February 29, 2012

SEC Commissioner Aguilar Urges Mandated Political Spending Disclosure

Last week, SEC Commissioner Luis Aguilar delivered this speech - entitled "Shining a Light on Expenditures of Shareholder Money" - urging the SEC to act in the newly hot area of political contribution disclosures (Vanessa Schoenthaler's blog notes Chair Schapiro's comments on the topic). Here are other speeches delivered during PLI's "SEC Speaks" Conference:

- Chair Schapiro on agency redesign and operating strategy
- Commissioner Walter on the meaning of being a Commissioner
- Commissioner Paredes on the Volcker Rule
- Commissioner Gallagher on failure to supervise

I have blogged other notes from the conference, both on "The Mentor Blog" (accounting, enforcement and litigation perspective) - and on CompensationStandards.com "The Advisors Blog" (Corp Fin on Form S-3 waivers for failure to amend Form 8-Ks and report say-on-pay frequency voting results).

By the way, the SEC has redesigned its "Speeches and Public Statements" page so that you can more easily sort out speeches by a specific speaker, etc.

Transcript: "The Exploding World of Political Contributions"

We have posted the transcript for our recent webcast: "The Exploding World of Political Contributions."

Webcast: "Conduct of the Annual Meeting"

Tune in tomorrow for the webcast - "Conduct of the Annual Meeting" - to hear Kathy Gibson of Campbell Soup, Carl Hagberg of The Shareholder Service Optimizer, Bob Lamm of Pfizer, Barbara Mathews of Edison International and Carol Ward of Kraft Foods explain how they handle the many challenges of running an annual shareholders meeting.

How old were you when you when you found out that 'Leap Day William' wasn't real? A classic from "30 Rock" if you missed it. Up there with Seinfeld's creation of Festivus...

- Broc Romanek

February 28, 2012

Corp Fin Withdraws Two CDIs as Reg D Amendments Become Effective

Yesterday, the following two CDIs were withdrawn because the SEC's amendments to Regulation D to implement Section 413 of Dodd-Frank - regarding the net worth standard under the definition of accredited investor - became effective: Section 179. Rule 215 - Accredited Investor: Withdrawn Question 179.01 and Section 255. Rule 501 - Definitions and Terms Used in Regulation D: Withdrawn Question 255.47.

We have many memos on the new standard posted in our "Private Placement" Practice Area - and we'll be covering this topic (and much more) in our upcoming webcast: "The Art of Regulation D and Private Placements."

Meanwhile, Keith Bishop blogs about a proposed California bill that would allow general solicitations in that state. And his blog today is entitled "Bill Proposes Another Reason Not To Incorporate In California."

Report: How ESG Will Fare This Proxy Season

Today, Sustainable Investments Institute and As You Sow release their annual Proxy Preview Report. Their proxy season forecast primarily deals with social and environmental proposals and a smattering of governance ones (those with a social twist) and it includes profiles of a bunch of different shareholder activists, plus commentaries from a few other key proxy season players. In addition to the Report, they are holding a webcast later today.

Highlights of the 2012 ESG shareholder proposals include:

- Political Spending: Investors are increasingly concerned about corporate political spending disclosure and have filed twice as many resolutions on this topic for 2012 (109) as they did just three years ago. New is a large group of proposals that focus on spending after elections, through lobbying. Another new feature in 2012 is a call for ending any campaign spending at a couple of companies (3M, Target, and Bank of America), and a few requests for shareholder votes on companies' political spending practices. Contributions through intermediaries are a critical focus of all the proposals, highlighting public worries about cash and influence in the 2012 election.

- Environment and Sustainability: Shareholder proponents still want companies to address climate change, reduce their impacts on natural resources, and use fewer toxic chemicals. The 117 environmental/sustainability resolutions filed in 2012 express these concerns as part of a roadmap for a new energy future. Coal and fracking dominate the group of 44 natural resource management proposals, with worries about the financial risks of relying on coal-based energy and the implications of shale gas development. A shareholder resolution from the New York City pension funds has helped prompt deals with Apple and other big electronics firms to be more open about conditions in their supply chains, even as investors tell companies they want environmental and social policies that are sustainable over the long term.

- Mortgage Foreclosures: Investors at four of the country's biggest banks will vote on whether they want more information on loan modifications, foreclosures, and securitization - on the heels of the recent $26 billion settlement that benefits homeowners.

- Diversity: The country's largest institutional investors want more diverse boards, as the report highlights. And companies increasingly are establishing non-discrimination policies for lesbian, gay, bisexual, and transgender (LGBT) employees, even as they face 38 proposals on this subject. Combined, the board and employee diversity proposals account for 11% of the total number of proposals filed so far, about even with the 2011 tally.

