January 31, 2011

Say-on-Pay: A Failed Vote in the First Week of Annual Meetings!

Last year, three companies in the US failed to obtain a majority vote for say-on-pay. That was a surprise to me as I have written about before given that so few United Kingdom companies have experienced failures over their decade of mandatory say-on-pay.

Well, in the very first week of annual shareholder meetings under Dodd-Frank's mandatory say-on-pay regime, we already have our first failed SOP vote. Late Friday, Jacobs Engineering filed this Form 8-K reporting a 54% "against" vote and a 45% "for" vote (as I hinted in a tweet back then). The company received a negative recommendation from ISS.

It's not a good sign that so early in the season - out of only a handful of companies having meetings - Monsanto's say-on-pay vote only received 65% "for" and another company's vote did not pass. Although it's still early, this could be a harbinger that SOP results will defy the predictions of those that felt that most say-on-pay votes would easily pass.

In the "Dodd-Frank.com Blog," Steve Quinlivan notes that Jacobs Engineering's vote results may be explained by the fact that they filed additional solicitation materials explaining one-time grants they had given to its executives, while the proxy statement "had only a perfunctory overview and the grants were otherwise barely addressed" (additional solicitation materials are often filed after a company receives a negative ISS report and must then actively solicit). Perhaps more disclosure in the proxy statement in the first instance would have helped? Who knows but it wouldn't have hurt the company. To get up-to-speed on drafting considerations, consider listening to the audio archive of last week's CompensationStandards.com blockbuster webcast featuring Mark Borges, Dave Lynn, Alan Dye and Ron Mueller (transcript coming later today).

Steve also reports about the difficulty that companies who recommended a triennial frequency in getting support for that recommendation. Of the six companies that have announced voting results so far - only two have received majority or plurality support for a triennial frequency (and each of the two had concentrated holdings).

In his "Proxy Disclosure Blog," Mark Borges gives us the latest say-when-on-pay stats: with 205 companies filing their proxies, 59% triennial; 6% biennial; 29% annual; and 5% no recommendation.

The Proxy Solicitors Speak on Say-on-Pay

We have posted the transcript for our CompensationStandards.com webcast: "The Proxy Solicitors Speak on Say-on-Pay."

Poll: How Many Companies Will Receive a "Failed" Say-on-Pay Vote?

Now that say-on-pay is mandatory for US companies - and we've already had one failed vote under the mandatory regime - please take a moment to participate in this anonymous poll and express how you read the tea leaves:


- Broc Romanek

January 28, 2011

Our Updated Model Insider Trading Policy

The January-February issue of The Corporate Counsel was just mailed - along with a Special Supplement with our newly updated Model Insider Trading Policy - and includes pieces on:

- Insider Trading Enforcement is Back -Time to Update your Insider Trading Policy
- Our Updated Model Policy
- Year Two of the Director Qualifications, Etc. Governance Disclosures (Some Lessons from Our Review of Posted Comment Correspondence)
- Newly Updated Alternatives to Registration Chart
- Loss Contingency Disclosure in Upcoming 10-Ks--Follow Up
- Issuers Currently Transitioning Out of SRC/non-AF Status--SOX Section 404(b) Attestation Applicable To Upcoming 10-K
- Say-On-Pay--What Shares Vote?
- Timely (Prompt) Amendment of Item 4 of Schedule 13D-- When Does an Idea Become a "Plan or Proposal"?
- Roth Conversion Reprieve
- Upcoming Equity Grants
- Fully Revised, Comprehensive Model Insider Trading Policy and Program

As all subscriptions expired on December 31st, renew now if you haven't already - or try a no-risk trial if you are not yet a subscriber.

SEC Updates Procedures for Handling SRO Rulemaking Proposals

Two weeks ago, the SEC revised its Rules of Practice - as required by Section 916 of Dodd-Frank - to change how it handles rule proposals from SROs (eg. NYSE, Nasdaq) by formalizing how it disapproves rule changes and adding transparency to the process, including allowing the submission of comments by interested parties to the SEC when the SEC provides notice of grounds for disapproval.

This truly is the week of Congressional studies issued by the SEC. Yesterday, the SEC released one more - this study is about investor access to investment professional information.

Asset-Backed Securities: The SEC Adopts Two Sets of Rules

Last week, the SEC adopted two set of rules related to asset-backed securities. One rulemaking requires ABS issuers to disclose the history of requests they received and repurchases made related to their outstanding asset-backed securities. The other rulemaking requires ABS issuers to conduct a review of the assets underlying those securities.

And back on January 6th, the SEC proposed rules that would permit suspension of the reporting obligations for ABS issuers when there are no longer of the class sold in a registered transaction held by non-affiliates of the depositor; the SEC also proposed amendments to the related '34 Act reporting obligations. A related action from the SEC Staff is the issuance of this no-action response to American Securitization Forum.

- Broc Romanek

January 27, 2011

Four of Corp Fin's Dodd-Frank Rulemakings Delayed

In its "Implementation of Dodd-Frank Act" rulemaking timeline, the SEC pushed back its estimate yesterday of when it will push out proposed rules from April-July to August-December for the following topics:

- Pay-for-performance disclosure (how compensation is related to financial performance; Section 953)
- Pay ratios (ratio of CEO pay to average employee pay; Section 954)
- Clawback policies (clawback of the compensation of current and former officers upon restatement; Section 954)
- Hedging policies (whether company has a policy regarding the ability of directors and employees to hedge; Section 955)

This delay is not surprising given that there are no deadlines for these rules under Dodd-Frank - and given the vast number of required rulemakings that the SEC still has on its plate that do have a deadline (as noted in this WSJ article). Also note that the SEC is working with a more limited budget than was expected (as I blogged about before - and will be blogging about more soon). Looking at the new estimated timeframes for these four proposals, it's possible that these rules may not be finalized in time to apply to the 2012 proxy season.

Note that these rulemakings are not included in the SEC's semi-annual regulatory agenda that came out last month (and whose information is good as of September 30th, the end of the SEC's fiscal year). Two non-Dodd-Frank rulemakings potentially are in the works according to this agenda: consolidation and enhancement of risk disclosures and requiring voluntary filers to comply with the SEC rules when they do voluntarily file.

Today's Webcast: Pat McGurn's Forecast for 2011 Proxy Season: Wild and Woolly

Tune in today for the webcast - "Pat McGurn's Forecast for 2011 Proxy Season: Wild and Woolly" - to hear Pat McGurn of ISS give a recap of what transpired during the 2010 proxy season and predict what to expect for the upcoming proxy season. Please print off Pat's presentation before the program so you can refer to it.

As all memberships expired at the end of the year, please renew if you haven't yet to catch this program. If not yet a member, try a no-risk trial now.

SEC Completes Pair of Congressional Studies on Brokers & Investment Advisors

Yesterday, the SEC released a 46-page Congressional study - as required by Section 919B of Dodd-Frank - regarding improved access to registration information about brokers and investment advisors.

