaluations - Individual evaluations are more important in light of shareholder access - The need for the nominating committee to evaluate incumbent directors has become clearer as the movement for shareholders to have a greater ability to nominate their own candidates grows [editor's note: this was written in '03; now that access is here, it truly apply]. For the nominating committee to evaluate incumbent directors, it needs information - and individual evaluations is one logical way to gather this information.

The latest surveys show that only 25% of public companies conduct individual evaluations. The most popular individual director evaluation method is the use of self-assessment questionnaires. Anyone who handles these evaluations should take care as this process can be quite political!

Poll: Who Should Play "Dave the Animal" in the Feature Movie?

A topic of interest among members is which characters will Dave and I play now that the Dodd-Frank Act has rendered "Billy Broc" Oxley and Dave "The Animal" Sarbanes obsolete (these characters were made infamous during these "The Sarbanes-Oxley Report" videos). So Dave and I seek your input into who we should be pretend to be now in this anonymous poll:

The Opening Salvo in the Proxy Access Fight

The Business Roundtable and the US Chamber of Commerce filed their Opening Brief in the case against the SEC over the proxy access rules. The Summary of the Argument in the Brief (found on page 28 of the 61 page brief) is as follows:

The Commission has forced public companies to include the director nominees of a select group of investors in company proxy materials on the basis of shifting, inconsistent, and unsubstantiated assertions that are the hallmark of an agency that has not reached a cohesive understanding of its action, nor "consider[ed] . . . important aspect[s] of the problem." State Farm, 463 U.S. at 43. The Rules violate the Administrative Procedure Act, the Commission's statutory duty to consider effects on efficiency, competition, and capital formation, and corporations' First Amendment rights. They should be vacated.

1. In three recent decisions, this Court has admonished the Commission to "apprise itself . . . of the economic consequences of a proposed regulation." See, 28 e.g., Chamber of Commerce, 412 F.3d at 144. The Commission failed that responsibility by repeatedly blaming state law for costs it was imposing. It neglected to provide any estimate for the campaign costs that record evidence showed would be the most costly element of the Rules and--after initially predicting that election contests under the Rules would occur 5 times as frequently as traditional proxy contests--shifted ground without explanation and asserted that the contests would occur 25 percent less frequently than proxy contests, even though a central premise of the Rules was that election contests would be initiated "more easily" than supposedly "prohibitively expensive" proxy contests.

2. The Commission also based its assessment of the Rules' costs on willful ignorance toward the agenda and practices of activist institutional investors, and the conduct of directors and corporations. Commenters warned that special interest investors would use proxy access as leverage to obtain concessions from companies; as a "soap box" to voice disagreements with company policy; and to seek the election of candidates favorable to the special interests of labor unions or the political officials in charge of government pension funds. The Commission failed to even discuss the first two concerns, and its 126-page Adopting Release did not even mention union or government pension plans and their unique and divergent interests. The Commission compounded its error by suggesting that corporations might not oppose the election of access candidates, even though all record evidence was to the contrary, and although elsewhere the Commission relied on anticipated corporate opposition in positing that the Rules would function effectively.

3. The Commission claimed to be empowering shareholders, yet prohibited them from voting to bar or limit proxy access to avoid the costs the Commission admitted might occur. In similar fashion, the Commission abrogated state laws that it claimed to be effectuating.

4. The Commission applied its ill-founded rule to investment companies (e.g., mutual funds) despite conclusive evidence that the asserted need for proxy access at investment companies is even less, and that some of the costs would be higher.

5. By forcing public companies to carry campaign speech of certain activist investors, the Commission violated the First Amendment.

For all of these reasons, Rule 14a-11 and its associated amendments should be vacated.

Something I Never Thought I Would See

In the "things I never thought I would see" department, yesterday the Department of the Treasury put out a press release announcing the exercise of the overallotment option in the GM initial public offering. The press release notes that the exercise of the overallotment option brought $1.8 billion in additional net proceeds for the US taxpayers, bringing the grand total of "taxpayer proceeds" to $13.5 billion and cutting the US stake in the automaker to 33.3 percent. The press release goes on to detail the return on the GM investment and the total amount of TARP funds returned to taxpayers. With the overzealousness of this post-offering press release aside, for me it is great to see the success of GM's IPO, and hopefully to see a return to business success for this great American institution. [I can't help but love the new Chevrolet Camaro, having had a 1969 Camaro when I was 16.]

The SEC Staff on M&A

We have posted the transcript of the DealLawyers.com webcast: "The SEC Staff on M&A."