- Labor and Human Rights: About two dozen resolutions request action on labor and human rights, mostly at companies active in global conflict zones, from faith-based investors. But several also raise concerns at private U.S. prison companies, Corrections Corp. of America, and GEO Group. An AFL-CIO proposal to a few companies is about worker safety on oil rigs and refineries, following up on safety audit issues sparked by Gulf of Mexico spill two years ago. And a new Securities and Exchange Commission interpretation just issued means investors now can vote on whether they think companies should provide equal access to all on the Internet.

Transcript: "Alan Dye on the Latest Section 16 Developments"

We have posted the transcript for the recent Section16.net webcast: "Alan Dye on the Latest Section 16 Developments."

- Broc Romanek

February 27, 2012

Walk Down Memory Lane: New York Legislature Debacle Redux

Last week, I received this from a member: Just when you thought it was safe to do business in New York State, here comes along a New York Executive Order that is intended to apply solely to health care providers but it's so poorly drafted that it arguably applies to all companies doing any services business with New York State. Many of us still recall the New York State Power of Attorney debacle of 2009-2010. The state legislature had amended New York State's power of attorney (POA) law in a commendable attempt to protect the elderly from unscrupulous financial advisors using broad POAs to clean out their bank accounts.

Unfortunately, because of poor drafting, it had the unintended consequence of applying to ordinary course POAs given in the corporate context. Among other things, that law required that when corporate directors were signing POAs in New York authorizing SEC filings for their companies (regardless of whether the company at issue was incorporated in New York, Delaware or elsewhere), the POA had to include language stating that the directors were giving the company the power to spend the director's personal funds and sell the director's personal property. The legal and corporate communities spent significant time and money over the course of a year to address this legislative snafu, resulting in the governor signing a technical corrections bill in September 2010, with retroactive effect to the date of the original amendment a year earlier, to make it clear that this law did not apply in the corporate context.

Governor Cuomo Signs Broad Order to Address Espada Scandal

Against that backdrop, you might naively think that the state legislature, and in particular the Governor's office, would be more careful in their drafting endeavors. Apparently not. The latest gift from New York to the corporate community is in response to the scandal-plagued health-care clinics founded by Pedro Espada, former member of New York State Senate. In April 2010, then State Attorney General Andrew Cuomo alleged that Espada used his health care clinics as a "personal piggy bank," for e.g., submitting expense bills for $20,000 in sushi deliveries. And this January, now Governor Andrew Cuomo signed New York Executive Order No. 38 (Limits on State-Funded Administrative Costs and Executive Compensation).

Why the Corporate Community is Concerned

Specifically, this executive order would prohibit any entity that falls within its purview from (i) paying "any executive" more than $199,000 per year from "state authorized payments" (not defined) and (ii) using more than 25% of state-authorized payments for "administrative costs". Unfortunately, the executive order raises more questions than it answers, including which companies fall within its scope and whether "state authorized payments" should be broadly read as meaning any payments by the state as an ordinary course customer of vendors including public companies. The most reasonable interpretation of this short executive order is that it does not apply to large public companies, for e.g., who act as vendors providing financial, consulting or IT services to New York State. However, we are told that the Governor's office has refused to agree, even informally, with that assessment, instead suggesting it may apply to public companies who provide any services to NY State as a customer. (Note to Delaware companies: There is no language in this executive order limiting it to service providers incorporated in New York -- so this is an issue for any and all companies who provide services to New York State).

The New York Business Council has taken the laboring oar in trying to focus attention on the broad scope and unintended impact this order could have on the corporate community. Unfortunately, however, the order has already been signed, with various state agencies being provided 90 days (until mid-April) to issue their own implementing regs. From our perspective, the best "fix" would be a simple clarification that this does not apply to public companies that are subject to SEC reporting obligations. Instead, it is limited to service providers like nursing homes, hospitals, etc. who receive state funding like Medicaid payments. If we do not get this reasonable fix, the corporate community will have to spend more time and money debating the applicability of the implementing regs issued by various state agencies.

Message from New York State to the Corporate Community?

All this really raises the question of what message New York State is trying to send to companies that do business here. Is it: "We believe that you have unlimited time and resources, and we rely on you to correct our huge mistakes"? Or perhaps, "We want to make sure the corporate community never mistakes us for Delaware - a state that may give you laws you don't always agree with but at least you can understand them and see they were intended to apply to you in the first place." Hopefully, the Governor's office will step up to the plate and issue a simple technical correction to narrow the scope of this order to the legitimate situations it was originally intended to cover.

Why Aren't There Women or Minorities on Facebook's Board?

Professor Usha Rodrigues recently wrote this blog on the "Conglomerate Blog" about one of the numerous governance question marks about Facebook as it prepares to go public. Unfortunately, gender - and racial - disparity in the boardroom, Wall Street and many other places continues to be a big problem that never seems to get better. Of the 54 guests on the Sunday morning talk shows for the month of February, do you know how many were men? 51. Here is more on that topic...

Congrats to our own Randi Morrison for being among the distinguished women selected for DirectWomen's Board Institute! As I've blogged before, DirectWomen is an organization devoted to helping qualified women - who also are lawyers - get recruited to sit on boards...