And last Friday, the SEC released a 208-page Congressional Study - as required by Section 913 of Dodd-Frank - regarding the effectiveness of the standards of care required of broker-dealers and investment advisers providing personalized investment advice about securities to retail customers. Here's a Davis Polk memo that discusses the study's recommendations.

- Broc Romanek

January 26, 2011

SEC Adopts New Say-on-Pay Rules: Our Webcast Covers This Today!

Yesterday, as noted in this press release, the SEC adopted new say-on-pay rules - by a 3-2 vote - and then posted the 152-page adopting release, just in time for today's CompensationStandards.com webcast - "The Latest Developments: Your Upcoming Proxy Disclosures - What You Need to Do Now!" Mark Borges, Alan Dye, Dave Lynn and Ron Mueller were up to the wee hours analyzing the adopting release and are now prepared to cover how the new rules impact you in practical terms during today's webcast. Here's Chair Schapiro's opening remarks - and remarks from the two dissenting Commissioners: Parades and Casey.

As all CompensationStandards.com memberships expired at the end of the year, please renew if you haven't yet to catch today's program. If not yet a member, try a no-risk trial now.

For those wondering how many attend open Commission meetings in person these days, I hear that yesterday's meeting drew mostly SEC Staffers plus maybe a dozen lawyers and another dozen reporters. It's pretty remarkable how webcasting the meetings have killed live attendance - a popular topic like SOP would have drawn hundreds in the old days. Personally, I haven't attended an open meeting at the SEC since they began webcasting them...

Monsanto Shareholders Back Company's SOP Despite Negative ISS Recommendation - But Significant Number Vote "Against"

Yesterday was the first annual meeting at which a say-on-pay vote was submitted to shareholders under Dodd-Frank. Right after Monsanto held its meeting, it filed its Item 5.07 8-K on the same day. The most noteworthy aspect of the Monsanto vote is that the company's SOP passed despite a recommendation by ISS against it. However, the company garnered only about two-thirds of the vote in favor - with a third voting against it. This relatively high level of "against" votes should probably be viewed by the company as a warning sign, as mentioned on our earlier say-on-pay webcasts (a notion likely to be repeated by our experts during today's webcast).

Also noteworthy is that notwithstanding the board's recommendation that shareholders vote for "triennial," shareholders selected "annual" - here is how that voting went: 62% for annual; 36% triennial; 1% biennial, and 0.5% abstentions. Even though this vote in non-binding, the company went ahead and disclosed in its Form 8-K that it would implement an annual SOP vote (as also reflected in this press release). However, the company was mum about the potential ramifications of the significant "against" votes on its SOP - understandably so since it may take the company some time to internally process the results (and engage shareholders to better understand why so many "against" votes were cast)...

SEC Proposes New "Accredited Investor" Definition

Yesterday, the SEC also proposed a new "accredited investor" definition - as required by Section 413(a) of Dodd-Frank - that would amend Rules 215(e) and 501(a)(5) under the '33 Act to revise the net worth standard for natural person accredited investors to exclude the value of their primary residence from the calculation. Here's the proposing release and press release. Bill Carleton intends to analyze this proposal soon in his blog so check that out...

- Broc Romanek

January 25, 2011

Survey Results: More on Regulation FD Practices

We have posted the survey results regarding the latest Regulation FD trends, repeated below. This new survey supplements two prior surveys that we have conducted on this topic, the last of which was in 2006 (note that I included the results of the 2006 survey results in parens below for comparison purposes):

1. Our company posts information on its corporate website and takes the position that this is sufficient to satisfy Reg FD:

- Yes, our company takes this position for anything posted on its corporate website - 5.6% (3.8% in '06)
- It depends, our company takes this position for certain items posted on its corporate website (but not all) - 16.7% (28.3%)
- No, our company does not yet take this position - 77.8% (67.9%)

2. Our company has a written policy addressing Reg FD practices:

- Yes, and it is publicly available on our website - 9.1% (5.6% in '06)
- Yes, but it is not publicly available on our website - 69.1% (60.4%)
- No, but we are in the process of drafting such a policy - 1.8% (15.1%)
- No, and we do not intend to adopt such a policy in the near future - 20.0% (18.9%)

3. Regarding reaffirmation of earning announcements, our company uses one of the following rules of thumb regarding private reaffirmations:

- We do not allow private reaffirmation - 76.0% (60.8% in '06)
- Rule of thumb allowing for private reaffirmations of one week or less - 6.0% (7.8%)
- Rule of thumb allowing for private reaffirmations of one to two weeks - 6.0% (13.7%)
- Rule of thumb allowing for private reaffirmations of two to three weeks - 4.0% (9.8%)
- We permit private reaffirmations - but never use a rule of thumb, instead we require confirmation of no material change with CEO, GC, etc. - 8.0% (7.8%)

4. At our company, our CEO and other senior managers: (multiple answers apply, may total more than 100%):

- Are not permitted to meet privately with analysts - 3.7% (6.7% in '06)
- Are only permitted to meet privately with analysts so long as someone else accompanies them (such as general counsel or IR officer) - 46.3% (35.0%)
- Are permitted to meet privately with analysts after briefing by IR officer, general counsel, etc. - 24.0% (18.3%)
- Are only permitted to meet privately with analysts during certain designated times - 33.3% (18.3%)
- Are not permitted to talk about certain topics - 37.0% (33.3%)

Please take our new "Quick Survey on Director Recruitment & Training."

You might also want to read this interesting piece from Dominic Jones entitled "Google CEO shows how to step down, social media style."

Webcast: The Latest Developments: Your Upcoming Proxy Disclosures and the New Say-on-Pay Rules

Assuming the SEC posts the adopting release later today for its new say-on-pay rules, tune in tomorrow for the CompensationStandards.com webcast - "The Latest Developments: Your Upcoming Proxy Disclosures - What You Need to Do Now!" - to hear Mark Borges of Compensia, Alan Dye of Hogan Lovells and Section16.net, Dave Lynn of CompensationStandards.com and Morrison & Foerster and Ron Mueller of Gibson Dunn discuss all the latest guidance about how to overhaul your upcoming disclosures in response to say-on-pay including analysis of what the adopting release says.

If the adopting release is not posted today, we will push back this program to Tuesday, February 1st so that these experts can provide you their guidance on this important rulemaking. Stay tuned!

As all CompensationStandards.com memberships expired at the end of the year, please renew if you haven't yet to catch this program. If not yet a member, try a no-risk trial now.

In his "Proxy Disclosure Blog," Mark Borges gives us the latest say-when-on-pay stats: with 153 companies filing their proxies, 54% triennial; 8% biennial; 31% annual; and 7% no recommendation. These are fairly close to the percentages seen earlier - so the relative ratios remain pretty steady so far. But many more companies will be filing over the next month or so and could disrupt current trends...