- Dave Lynn

CII Releases White Paper on Wall Street Pay Practices

A new white paper commissioned by the Council of Institutional Investors and prepared by The Corporate Library notes some improvement in pay practices at Wall Street firms since the financial crisis, but indicates that improvement is still needed in tying compensation to long-term value growth. Ted Allen notes in the RiskMetrics Governance Insight blog:

The Council of Institutional Investors (CII) released a new report today that concludes that Wall Street's executive compensation practices have improved somewhat since the global financial crisis, but warns that major banks still are not tying pay to long-term gains in performance.

"While many banks have strengthened their pay practices, there's still a long way to go," Ann Yerger, CII's executive director, said in a press release. "The report suggests they need to do more to make sure that executive compensation rewards performance over the long term."

The report was prepared by written by Paul Hodgson, a senior research associate at the Corporate Library.

The report's findings include:

- Total CEO compensation at major Wall Street institutions in 2003-2007 was two to three times the level of pay at other Fortune 50 companies during the same period. The differential was driven mainly by big dollops of time-restricted stock in Wall Street pay packages.

- Pay at these banks was structured to incentivize executives to deliver strong performance--over the short-term. But lavish cash bonuses, high absolute levels of pay, and excessive focus on short-term annual growth measures had damaging consequences for shareowners over the long-term.

- Compensation structures on Wall Street has improved since 2008, but the banks still are not tying compensation to long-term performance metrics.

The Case of the Forged Comment Letters

We have all observed the often annoying letter writing campaigns that are spawned by the SEC's (or another agency's) request for comments on rulemaking proposals where the people writing the letters don't seem to have any idea what the rule proposal is actually about, but now it appears that a group has taken the letter writing campaign to a whole new level. This Bloomberg story discusses a recent situation where some comment letters submitted to the CFTC on one of its Dodd-Frank Act rulemaking were allegedly forged, and the CFTC has now referred the matter to the Justice Department.

November-December Issue: Deal Lawyers Print Newsletter

This November-December issue of the Deal Lawyers print newsletter was just sent to the printer and includes articles on:

- The 2011 Outlook for Deals & Governance: Back to the Future
- "Clear and Simple": SEC Proposes Say-on-Golden Parachute and Enhanced Disclosure Rules
- Delaware Supreme Court Upholds Net Operating Loss Poison Pill
- Top-Up Options: Looking Better and Better
- M&A Due Dilgence: The Effect of Restatements

If you're not yet a subscriber, try a "Rest of '10 for Free" no-risk trial to get a non-blurred version of this issue on a complimentary basis.

- Dave Lynn

Our December Eminders is Posted!

We have posted the December issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!

PCAOB Approves a Budget Increase

While the talk in Washington is now focused on a pay freeze for federal workers, the PCAOB has announced its approval of a $204.4 million budget, which represents an 11.5% increase over the 2009 budget. The increase is accounted for in part by the new oversight responsibilities that the Dodd-Frank Act has conferred on the PCAOB, which will now have to oversee the audits of broker-dealers. The Board notes that "the majority of new expenses in the 2011 budget are increases in staffing, information technology and facilities. The need for these additional resources is largely the result of certain changes in the Board's 2011 responsibilities and programs, including: (1) the commencement of a program to oversee broker-dealer audits, (2) enhanced requirements for performing and documenting PCAOB inspection work, and (3) a potential increased number of litigated enforcement proceedings." In addition to the budget, the Board also approved a strategic plan for 2010-2014. The PCAOB budget now goes off to the SEC for approval.

Relief Extended for Credit Ratings in Asset-Backed Offerings

Last week, the Corp Fin Staff issued a new no-action letter to Ford Motor Credit and a related entity, extending the relief originally provided back in July following enactment of Section 939G of the Dodd-Frank Act, which specified that, effective July 22, 2010, Securities Act Rule 436(g) shall have no force or effect. The relief contemplated in the original letter was set to expire with respect to any registered offerings of asset-backed securities commencing with an initial bona fide offer on or after January 24, 2011. The Staff now states that "[p]ending further notice, the Division will not recommend enforcement action to the Commission if an asset-backed issuer as defined in Item 1101 of Regulation AB omits the ratings disclosure required by Item 1103(a)(9) and 1120 of Regulation AB from a prospectus that is part of a registration statement relating to an offering of asset-backed securities."

On the same day last week, the Commission issued an order extending a temporary conditional exemption for NRSROs from the requirements of Exchange Act Rule 17g-5, which deals with conflicts of interest in connection with the issuance of credit ratings for structured finance products. The temporary conditional exemption will run through December 2, 2011. The Commission also continues to seek comments on this already effective rule.

- Dave Lynn