The Largest FCPA Case in US History

In this podcast, Stephen Bronis of Carlton Fields provides some insight how a client - Stephen Giordanella - was acquitted in the largest foreign bribery case in US history (since I taped this with Stephen, all sting charges have been dropped for the remaining defendants under this court order), including:

- What is the background of the case?
- What did the court find?
- What are the lessons learned for executives?

- Broc Romanek

February 24, 2012

House Financial Services Committee: New Bill Would Exempt Newly Public Companies from Say-on-Pay for 5 Years

Earlier this week, I blogged about a quartet of bills that the House Financial Services Committee approved. Ted Allen of ISS blogged yesterday that one of the bills would exempt newly public companies from holding say-on-pay votes for five years. A similar bill has been introduced in the Senate and has attracted bipartisan support.

The House bill, the "Reopening American Capital Markets to Emerging Growth Companies Act," H.R. 3606, would create a new class of issuers, "emerging growth companies," that would be exempt from the Dodd-Frank Act-mandated advisory votes for five years, or until they reach $1 billion in annual revenue or $700 million in public float. These companies also would be exempt from holding separate shareholder votes on "golden parachute" severance arrangements.

The bill would also excuse these emerging companies from Section 953(b) of Dodd-Frank, which would require disclosure of the ratio between a CEO's total compensation and that of the firm's median employee. These companies also would be spared from Sarbanes-Oxley's requirement to hire an outside auditor to attest to the sufficiency of their internal financial controls.

ISS Extends GRiD Verification Period (and Delays Final Release Date)

On the heels of software glitches and more (eg. many members have complained about an inability to reach anyone at ISS to discuss GRiD score corrections), ISS has pushed back the deadline for companies to verify their GRiD scores until the end of Monday (8 pm eastern on February 27th) - and won't release the final GRiD scores to the public until the following Monday, March 5th. Here is ISS's GRiD page - and here is my initial blog on this topic...

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:

- The IPO Dutch Auction: Should Facebook Have Done a Google?
- Punitive Bill Proposes Giant Step Backwards On Capital Formation
- LLC Manager Liability to Minority Members
- 7th Circuit Ruling Expands Rights of Whistleblowers to RICO
- Delaware Weighs In: Indemnification and Advancement of Expenses

- Broc Romanek

February 23, 2012

Senators Complain Over Potentially Imminent Conflict Minerals Rulemaking

This Bloomberg article notes that Senator Patrick Leahy and others have written the SEC Chair objecting to proposed language in the SEC's conflict minerals rule proposal which would allow firms to "furnish" instead of to "file" required disclosures. As noted in this Akin Gump memo, the letter also indicates that a final conflict minerals rule may be imminent.

Check it out! Bill Gates - in his capacity as head of his foundation - has sent a comment letter to the SEC regarding the resource extraction proposal...

Could the World Move on IFRS Without the SEC? And If So, What are the Ramifications?

This CFO.com article entitled "Foot-Dragging on IFRS Decision Could Strip SEC of Power" is worth a read...

Investors Press SEC on Financial Market Reform

As noted in this ISS blog, CalPERS - on behalf of a group of 14 institutional investors - has written a letter to SEC Chair Schapiro asking the SEC to prioritize these six initiatives:

- Appoint an Investor Advisory Committee to provide the commission with investors' perspectives on regulatory issues; appoint an Investor Advocate to champion investor rights.
- Renew rulemaking for universal proxy access so that investors can propose directors for boards on a level playing field with management.
- Adopt final rules on the remaining executive compensation reforms under the Dodd-Frank Act.
- Continue work on International Financial Reporting Standards to ensure high quality accounting in global markets.
- Provide for an accountable and transparent ratings system with full disclosure on data and models used to develop securities ratings. Develop an independent mechanism to track the accuracy and effectiveness of the ratings process and complete the study of financing alternatives for credit rating agencies.
- Clarify and ensure compliance with the commission's interpretive guidance on climate risk disclosures. Direct the new Investor Advisory Committee to provide advice and recommendations on climate change disclosure and the process for including diversity considerations into the corporate board nomination process. Ensure that sustainability issues and diversity reporting are integrated into financial reporting frameworks.

- Broc Romanek

February 22, 2012

Our Pair of Popular Executive Pay Conferences: A 25% Early Bird Discount

We are excited to announce that we have just posted the registration information for our popular conferences - "Tackling Your 2013 Compensation Disclosures: 7th Annual Proxy Disclosure Conference" & "Say-on-Pay Workshop: 9th Annual Executive Compensation Conference" - to be held October 8-9th in New Orleans and via Live Nationwide Video Webcast. Here is the agenda for the Proxy Disclosure Conference (the Executive Compensation Conference's agenda will be posted soon).