NACD's Perspective on Say-on-Pay

In this CompensationStandards.com podcast, Peter Gleason of the National Association of Corporate Directors explains the NACD's perspective on say-on-pay, including:

- What is the NACD's position on the SEC's proposed say-on-pay rules?
- What are potential business risks and consequences of the proposed say-on-pay rules if they are not changed before adopted by the SEC?
- What are the potential implications for directors and boards once the say-on-pay rules are finalized?
- How does the NACD suggest the SEC amend the proposed say-on-pay rules?
- How is the NACD preparing its members and the director community to address new say-on-pay, and other rulemakings, associated with Dodd-Frank?

- Broc Romanek

January 24, 2011

SEC Brings Rare Perks Enforcement Action

A week ago, the SEC brought a rare enforcement action involving perks when it charged NIC Inc. and four current or former officers with failing to disclose more than $1.18 million in perks paid to the former CEO over a six-year period. Correct me if I'm wrong, but this is the first perks case that the SEC has brought since this Tyson Foods settlement in 2005 (and this General Electric order from the year before that). The company and three of the officers agreed to pay a combined $2.8 million to settle the charges.

The SEC alleges that NIC Inc.'s SEC filings failed to disclose that the company footed the bill for wide-ranging perks enjoyed by the former CEO, his girlfriend, and his family - including vacations, computers, and day-to-day personal living expenses and that NIC's related party disclosures for 2002 through 2005 also were misleading. Among the alleged undisclosed perks for Fraser outlined in the SEC's complaints filed in federal court in the District of Kansas:

- More than $4,000 per month to live in a ski lodge in Wyoming.
- Costs for Fraser to commute by private aircraft from his home in Wyoming to his office at NIC's Kansas headquarters.
- Monthly cash payments for purported rent for a Kansas house owned by an entity Fraser set up and controlled.
- Vacations for Fraser, his girlfriend and his family.
- Fraser's flight training, hunting, skiing, spa and health club expenses.
- Computers and electronics for Fraser and his family.
- A leased Lexus SUV.
- Other day-to-day living expenses for Fraser such as groceries, liquor, tobacco, nutritional supplements, and clothing.

In his blog about this action, Mike Melbinger notes: "The SEC's allegations make this seem like an egregious situation. However, this action is still a bit frightening to those of us who are making a variety of tough calls each proxy season on whether to report certain items as perquisites." And here is Paul Hodgson's take on the circumstances...

Webcast: Alan Dye on the Latest Section 16 Developments

Tune in tomorrow for the Section16.net webcast - "Alan Dye on the Latest Section 16 Developments" - to hear Alan Dye of Section16.net and Hogan Lovells discuss the most recent updates on Section 16, including new SEC Staff interpretations and Section 16(b) litigation. As all Section16.net memberships expired at the end of the year, renew now to catch this program. If you're not yet a member, try a no-risk trial now.

Also on Section16.net, the annual Romeo & Dye year-end compliance checklist, designed to assist companies and compliance officers in integrating the Section 16 compliance program with the year-end 10-K/proxy statement disclosure process, has been updated for 2011.

Deadline: S&P 500 Companies Owe Contact Information to ISS

S&P 500 companies should remember that they have until next Monday - January 31st - to provide contact information to ISS. If ISS doesn't receive the information, companies will not receive their proxy analysis for review and thus lose the chance to correct factual inaccuracies before an ISS report is released on the company. This is a new policy and an important omission if a S&P company fails to comply.

- Broc Romanek

January 21, 2011

Shareholder Proposals: KBR Sues Chevedden Over Eligibility

Following in Apache's footsteps, KBR filed this complaint last week in an effort to have the Federal District Court for the Southern District of Texas issue a declaratory judgment allowing the company to exclude a shareholder proposal submitted by John Chevedden due to his alleged lack of eligibility. Reflected in this blog, you'll recall that Apache received this type of relief last proxy season in the exact same court (based on similar introductory broker letter facts, with the case brought by the same lawyer).

Like Apache, KBR filed a lawsuit rather than attempt to exclude the proposal through the normal SEC channels (and thus once more is challenging the Hain Celestial position of the Staff regarding the use of introductory letters from brokers as evidence of ownership under Rule 14a-8(b)). Here is KBR's notice to the SEC of its intention to file the lawsuit.

Jim McRitchie blogs that Apache has decided to exclude a proposal from John Chevedden again this year too (this time around, the company has filed a notice with Corp Fin - thus not going the no-action route like last year - but isn't bothering with another lawsuit this year). Jim also notes this Houston Chronicle article on the KBR lawsuit.

Proxy Access Litigation: The SEC Files Initial Brief

On Wednesday, the SEC filed its 83-page initial brief in the challenge to its proxy access rules filed by the Business Roundtable and the Chamber of Commerce in the U.S. Court of Appeals for the District of Columbia Circuit. I understand the court plans to hold its oral argument hearing on April 7th. We have posted the brief - along with the other briefs filed to date - in our "Proxy Access" Practice Area.

Dodd-Frank: SEC Submits Congressional Study on Burden of Investment Advisor Exams

On Thursday, the SEC Staff submitted its Congressional study on enhancing investment adviser examinations, required under Section 914 of Dodd-Frank. As noted in this article, "the premise of the report is that the number of investment advisors outweighs the SEC's resources to conduct appropriate oversight (inspection and enforcement) activities."

In an unusual move, SEC Commissioner Elisse Walter felt compelled to issue this 8-page statement to discuss the growing burdens on the Staff, while resources continue to be dangerously low (and that Congress hasn't even approved the budget increase that Dodd-Frank sought). Kudos to Commissioner Walter for highlighting a troubled situation...

- Broc Romanek

January 20, 2011

Time for You to Consider Tweeting? The IR Pros Are...

Last year, I passed along my sour grapes about spending time on Twitter as I felt the effort wasn't worth the reward because most of our community was not participating (here's a related blog about the importance of face-to-face networking). But as Dominic Jones breaks down this report from Q4 Web Systems on his IR Web Report, it appears the acceptance level of Twitter by IR departments is reaching some sort of critical mass (and in this follow-up blog, Dominic notes that tweeting has become so popular that IROs need to work harder to get noticed). And if that's the case, outside lawyers better get up-to-speed with what Twitter is - and isn't - so they can have intelligent conversations with their clients.

As Dominic relates in the excerpt below, the use of IR web pages to promote the use of Twitter by IROs has been mixed, without a valid reason to do so:

The report highlights a key issue with current corporate use of social media - a lack of visibility for companies' social media accounts on their websites. While all of the surveyed companies have Twitter accounts, the report says almost 40% do not post a link to the channel on their websites. This likely understates the situation because the study authors are flexible on what constitutes a link on the corporate website.