Early Bird Rates - Act by April 13th: Huge changes are afoot for executive compensation practices and the related disclosures - that will impact every public company. We are doing our part to help you address all these changes - and avoid costly pitfalls - by offering a special early bird discount rate to help you attend these critical conferences (both of the Conferences are bundled together with a single price). So register by April 13th to take advantage of the 25% discount.

The NYSE Sends Its Annual Letter to Listed Companies

Ahead of annual shareholder meetings being held, the NYSE has sent its 8-page annual letter to companies listed on the exchange, full of reminders about actions that companies need to take as part of the annual meeting process - including a reminder about the NYSE's change to Rule 452 (here's the version for foreign private issuers). No real changes from last year's letter...

Webcast: "Company Buybacks: Best Practices"

Tune in tomorrow for the webcast - "Company Buybacks: Best Practices" - to hear Kady Ashley of Skadden Arps, Rob DelPriore of Baker Donelson and Jim Rothwell of Davis Polk provide practical guidance about how to conduct a stock repurchase program, including analysis over whether such a program is the best use of corporate funds.

- Broc Romanek

February 21, 2012

House Financial Services Committee Passes Four Bills

Last Thursday, as noted in this Bloomberg article and this Reuters article, the House Financial Services Committee passed four bills that are either Dodd-Frank related or would impact the capital markets, including (the Committee's site has all four bills posted):

1. H.R. 3606: "Reopening American Capital Markets to Emerging Growth Companies Act," the small business capital formation bill (that is described in Jim Hamilton's blog)

2. H.R. 2308: "SEC Regulatory Accountability Act," which would require the SEC to conduct enhanced cost-benefit analyses before adopting new rules

3. H.R. 1838: "Swaps Bailout Prevention Act," which would remove "push-out" provision of Dodd-Frank so over-the-counter swaps tied to high-quality credit transactions would remain on the books of insured banks

4. H.R. 4014: still unnamed, would give CFTC power to compel production of documents without it constituting a waiver of attorney work product privilege

The first bill was approved 54-1, the second narrowly by 30-26 and the last two were unanimously approved.

ISS Makes GRid 2.0 Preview Available to Companies Before It Goes "Live"

As I've blogged before, ISS has changed its corporate governance ratings process again - it's now called "GRId 2.0." Yesterday, ISS began allowing companies to verify what ISS will be disclosing about them publicly - and Russell 3000 companies should take advantage of this opportunity before the general public gets to read ISS' analysis starting next Monday, February 27th. So there is less than a week to review these 'draft' analyses - tough timing given its the heart of 'drafting the proxy' season for many.

Companies will need to obtain a username and password to verify their GRId data (which they can do for free) - then you have to go into the "Governance Analytics" portal to get to your company's GRId score as ISS' main site won't get you there. Learn more about the new GRid in our "Governance Ratings" Practice Area.

Transcript: "Ethics, Conflicts and Privilege Issues in Executive Compensation"

We have posted the transcript for our recent CompensationStandards.com webcast: "Ethics, Conflicts and Privilege Issues in Executive Compensation."

- Broc Romanek

February 17, 2012

Bringing Humor to Investor Relations Disclaimers

One of my favorite topics to blog about is the art of writing disclaimers. Remember these examples. The Contango Oil & Gas Company seems to inject humor into their forward-looking disclosure disclaimers quite often. Here is one from their latest investor presentation:

Lawyer Stuff The future is unknowable. We have good intentions but all of our projections and estimates will be wrong, and could be materially wrong. Wildcat exploration is expensive, speculative and potentially dangerous. An offshore spill or explosion would be enormously expensive. We have insurance but it may not be enough. You could lose your entire investment. Don't be lazy - read our 10-Q's, 10-K's and press releases, and if you lose money - please no tears.

"Don't forget about risk-free T-bills in your portfolio...After inflation and taxes you'll likely only lose 5-10% of your investment."

And here is one from an investor presentation last year:

.... And More Lawyer Stuff "There are three reasons why lawyers are replacing rats as laboratory research animals. One is that they're plentiful, another is that lab assistants don't get attached to them, and the third is that there are some things rats just won't do" -Unknown

Our "Best Practice" Disclosure for Say-on-Pay in 2012

We recently mailed the January-February Issue of The Corporate Executive and it includes pieces on:

- Our "Best Practice" Disclosure for Say-on-Pay in 2012
- Model CD&A Disclosure for a Company Receiving Strong Say-on-Pay Support
- Model CD&A Disclosure for a Company that Received Weak Say-on-Pay Support, or Failed to Achieve Majority Support
- When Is a Tax Cut Not a Tax Cut?
- Follow-Up: Modifying Awards in Response to Say-on-Pay
- Trap for the Unwary: Retirement Provisions in Performance Awards
- Cost-Basis Reporting Update

Act Now: If you are not yet a subscriber, get this issue rushed to you when you try a 2012 No-Risk Trial today.

Insider Trading Compliance Training

In this podcast, Bruce Brumberg of "Think Twice Training Videos" provides some insight into how companies can conduct insider trading compliance training, including:

- What is your training module like?
- How do companies use your insider trading training?
- Do companies supplement the use of your video with other training?
- How - and why - did you start producing these?
- How did the SEC get involved?
- The original "Twice Twice" video just had its 20 year anniversary. Are you surprised it's still popular?

- Broc Romanek

February 16, 2012

Two Names You Should Know: "StockTwits" and "MarketBrief"

When I was on my social media speaking tour last year, I talked quite a bit about two new services that were changing the way that investors received and shared information. These two services really are game-changers and show how social media is changing the investment world just as much as any other industry.

The first is StockTwits, which is an online financial community that enables investors to share their market insights, ideas, charts and news in real time in a Twitter-like manner. In other words, StockTwits takes the chaos out of Twitter by organizing tweets by company (the filter is the dollar sign in front of a company's stock symbol - tweets that do this are then included in a company's message stream on StockTwits and Twitter, as well as other social networks and financial websites); here are instructions on how to try it out.

After four years in operation, StockTwits really has taken off with well over 150,000 investors of all types using the platform (this recent article explains more). Remember that time is money - and studies have shown that news travels faster through online platforms than through the news wires (see this article for example).

Here are three examples of the growing power of StockTwits:

1. StockTwits has partnered with mainstream media channels to distribute news, including Yahoo Finance, Bloomberg, CNN Money, Reuters and others, as well as social media platforms including Twitter, Facebook and LinkedIn.

2. Starting last summer, investor relations departments at a number of public companies began managing and utilizing their "official" profile and ticker pages on StockTwits to create a verifiable presence on the platform. In other words, companies can distribute their own messages on StockTwits and investors reading them know they truly are from the company. Since this is where a company's shareholders (and potential shareholders) are gathering online, these companies smartly have gone to where the action is to participate, which can be as simple as tweeting links to SEC filings and press releases as they come out.

3. As reflected on this StockTwits page, investors can choose to "follow" the analysis provided by specific analysts that they like. In this way, StockTwits facilitates whom investors choose to obtain their information to make investment decisions.

MarketBrief is the second service that is changing the way investors consume information - and it was only launched last August. As explained in this article, MarketBrief's computers take SEC filings as they are made and converts them into tweets. That is, they cram the essence of the SEC filing into 140 characters in about a second. Mind-blowing. And as noted in this announcement, these two have teamed up so MarketBrief's summaries flow through StockTwits.

For those out there that aren't tech-savvy, it is not hard to learn the basics of what is happening here and it's important that you do because these are not like the Yahoo message boards of the '90s. These are much more powerful and reliance on them by sophisticated (and large) investors will only grow...

Introducing AnalytixInsight

Recently, I was trying the free beta for the AnalytixInsight service and came away amazed about what technology can do these days. Among other interesting things, its computers can crunch numbers and other publicly available information (click on the "Fundamental Analysis" tab) and put together a lengthy report that is akin to an analyst's research report.

In this podcast, John Ballow of AnalytixInsight discusses his AnalytixInsight service and what it can do, including:

- What is the AnalytixInsight service?
- How would public companies use this service?
- How does these tools relate to say-on-pay?
- How can companies dispute content that they view as erroneous?

The Regulatory View on Social Media

Brink Dickerson of Troutman Sanders give us these thoughts:

The recent discussion of the CEO of WebMediaBrands highlighted the importance of thoughtful social media policies. But before you conclude that those policies are the domain of just the securities and IP/IT lawyers, you need to consider the NLRB's view on social media as recently expressed in a report by the NLRB's general counsel.

In the NLRB's view, there are significant limitations on companies' ability to constrain communications that relate to "concerted action," and it takes a very broad view of the different types of statements that might be concerted action. As a result, social media policies that are absolute in their prohibitions - e.g., a prohibition on employees publicly discussing financial results, a perfectly reasonable prohibition from a securities lawyer's perspective - could run afoul of the NLRB's views.

For instance, a company may or may not be able to prohibit an employee's posting on his or her Facebook page, even if the posting precedes any other public announcement by the company, that "The company made $152 million last quarter and can afford to pay us more." In reality, this is an extreme example and probably could be constrained somewhat, but the boundary line is not far from it. As a result, companies need to factor in not just Reg. FD and other securities laws when they consider their social media policies, but also the NLRB's views.

- Broc Romanek

February 15, 2012

Shareholder Proposals: Apache Wins as Chevedden Appeals KBR Decision

Last month, I blogged about Apache suing John Chevedden in the District Court for the Southern District of Texas for the second time in three years, using this a court-mandated exclusion route rather than the traditional Corp Fin no-action request one. As was the case when Apache won its case two years ago, the company contested whether John Chevedden satisfies the proof of ownership requirements imposed by the rule.