The authors say that in their discussions with companies "some prefer not to include Twitter on their website as they are still 'testing' the channel." The report rightly recommends that companies acknowledge the existence of their Twitter accounts on their websites. Without a link on the company website, it is difficult for users to verify the Twitter account as legitimate. And while companies my believe that not acknowledging their social media accounts on their websites shields them from liability, in reality they are still liable.

And it's clearly not just IROs taking to social media, check out Dominic's blog about how a CEO recently responded to a short-seller on the increasingly popular Seeking Alpha.

Not that I don't find Twitter valuable myself, but I figured I would appeal to the fact that clients are using social media as a way to convince our community to start using social media. Social media is here to stay folks. You'll need it to work - and to play. Don't be one of those people that thought the Web was a fad back in '97 (or that television was one back in '58). Here's some good info on how to use Twitter...

What Would Corporate Secretaries Blog About? Plenty

As I continue to beat the drum about how the future will see many more lawyers, IROs and corporate secretaries blogging, I often get the question: "well, what would I blog about?" I think this recent blog by Microsoft's Deputy GC John Seethoff - entitled "Responding to Shareholder Input on Executive Relocation Policy" - is a perfect example of what a good corporate secretary could be blogging about.

In five paragraphs, not only does John explain a change to the company's relocation policy - more importantly - he provides an example of how his company is engaging shareholders. My guess is that this will provide comfort to other shareholders (and potential investors) about the willingness of the company to listen - and likely would lead to more shareholders being willing to voice their concerns directly to management rather than go the activist route. As you can see, it doesn't take a whole lot of effort to blog (ie. five paragraphs is just a few minutes and then I imagine, there was a brief review by others) - and the resulting pay-off can be quite large for such a small burden.

How Not to Tweet: Law Firm Styling

On Twitter, I follow a few of the first law firms that started tweeting. As expected, their tweets were so bland that I can't recall a single one as having any value. They were all about the latest hires they had - and which deals they worked on. Stuff not significant for me (nor clients or potential clients I imagine).

Which is why when I recently saw a law firm open a Twitter account and excitedly send an email that said "Following us on Twitter provides immediate access to market information that can impact your business," I took a gander at what they had been tweeting - even though I had a pretty good hunch what their feed would be about. Sure enough, it was mostly about their own internal movings and shakings and little about anything that someone outside the firm would really care about (and merely tweeting the latest law firm alerts isn't much better - Twitter needs the human touch). Why most firms can't figure out how to communicate effectively by placing themselves in their client's shoes is beyond me...

- Broc Romanek

January 19, 2011

January 25th: SEC to Adopt Say-on-Pay Rules

We have winners! The 39% that guessed that the SEC would adopt final say-on-pay rules shortly after January 21st are right! The SEC has calendared an open Commission meeting next Tuesday, January 25th to adopt these rules, as well as propose a new definition of "accredited investor" and propose reporting obligation for investment advisors to private funds.

Assuming the SEC posts its adopting release on the same day as the open Commission meeting, we will cover the new rules during our January 26th CompensationStandards.com webcast: "The Latest Developments: Your Upcoming Proxy Disclosures--What You Need to Do Now!" If not, we will push back this webcast to cover the new rules as soon as the adopting release is out.

The Latest on Crisis Management

In this podcast, Stasia Kelly of DLA Piper provides guidance on how to handle a corporate crisis, including:

- What should a "Crisis Plan" include?
- What advice do you give to Boards about crisis management - both before and during a crisis?
- What should in-house counsel do to prepare for a crisis?

More on our "Proxy Season Blog"

With the proxy season in full swing, 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:

- Analysis: Common Corp Fin Comments for Proxies
- Survey: Corporate Governance Practices
- The Virtual Meeting Failure: Symantec Points Finger
- A Proxy Is Not A Vote And Why It Matters
- Proxy Plumbing: Analysis of Comment Letters
- Proxy Season: A Harbinger or the Lull Before the Storm?

- Broc Romanek

January 18, 2011

Corp Fin Posts 10 New CDIs Re: Changes in Accountants

On Friday, Corp Fin posted 10 new Compliance and Disclosure Interpretations that deal with accountants as follows:

1. Regulation S-K: Section 111. Item 304 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:
- New Question 111.01
- New Question 111.02
- New Question 111.03
- New Question 111.04
- New Question 111.05
- New Question 111.06
- New Question 111.07

2. Form 8-K: Section 114. Item 4.01 - Changes in Registrant's Certifying Accountant:
- New Question 114.01
- New Question 114.02
- New Question 114.03

In Friday's blog, I conducted a poll regarding your guess as to when the SEC would adopt final say-on-pay rules. The 30% who believed that the SEC would adopt them before or on January 21st (which is the date of annual meetings that Dodd-Frank begins to apply mandatory say-on-pay) are proven wrong because the SEC has now calendared an open Commission meeting for this Thursday - but the two agenda items apply to asset-backed securities and not SOP.

So we shall now see if the 38% who believed the SEC would act before the end of this proxy season are right - or the 28% who believed it would be after the proxy season. Or the 10% who believed they would never be adopted. PS - The math doesn't add up to 100% because folks were allowed to make more than one selection.

AICPA Conference: Notes and Corp Fin Presentations

As it typically does, the SEC has posted these PowerPoint presentations used by its staffers during last month's annual AICPA Conference:

- "Current Corp Fin Developments" - Wayne Carnall, Corp Fin Chief Accountant and others

- "Current Corp Fin Developments" - Wayne Carnall, Corp Fin Chief Accountant (this is in addition to the above)

- "Areas of Frequent Staff Comment" - Stephanie Hunsaker, Corp Fin Associate Chief Accountant

- "International Reporting Issues" - Craig Olinger, Corp Fin Deputy Chief Accountant

We have also posted detailed notes from this conference in our "Conference Notes" Practice Area.

On Friday, the Financial Accounting Foundation bumped the FASB Board back up to 7 members by announcing that Daryl Buck, CFO of Reasor's Holding Company, and Harold Schroeder, Partner of Carlson Capital, have joined the Board.

PCAOB Issues Staff Practice Alert on Litigation & Loss Contingencies

In late December, the PCAOB issued a Staff Audit Practice Alert #7 highlighting auditing considerations related to litigation and other loss contingencies arising from mortgage and other loan activities. Here is analysis from Tom White of WilmerHale: "The Alert stems from recent reports regarding possible liabilities from alleged misrepresentation of mortgage quality as well as irregularities in the foreclosure process. The Alert parallels the SEC's recent "Dear CFO" letter regarding accounting and disclosure issues related to potential risks associated with mortgage and foreclosure-related activities. Like the Dear CFO letter, the PCAOB alert notes the standards for loss contingencies, and the alert specifically notes the standard (AU 337) for auditing litigation, claims and assessments, including obtaining letters from the reporting entity's lawyers."