On Monday, the court entered into this final judgment in favor of Apache again - but this time around, it was based on a settlement between Apache and Chevedden. It appears that Chevedden threw in the towel early - possibly to save his resources for his appeal of last year's District Court decision against him in his litigation with KBR regarding similar proof of ownership issues. That case is being appealed in the Court of Appeals for the Fifth Circuit. All of the Apache proceedings are posted in our "Shareholder Proposals" Practice Area.

Webcast: "The Dynamics of Disclosure Claims"

Tune in tomorrow for the DealLawyers.com webcast - "The Dynamics of Disclosure Claims" - to hear Kevin Miller of Alston & Bird, Blake Rohrbacher of Richards Layton and Steven Haas of Hunton & Williams discuss how the dynamics of disclosure claims - including the procedural posture and risk/reward analysis of a potential appeal by defendants - are causing outside counsel to transaction participants to recommend increasingly detailed disclosure of such information in merger proxies and notices of appraisal rights. Please print off these course materials in advance.

Yes, we are holding DealLawyers.com webcasts on consecutive days - today's program is "Transaction Insurance as a M&A Strategic Tool"...

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:

- NACD's New Blue Ribbon Commission Report on Lead Directors
- Corp Fin Allows Exclusion of GE Auditor Rotation Proposal
- SEC Republishes Revised FINRA Proposal to Require the Filing of Private Placements
- Sentencing Commission Acts on Dodd-Frank
- Q&A with Governance Expert Bob Monks

- Broc Romanek

February 14, 2012

Corp Fin's New CDI: How to Present Say-on-Pay on Proxy Cards/VIFs

Yesterday, Corp Fin issued new '34 Act CDI 169.07 to provide clarity about how companies should be listing their say-on-pay proposals on proxy cards and voting instruction forms. The CDI lists four examples that the Staff believes is consistent with Rule 14a-21 - and one example that the Staff believes is not consistent (ie. "To hold an advisory vote on executive compensation"). I believe many companies are going to need to make a tweak to their proxy cards and VIFs as they used the "inconsistent" language last year...

I'm not sure what to make of this NY Post article noting that a whistleblower - someone at an unnamed proxy solicitor - is claiming that a mid-level employee in ISS's Boston office has been exchanging confidential voting data for gifts or cash from solicitors. Allegedly, the whistleblower has complained to the SEC - but whomever it is wouldn't respond to questions from the NY Post reporter. We'll see if this develops or is an urban myth. Among the odd things, it seems like the information could be valuable to arbitragers in a merger vote, but really not worth that much to companies (and their agents). Here's today's WSJ article on the topic...

Section 12(g): Corp Fin Grants Global No-Action Relief for RSUs at Pre-IPO Companies

Yesterday, Corp Fin granted this no-action relief to Fenwick & West regarding the use of restricted stock units for employees at pre-IPO companies under certain conditions without the company needing to register the securities under Section 12(g) of the '34 Act (generally, the conditions are similar to those in Rule 12h-1(f) for options). By granting the letter to a law firm - and not a specific company - this no-action letter serves as broad relief for those pre-IPO companies hoping not to be forced to go public before they are ready, a hot topic as it has even attracted attention on Capitol Hill where proposed legislation is afoot to raise the 12(g) thresholds, etc. Previously, Corp Fin had been granting relief in this area on a case-by-case basis (egs. Twitter, Facebook - see this blog).

Yesterday, Reuters ran this article entitled "Proxy adviser ISS slams Facebook share structure."

Webcast: "Transaction Insurance as a M&A Strategic Tool"

Tune in tomorrow for the DealLawyers.com webcast - "Transaction Insurance as a M&A Strategic Tool" - to hear Keith Flaum of Dewey & LeBoeuf, Mark Thierfelder of Dechert and Craig Schiappo of Marsh's Private Equity and M&A Services Group discuss how the use of insurance in deals is gaining popularity as a tool to bridge the gap on one of the most fundamental deal issues in any M&A transaction: the potential post-closing erosion of value. Please print off these course materials in advance.

- Broc Romanek

February 13, 2012

Which Auditors Have the Most Public Company Clients?

Due to my high visibility I guess, I often am asked all types of statistic queries. That's why I was excited to see this issue of the "Accounting News Report" that includes these stats:

- Big Four firms hold 43.5% of all public company clients (there were 8903 public company clients)

- Nine firms audit more than 50% of all public company clients

- Ernst & Young audits the most with 1177

- Analyzing the # of clients per category: E&Y led the accelerated filer category; PwC led the large accelerated filer category; Deloitte led the non-accelerated filer category; and BDO USA led the small reporting company category.