Last week, the SEC delegated authority to its Chief Accountant to propose and adopt rules from the PCAOB - among other things - in an effort to streamline the process.

- Broc Romanek

January 14, 2011

SCOTUS: Oral Arguments in Matrixx Materiality Case

On Monday, the US Supreme Court heard oral arguments in Matrixx Initiatives v. Siracusano (No. 09-1156) - here is the transcript and here are the briefs - the important securities fraud case dealing with whether a company was required to disclose reports of adverse events following the use of its cold remedy product even though the reports are not alleged by the plaintiffs to have been statistically significant. Even though the issue presented is somewhat limited, it is rare that SCOTUS considers a "materiality" case - one of the hardest judgments for corporate lawyers and their business clients to make. The Court isn't likely to issue an opinion until the Spring.

This BBC video - entitled "My BlackBerry is Not Working" - is hilarious...

Webcast: The Proxy Solicitors Speak on Say-on-Pay

Tune in on Tuesday for the CompensationStandards.com webcast - "The Proxy Solicitors Speak on Say-on-Pay" - to hear Art Crozier of Innisfree M&A, David Drake of Georgeson, Ed Hauder of ExeQuity and Reid Pearson of Alliance Advisors discuss solicitation and engagement strategies to help educate shareholders about a company's compensation programs in light of mandatory say-on-pay.

As all CompensationStandards.com memberships expired at the end of the year, please renew if you haven't yet to catch this program. If not yet a member, try a no-risk trial now.

Poll: When Will the SEC Adopt Say-on-Pay Rules?

During yesterday's webcast (audio archive available), the panel had a spirited debate - pure conjecture, mind you - about when the SEC will adopt final say-on-pay rules. You may recall that Section 951 of Dodd-Frank applies mandatory say-on-pay to all shareholder meetings held on or after January 21st - regardless if the SEC adopts final rules.

Please participate in this anonymous poll regarding your guess as to when the SEC will act on final rules:


- Broc Romanek

January 13, 2011

The SEC's Latest Enforcement Stats

Last week, the SEC released its "Select SEC and Market Data" for fiscal 2010, which contains all sorts of Enforcement statistics. It's been more important than ever before for the SEC to tout its accomplishments in the wake of recent pressure from Congress and widespread negative media coverage. Interestingly, studies like this recent one from NERA notes a drop in the number of SEC Enforcement actions against accountants and auditors (and financial fraud). Perhaps stronger internal controls dictated by Sarbanes-Oxley have reduced the likelihood of financial fraud being committed.

The SEC's First Non-Prosecution Agreement

Here is news from Wachtell Lipton's Ted Levine, Wayne Carlin and David Anders (we have posted memos about this action in our "SEC Enforcement" Practice Area):

The SEC recently announced its first use of a non-prosecution agreement, one of the new investigative tools that the agency unveiled nearly a year ago. The SEC simultaneously filed an enforcement action against a former sales executive of Carter's, Inc. See SEC v. Elles, Civ. Action No. 1:10-CV-4118 (N.D. Ga.). The Commission did not bring any enforcement action against the company.

At first blush, this appears to be the sort of case in which the SEC historically would likely have brought charges against a public company. According to the complaint, the executive granted and concealed substantial unauthorized discounts to the company's largest customer. By misrepresenting the facts and creating false documents, the executive allegedly caused the company to delay recognizing these discounts until later periods, thereby inflating the company's reported earnings in the earlier periods. When the company discovered the scheme, it conducted an internal investigation, self-reported the matter to the SEC and ultimately restated its financial statements covering a five-year period.

In explaining the decision to accept a non-prosecution agreement rather than bring an enforcement action against the company, the SEC identified the following factors: (1) the "relatively isolated nature" of the unlawful conduct; (2) the company's "prompt and complete" self-reporting of the misconduct to the SEC; and (3) the company's "exemplary and extensive" cooperation in the inquiry, including undertaking a "thorough and comprehensive" internal investigation.

The isolated nature of the conduct was likely a significant factor in the SEC's determination to use this case to demonstrate its willingness in some cases to address a company's responsibility for the misconduct of a corporate employee through a non-prosecution agreement. The SEC has not asserted that the company's most senior management or the accounting function had any complicity in the alleged misconduct. While the sales executive had a significant management position, he allegedly acted alone, misled other members of management and pocketed $4.7 million from sales of stock before the company discovered his misconduct.

The SEC has also publicly released its non-prosecution agreement with the company. While the agreement requires the company to continue to cooperate with the SEC, it does not require any waiver of attorney-client privilege - although it appears that the company has in some manner shared the results of its internal investigation with the SEC. In the event that the SEC Enforcement Staff determines that the company has failed to comply with any of its obligations under the agreement (such as the obligation to cooperate), the Staff may then proceed with an enforcement recommendation to the Commission.

The SEC's willingness to resolve this case without an enforcement action against the company is an encouraging first step. The SEC should demonstrate in future cases that this form of resolution is also available in scenarios in which it is not possible to isolate the misconduct to a single culpable individual. The policy rationale for such an outcome is equally strong where multiple employees have involvement, but the company had reasonable controls and an appropriate compliance culture in place, responded promptly to indications of wrongdoing and cooperated with the SEC's investigation.

House Bill: Two-Year Moratorium on New Regulations

On Monday, I blogged about a House bill that seeks to repeal Dodd-Frank in its entirety. Now, here comes news from CQ Today Online News, an excerpt of which is below:

A senior Republican House member unveiled legislation Jan. 10 designed to slow down the pace of federal rulemaking, adding to the growing GOP and industry calls for Congress to reassert authority over executive branch agencies. Don Young of Alaska offered a pair of bills (HR 213, HR 214) that would impose a two-year moratorium on new regulations, while creating a congressional office to review federal rules. "With the abundance of regulations already coming from legislation such as the health care bill and the inevitability of thousands more this year, it is incredibly important that we do this review sooner rather than later," Young said in a statement.

Young's legislation would not apply to proposals necessary to address imminent health or safety threats or for criminal enforcement matters. It also would exempt actions related to defense, foreign policy or trade agreements. The proposed new Congressional Office of Regulatory Analysis would conduct cost-benefit analyses of major regulations with an annual implementation cost of more than $100 million. Additionally, it would require agencies to periodically review regulations to consider if changes are needed, while establishing a process to "sunset" rules.

- Broc Romanek

January 12, 2011

Survey Results: Rule 10b5-1 Plan Practices

We have posted the results from our recent survey regarding Rule 10b5-1 plan practices, repeated below:

1. Does your company require insiders to sell shares only pursuant to a Rule 10b5-1 trading plan?
- Yes, insiders are required to use Rule 10b5-1 plans in order to sell shares - 3.9%
- No, but they are strongly encouraged - 30.8%
- No, and they are not explicitly encouraged - 65.4%
- Not sure, it hasn't come up - 0%

2. Does your company review and approve each insider's Rule 10b5-1 trading plan?
- Yes, it is subject to prior review and approval by the company pursuant to the insider trading policy - 78.9%
- Yes, but only the template plan is reviewed and not the actual trading schedule - 13.5%
- No, but we have a broker that we require to be used and have reviewed that brokers template - 0%
- No, and there is no requirement to go through a specific broker - 7.7%

3. Does your company allow sales of shares through Rule 10b5-1 trading plans during blackout periods?
- Yes - 84.6%
- No - 5.8%
- Not sure, it hasn't come up - 9.6%

4. Does your company require a waiting period between execution of Rule 10b5-1 trading plans and time of first sale?
- Yes, it is a two week waiting period or less - 13.5%
- Yes, it is a one month waiting period (or close to it) - 23.1%
- Yes, it is a two month waiting period (or close to it) - 5.8%
- Yes, it is a waiting period until the next open window - 11.5%
- No - 36.5%
- Not sure, it hasn't come up - 9.6%

5. Does your company allow insiders to voluntarily terminate a Rule 10b5-1 plan?
- Yes - 74.5%
- No, only terminations dictated by the trading plan are allowed - 25.5%

6. Does your company make public disclosure of the insiders' Rule 10b5-1 trading plans?
- Yes, but only for directors and/or one or more officers - 30.8%
- Yes, for all directors and employees - 3.9%
- No - 65.9%

7. If your company makes public disclosure, how does it do it?
- Form 8-K - 55.0%
- Press release - 5.0%
- Website posting - 0%
- Combination of above - 15.0%
- Other - 25.0%

Please take a moment to participate on this "Quick Survey on Director Recruitment & Training."

Webcast: How to Implement Dodd-Frank for This Proxy Season

Tune in tomorrow for the webcast - "How to Implement Dodd-Frank for This Proxy Season" - to hear Ning Chiu of Davis Polk, Howard Dicker of Weil Gotshal, Marty Dunn of O'Melveny & Myers, Amy Goodman of Gibson Dunn and Dave Lynn of TheCorporateCounsel.net and Morrison & Foerster discuss how to implement the SEC's new rules regarding proxy access as well as all the Dodd-Frank changes (note there is a companion CompensationStandards.com January 26th webcast to cover how to handle the new executive compensation requirements).

As all memberships expired at the end of the year, please renew if you haven't yet to catch this program. If not yet a member, try a no-risk trial now.

GAO Report: US Government Has Material Internal Control Weaknesses

As noted in this press release, the GAO can't render an opinion on the US Government's financials because of material internal control weaknesses and other serious fiscal mismanagement issues.

In the Dodd-Frank.com Blog, Steve Quinlivan of Leonard, Street & Deinard notes that the SEC has delivered its first "supervisory controls" report required under Section 961 of Dodd-Frank to the Senate Banking Committee.

- Broc Romanek

January 11, 2011

Even More on "The Facebook and Goldman Saga: All About Section 12(g) and Section 12(h) Applications"

I held off on blogging about the Facebook situation for some time as I was afraid that I would never stop blogging about it. And now I have three entries in a week on the topic (see the last one and the first one). There continues to be a number of interesting articles written about it, including:

- New York Magazine's "Lloyd Blankfein's Secret Facebook Feed" (this one has a fake Facebook feed that is pure genius)
- Bloomberg's "Goldman Sachs Says It May Sell, Hedge Facebook Stake"
- DealBook's "S.E.C. Questions Goldman Sachs on Offering"
- Reuter's "SEC examines rules for private firms after Facebook deal-report"
- Bloomberg's "Facebook May Face SEC Disclosure Scrutiny as Goldman Invests $450 Million"
- WSJ Opinion "How Washington Defriended Investors"
- NY Times' DealBook's "The Legal Issues in the Goldman-Facebook Deal"

Webcast: Towards State of the Art: Scrubbing Your Bylaws, Governance Guidelines & Committee Charters

Tune in tomorrow for the webcast - "Towards State of the Art: Scrubbing Your Bylaws, Governance Guidelines & Committee Charters" - to hear Chris Butner of Chevron Corporation, Bob Messineo of Weil Gotshal, Beth Ising of Gibson Dunn and Rachelle Silverberg of Wachtell, Lipton discuss the latest developments in updating your company's bylaws, committee charters and corporate governance guidelines, as well as the pros and cons of the various alternatives.

As all memberships expired at the end of the year, please renew if you haven't yet to catch this program. If not yet a member, try a no-risk trial now.

Recently, we have added sample bylaw provisions in a variety of areas to our "Bylaw" Practice Area. Check it out!

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:

- KPMG's "2010 International Audit Committee Survey"
- Rumor Has It: The Art of Managing Speculation
- All I Really Need to Know I Learned Reading Escott v. BarChris in Securities Regulation
- In the Spotlight: Reg FD
- Why Non-Executive Chairmen Keep Running Into Trouble

- Broc Romanek

January 10, 2011

Dodd-Frank: House Bill Introduced to Repeal the Whole Darn Thing

Last week, Michele Bachmann (R-Minn.) and 4 Republican co-sponsors introduced a bill entitled "to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act" (here is a related article). Here is analysis of why this may have been introduced and this article weighs its chances of being enacted.

Meanwhile, Rep. Darrell Issa (R-Ca.) - the new House Government Oversight Committee Chair - sent this letter to 150-plus trade associations, companies and think tanks asking them to identify burdensome laws and regulations, which eventually could form the basis for committee hearings, etc.

PCAOB Gets Three New Board Members Including Chair Jim Doty

On Friday, after a lengthy delay, the SEC appointed three new members of the PCAOB Board - that is 3 out of the 5 seats appointed in one fell swoop! Jim Doty was appointed as Chair (here is a recent interview with Jim) - and Jay Hanson and Lewis Ferguson were appointed to the Board. Jim is a lawyer and served as the SEC's General Counsel from '90-'92. Lew also is a lawyer and formerly was the PCAOB's first General Counsel before going to a law firm. Jay is an accountant, leaving McGladrey & Pullen as National Director.

Bill Gradison and Charley Niemeier - two of the founding Board Members - finally retire from the Board and Acting Chair Dan Goelzer remains on the Board as a regular Member. Here is an article analyzing the appointments. And yes, the PCAOB - the regulator of audits - has three out of five Members that are lawyers - and yes, a Republican has been appointed Chair of a regulator during a Democratic Administration...

Happy Retirement John Heine

I'm torn to hear that John Heine has retired from the SEC's Office of Public Affairs after 35 years of service. I first met John during my second tour of duty at the SEC in the mid-90s and he quickly proved one of the nicest and helpful Staffers I have ever come across. I'm sure that journalists from all over the country feel the same way. Sad for us, happy for him...