- Big Four hold a dominant share, no less than 67% in each of three categories (large accelerated filers, accelerated filers and non-accelerated filers) - but they hold only 7.2% in smaller company category

- 103 firms that comprise leading auditors hold 84.7% of all public company clients

- Median number of public company clients for 103 leading auditors is 25

An Interview with the PCAOB's Jim Doty

A while back, the Journal of Accountancy published this interesting interview with new PCAOB Chair Jim Doty. This excerpt says it all regarding what to expect during his tenure (ie. change):

He said the greatest surprise he's encountered in his new role is "the heightened self-awareness [auditors] have that the world is changing." "I don't see any firm that I have looked at and met with or heard from that doesn't appreciate that, in fact, they're in the middle of a process that can't be reversed."

Note that last week, the PCAOB settled a disciplinary order censuring Ernst & Young for the largest civil penalty it has ever imposed - $2 million, sanctioning four of its current and former partners for violating it rules and standards.

Survey Results: Big 8 Auditors - and a New Survey about the "Little Eight"

Last year, I ran a poll to see how many old-timers out there could name what used to be known as the Big 8 auditors. For the most part, members answered correctly although some were tripped up by "Arthur Siskel & Ebert." As noted in Wikipedia, the Big 8 died back in 1987 and consisted of:

1. Arthur Andersen
2. Arthur Young & Co.
3. Coopers & Lybrand (originally Lybrand, Ross Bros., & Montgomery)
4. Ernst & Whinney (until 1979, Ernst & Ernst in the US and Whinney Murray in the UK)
5. Deloitte Haskins & Sells (until 1978 Haskins & Sells in the US and Deloitte & Co. in the UK)
6. Peat Marwick Mitchell (later Peat Marwick, then KPMG)
7. Price Waterhouse
8. Touche Ross

The concentration of auditors in a Big 4 doesn't appear to be on the PCAOB's plate at this time, with its recent concept release tackling so many other issues. I do note that, in 2008, the report of the US Treasury Committee on the Auditing Profession did discuss competition problems and issues within the profession, with a call for certain changes. And last year, as noted in this Bloomberg article, the Big Four were reported to be facing a probe by the UK's antitrust regulator.

Anyways, a member threw down a more difficult challenge than naming the Big 8. She wants you to name the "Little Eight" that existed at the time of the "Big Eight." Shoot me an email with your answers...

- Broc Romanek

February 10, 2012

The Case for the SEC's Self-Funding: House Financial Services Chair's Alleged Insider Trading

I've written repeatedly how absurd it is for a so-called independent federal agency - like the SEC - to be subject to the very real political pressures and whims of Congress. And the political pressures faced by the SEC have only grown since the passage of Dodd-Frank a mere two years ago. You may recall that the Senate's version of Dodd-Frank envisioned a self-funded SEC - a concept to be lost during the House-Senate conferencing leading up to the bill's enactment (if I recall, House conferees had accepted self-funding but some Senators stripped it from the final bill). Dodd-Frank also was supposed to dramatically bolster the SEC's resources, a notion that was quickly buried after it became law.

So what to do with the front-page article in the Washington Post today that Rep. Spencer Bachus (R-Ala.), Chair of the House Financial Services committee - the one that oversees the SEC - is being investigated for insider trading by the Office of Congressional Ethics? The case is the first of its kind involving a member of Congress. Although I wouldn't hold your breath given that the OCE's powers are limited (egs. can't compel cooperation with an investigation nor does it have subpoena powers).

But the bigger picture is how can there still be justification to allow Congress to continue playing games with the SEC's budget when it's supposed to be operating as an independent agency? A lot of fingers continue to be pointed at the SEC for regulatory failures. But one of the causes for the SEC's failures rests with those at the top - Congress. More than just a few on the Hill want the SEC to fail, doing their utmost to be a thorn in the agency's side. Doing the work urged by well-heeled lobbyists. Until this problem is fixed, the SEC will always be faced with strong headwinds in their work to keep the markets safe for investors. Riddle me that, Batman!

House Passes Watered-Down STOCK Act

Yesterday, the House of Representatives passed its version of the STOCK Act in a nearly unanimous vote. However, as noted in this Washington Post article, the House version of this Act omits a few key provisions that the Senate passed last week (S 2038). The differences will be resolved in conference over the next few weeks.

Although the House version of the STOCK Act bars members of Congress from trading on material non-public information like the Senate version, it doesn't include the provision - pushed by Sen. Chuck Grassley - which would require those in the "political intelligence" world to register as lobbyists under the Lobbyist Disclosure Act. In DC, there are a growing number of specialized political intelligence agencies that collect and sell information about upcoming legislation and regulatory developments to hedge funds, private equity, etc.

The House version would merely require a study into this practice rather than require lobbyist registration. Not surprisingly, those pushing for the study alternative - including Rep. Eric Cantor and House Speaker John Boehner - are among the largest recipients of contributions from hedge and private equity funds, etc. as noted in this spreadsheet from Maplight.org. Check out this NY Times article from a few days ago about how these GOP House members claim their revisions to the Senate bill would "strengthen" it...