Mailed: November-December Issue of The Corporate Counsel

The November-December Issue of The Corporate Counsel includes pieces on:

- The Smaller Reporting Companies Phenomenon
- Becoming an SRC
- Scaled Disclosure
- FASB's FAS 5 Disclosure Enhancements On Hold, But Not Necessarily Status Quo for 2010 Audits
- Convergence Will Not Obsolete FASB
- Earnings Dissemination--Staff Update
- S-3 Waiver Requests--A Kinder, Gentler Staff?
- The Compensation Risk Proxy Disclosure--Our Review of Comment Correspondence
- 10-K Items
- Shareholder Proposals

Act Now: Get this issue rushed to you by trying a "No-Risk Trial today. And since all subscriptions ended at close of 2010, renew now for 2011 if you haven't already.

- Broc Romanek

January 7, 2011

Poll Results: Say-When-on-Pay Recommendations

I blogged this yesterday on CompensationStandards.com's "The Advisors Blog": Earlier this week, I conducted my own informal poll on TheCorporateCounsel.net Blog regarding what say-when-on-pay recommendations companies will choose for this proxy season. The results fell in line with what I predicted - "annual" was the most popular despite the limited experience of companies filing proxies so far mostly going with triennial. My poll results came in at: 50% annual; 4% biennial; 33% triennial; 4% no recommendation. Compare that with the 71 companies who had filed proxies by the end of the year: 11% annual; 24% biennial; 55% triennial and 10% no recommendation.

On Wednesday, Towers Watson released its own poll results on this topic - and I'm happy to say that the results are quite similar to my own poll results. Here is an excerpt from their press release:

Conducted in mid-December, the Towers Watson poll of 135 U.S. publicly traded companies found that 51% of respondents expect to hold annual say-on-pay votes, while 39% prefer the vote be held every three years, and 10% anticipate holding biennial votes. The poll, however, found companies have a range of reasons for favoring a particular voting frequency. Four in 10 respondents cited accountability to shareholders and a desire to minimize administrative burdens as factors having the greatest influence on their vote-frequency recommendation, while slightly fewer cited shareholder preferences, proxy advisor policies and providing shareholders with an avenue to express concern about executive pay without casting negative votes on other matters as key factors.

"Clearly, there's no single right answer to the question of how frequently these votes should be conducted that will work for every company," said Towers Watson senior consultant James Kroll. "Each company seems to be assessing its own circumstances and needs, taking into account its specific shareholder composition and the degree of potential shareholder concern about the company's executive pay programs."

The survey also found that nearly half (48%) of surveyed companies are making some adjustments to their executive pay-setting process in preparing for the upcoming proxy season, although many companies have already strengthened their processes in recent years in light of growing shareholder activism and intensifying scrutiny of pay issues. Among those making further changes in preparation for the 2011 proxy season, 65% are devoting more attention to explaining their programs in the Compensation Discussion & Analysis (CD&A), 41% are performing additional analyses on the link between their executives' pay and company performance, and 30% have made or are considering changes to programs such as severance, change-in-control benefits and perquisites that have high visibility.

Somewhat surprisingly, almost half (49%) of the respondents don't know what level of favorable shareholder say-on-pay votes will be considered a successful outcome by their boards, and only 8% of the respondents have a process in place for analyzing the results of the vote and developing appropriate action plans in response to potential shareholder concerns. Of those companies that have defined how they will evaluate success, most believe that a favorable shareholder vote of at least 80% would be considered successful.

More on "The Facebook and Goldman Saga: All About Section 12(g) and Section 12(h) Applications"

Yesterday, I finally blogged about the rumors of the SEC investigating secondary markets for private companies and the flare-up over Goldman Sachs creating a special purpose vehicle to allow certain investors to invest in Facebook. As I noted, there was a lot of speculation over whether Facebook should be registering its stock under the '34 Act despite getting Section 12(h) exemptive relief from Corp Fin back in 2008.

Late in the day yesterday, the WSJ ran this article about Facebook including disclosure in a recent private placement offering memo that states that the company intends to surpass 500 shareholders during 2011. Here is an excerpt from the article: "Some investors have wondered whether the arrangement with Goldman was designed to avoid such disclosures. The document makes clear that isn't the case, and that Facebook will likely be a publicly traded company in 2012."

A member sent along this petition for rulemaking sent to the SEC in 2003 that recommends that the SEC create a "Beneficial Owner's Rule" that would change the definition of "held of record" to include beneficial owners holding the security in "street name."

Poll: What Did Santa Bring? Corporate Flavored Candy?

One member recently bemoaned that for Christmas, his wife gave him a copy of the new book "Ferdinand Pecora, the Hellhound of Wall Street" and he wondered if other corporate types received similar tokens of affection. Please take a moment for this anonymous poll:


- Broc Romanek

January 6, 2011

A "Double Wow": Corp Fin Reverses Position on Golden Parachute Shareholder Proposal

Last month, I blogged that I was "wow'ed" that Corp Fin had allowed the exclusion of a golden parachute shareholder proposal. Since then, I've been surprised that my blog is the only piece of writing I've seen about that development since I considered it significant.

But apparently folks were tracking it because I got a flood of emails yesterday when Corp Fin reversed course and issued this no-action letter noting that it had reconsidered its position and decided to not allow the exclusion at Navistar. Although the incoming letter is addressed to the SEC's Secretary, it appears that this reconsideration was made at the Staff level and not at the Commission level (the incoming letter doesn't "cc" the Commissioners), although it is possible that one or more Commissioners influenced Corp Fin. Rule 14a-8 reconsiderations at any level at the SEC are rare - but as this development proves, they do happen.

Note that we have added shareholder proposals as a topic for next Wednesday's webcast - "How to Implement Dodd-Frank for This Proxy Season" - so tune in to hear more about this development and others in the Rule 14a-8 area. As all memberships expired at the end of the year, please renew if you haven't yet to catch this program. If not yet a member, try a no-risk trial now.

The Facebook and Goldman Saga: All About Section 12(g) and Section 12(h) Applications

For securities law geeks, the outpouring of interest in the nuances of when companies are required to register their securities under Section 12(g) of the '34 Act - and whether Facebook has violated the terms of the exemptive relief granted from Corp Fin back in 2008 - surely is big fun. Back when I served in Corp Fin's Office of Chief Counsel in the mid-90s, I handled the Division's Section 12(h) exemptive requests so it has been fun for me (not that there are many; I had never heard of them when I was "asked" to take them on). These requests are fairly technical in nature and require much analysis.

Anyways, I started dabbling in using Quora over the break to check it out and answered a few queries on the ability of new exchanges to trade shares in private companies (eg. SecondMarket, Sharespost and more) because there was so much misinformation out there (eg. that the SEC was "forcing" Facebook to conduct an IPO). And now we have the news about Goldman Sach's offer to certain clients to invest in Facebook. Rather than repeat my answers from Quora (you can "follow me" there), I share related stories from others:

- WSJ's "Goldman Flooded With Facebook Orders"

- Washington Post's "When it comes to investing, Facebook is not for the masses"

- Conglomerate Blog's "Facebook! Facebook! Facebook!"

- Deal Professor's "Facebook and the 500-Person Threshold"

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:

- SEC Proposes Rules to Increase Oversight of Private Fund Advisers
- His Lips Are Moving: Deception During Conference Calls
- SEC and DOJ Announce Resolutions of FCPA "Industry Sweep"
- European Union Agrees to Economic Governance Changes
- SEC Enhances Centralization of Tip Gathering and Analysis Functions

- Broc Romanek

January 5, 2011

Dave & Marty on Giving:The Holiday Show

In this podcast, Dave Lynn and Marty Dunn engage in a lively discussion of the latest developments in securities laws, corporate governance, and pop culture. Topics include:

- Dealing with gifts under Rule 144
- Gifts and insider trading concerns
- The Best Debut Album after "Meet the Beatles"

In his "SEC Actions" blog, Tom Gorman writes about "Letters to Santa: What Key Securities Market Players Want."

SEC Approves PCAOB's Risk Assessment Rules: Eight New Auditing Standards Created

Right before Christmas, the SEC issued this order approving the PCAOB's rules regarding auditor's assessment of - and response to - risk. The PCAOB had proposed these rules back in September and results in eight new auditing standards - Auditing Standards #8-15 - replacing six interim standards. In one fell swoop, the PCAOB has more than doubled the number of its standards. The PCAOB's new rules are effective for audits of fiscal years beginning on or after December 15, 2010.

SEC Approves the PCOAB's 2011 Budget and Accounting Support Fee

Over the break, not only did Congress finally approve the SEC's budget, but the SEC approved the PCAOB's annual budget and accounting support fee. As Dodd-Frank provides the PCAOB with the authority to oversee auditors of brokers - and allocate its support fee among both brokers and issuers now - this year's budget and support fee reflect these changes. As noted in this PCAOB press release, the 2011 budget is $204.4 million, which is $21.1 million (or 11.5%) above last year's budget.

- Broc Romanek

January 4, 2011

Say-on-Pay: Five Steps to Maximize Your Shareholder Engagement Efforts

On CompensationStandards.com, I just posted the Winter 2011 issue of our Compensation Standards newsletter that contains practical guidance, which supplements what I wrote in our "Say-on-Pay Solicitation Playbook" this past summer. The Winter issue covers these topics:

- Say-on-Pay: Five Steps to Maximize Your Shareholder Engagement Efforts
- Say-on-Pay Preparation: Six Other Actions to Consider
- Say-on-Pay Frequency: What Recommendation Should Management Make?
- Say-on-Pay Frequency: Does Management Need to Make a Recommendation?
- Say-on-Pay Frequency: Keep Tabs on How It Works in Practice
- A Future Regulatory Fix? Acquiring Executives Not Subject to Golden Parachute Vote

Act Now: This issue is available to all those with a 2011 CompensationStandards.com membership. All 2010 memberships expired on December 31st. If you haven't renewed your membership, you need to renew now to gain immediate access. If you're not yet a member, try a 2011 no-risk trial now. You will also gain access to these upcoming webcasts: "The Proxy Solicitors Speak on Say-on-Pay" (1/18) and "The Latest Developments: Your Upcoming Proxy Disclosures--What You Need to Do Now!" (1/26).

ISS Issues 20 Compensation Policy FAQs

A few weeks ago, ISS issued a set of 2011 US Compensation Policy FAQs. There are four FAQs regarding say-on-pay vote frequency, nine on problematic pay practices and four on golden parachute votes.

Poll: Say-When-on-Pay Recommendations

In his "Proxy Disclosure Blog," Mark Borges gives us the latest say-when-on-pay stats - with 71 companies filing so far, 55% recommend a triennial vote; 24% recommend a biennial; 11% recommend an annual and 10% make no recommendation.

Despite this early indication that triennial will be the most popular recommendation, there are those that think that annual will come out on top by the end of the day (including me for the reasons that I set forth in the Winter 2011 issue of the Compensation Standards newsletter). Take a moment and participate in this anonymous poll:


- Broc Romanek

January 3, 2011

Oh Boy! The World's Largest Holiday Disclaimer

During the break, I wrote one blog that proved popular entitled "The Mighty Holiday Disclaimer: One That Any Lawyer Could Love!" People loved the disclaimer, I suppose for the same reasons that this "Law and the Multiverse" blog has proved popular (the blog analyzes the legal issues related to damage caused by superheros during their missions).

Cary Klafter of Intel quickly responded by sharing what I imagine has to be the world's largest holiday disclaimer, running for 8 pages - so long that I don't dare repeat it verbatim in this blog - rather I posted it as a PDF. But here is a small excerpt from the opening so you can get a taste:

Please accept, with no obligation, implied or implicit, the best wishes of the Corporate Legal Group (sometimes hereinafter referred to as the "wisher" or "us" or "publisher" or however else we refer to ourselves in this document in our complete and unfettered discretion) for an environmentally conscious, socially responsible, low stress, non-addictive, gender and gender-identity neutral, celebration of the winter solstice holiday, practiced within the most enjoyable traditions of the religious persuasion of your choice, or secular practices of your choice, with respect for the religious/secular persuasions and/or traditions of others, or their choice not to practice religious or secular traditions at all . . . . . and a fiscally successful, personally fulfilling, and medically uncomplicated recognition of the onset of the generally accepted calendar year 2011, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make America great, (not to imply that America is necessarily greater than any other country or is the only "America" in the western hemisphere or that there are not other hemispheres of equal dignity), and without regard to the race, creed, color, age, physical ability, religious faith, or sexual preference or identity of the wishee (or lack thereof with regards to any or all of such, or other, factors) (and further not to imply that the winter solstice should be considered a holiday for those afflicted, through no fault of their own, with some form of psychological or physical depression occasioned by the natural reduction of sunlight or increase in precipitation due to seasonal factors (or increase/reduction for those in the so-called Southern Hemisphere)). (Note: based on some news stories we are modestly concerned about the Mayan calendar since it apparently predicts the End Of Time (EOT) in 2012, unless inappropriately interpreted by non-Mayan so-called "scholars", but we disclaim any responsibility for the EOT and as a matter of public policy we do not advocate the EOT).

And here is another funny electronic holiday card, courtesy of Shareholder Representative Services...

Europe's Answer to Dodd-Frank? The MiFID Review Affects Almost Everyone

As noted in these memos posted in our "European Law" Practice Area, the European Commission published proposals for revision of the Markets in Financial Instruments Directive ("MiFID") last month. The comment period is open until February 2nd and the Commission is scheduled to publish its final proposals, including legislative text, in the spring (probably in mid-May).

Our January Eminders is Posted!

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

To start off the New Year right, remember this Seinfeld gem...

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- Broc Romanek