Corp Fin's Common Financial Reporting Issues for Smaller Companies

Yesterday, Corp Fin posted these slides that detail the latest common financial reporting issues for smaller companies. The slides were part of a presentation for a small business forum hosted by the PCAOB in December.

- Broc Romanek

February 9, 2012

Coordinated Attack on Exclusive Forum Bylaw Provisions

Here's news from Steven Haas of Hunton & Williams (also see this blog from Francis Pileggi): In recent days, shareholders have filed several class action complaints in Delaware (here's a sample complaint posted in our "Exclusive Forum Bylaws" Practice Area; there are 9 filed so far). The litigation will require Delaware courts to review a bylaw that would increase Delaware's market share of corporate litigation. A ruling upholding these bylaws would likely cause numerous other corporations to adopt them.

An exclusive forum provision typically provides as follows:

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article __.

These provisions gained traction, particularly for IPO companies, ever since Vice Chancellor Laster suggested in a 2010 opinion that they would be enforceable (see In re Revlon S'holders Litig., 990 A.2d 940 (Del. Ch. 2010)). Claudia Allen of Neal Gerber recently updated her study detailing that, as of December 31st, 195 Delaware corporations have adopted or proposed exclusive forum charter or bylaw provisions. Although a California court refused to enforce Oracle's exclusive forum bylaw last year, this is the first time the issue has been squarely presented to the Delaware courts. Steven Davidoff (aka The Deal Professor) previously offered his thoughts on the issue.

Large Trader Reporting Rules Update: No Annual Form 13H Required This Year

Here's news from Skadden Arps: Exchange Act Rule 13h-1(b), which went into effect on October 3, 2011, requires persons defined as "large traders" to file a Form 13H with the SEC on the following timetable:

- promptly after first effecting aggregate transactions, or after effecting aggregate transactions subsequent to becoming an inactive large trader, equal to or greater than the identifying activity levels in Rule 13h-1;
- within 45 days after the end of each full calendar year; and
- promptly following the end of a calendar quarter in the event that any of the information contained in a Form 13H filing become inaccurate for any reason.

Large traders were required to file their first Form 13H on or before December 1, 2011.
We have confirmed with the SEC staff that it is interpreting the annual reporting requirements in Rule 13h-1(b) not to apply to 2011 since the new rules were not in effect for a "full calendar year." As a result, large traders will not be required to file an annual Form 13H on or before February 14, 2012.

The large trader rules also include provisions applicable to registered broker-dealers, including requirements to maintain records in connection with transactions by large traders, monitor customer accounts for activity that may trigger the large trader reporting requirements and report large trader transaction information to the SEC upon request through the Electronic Blue Sheets (EBS) system. Although these broker-dealer requirements were expected to go into effect on April 30, 2012, it is our understanding that the SEC staff is considering requests to extend the compliance date for these requirements.

Here's A Metric on the Facebook IPO You Won't See Anywhere Else

Last week, Facebook's filing of a Form S-1 for its IPO was all the rage - and as I blogged, the level of traffic to the SEC's site seemed to bring Edgar to its knees. Chris Hitt hints on Blog Mosaic just how much traffic there actually was...

- Broc Romanek

February 8, 2012

Webcast: "The Exploding World of Political Contributions"

I never thought I'd host a program involving election law but boards increasingly are being called on to oversee the corporate political contribution process - and thus many in our community are now required to learn some new "tricks." Tune in tomorrow for the webcast - "The Exploding World of Political Contributions" - to hear Ken Gross of Skadden Arps and Doug Chia of Johnson & Johnson discuss how companies should rethink their political contribution policies and procedures so they don't violate pay-to-play or other laws or run afoul of what their major shareholders demand from them (the webcast won't parse efforts to rein in Citizens United, such as this California initiative). Please print these course materials in advance.

By the way, you might want to check out this article by the Center for Political Accountability entitled - "Dangerous Terrain: How to Manage Corporate Political Spending in a Risky New Environment" - which looks at the dramatic change in campaign spending through the lens of corporate governance and Watergate and the heightened risks that companies face.

Three States to Require Insurers to Disclose Climate Change Response Plans; Covers 90% of Insurers

As noted in this NY Times article, insurance commissioners in California, New York and Washington State now will require that companies disclose how they intend to respond to the risks their businesses and customers face from increasingly severe storms and wildfires, rising sea levels and other consequences of climate change. The disclosure will be made in the form of a National Association of Insurance Commissioners survey ( I think this is what the survey will look like). I believe these are the first three states to mandate this type of disclosure (state NAICs started collecting voluntary disclosure surveys in 2009 (here's Ceres' latest summary of what insurers have voluntarily disclosed), but this is the first time it has been mandated).

Between these three states, about 90% of the insurance industry in the US market will be covered, as these states made it mandatory for any insurance company doing business in those states (if they do $300 million worth of business nationwide); not just those domiciled in those states. This effort builds upon the SEC's climate change guidance from early 2010.

New US Exchange: "It's Better Than A Magic Lantern Show"

A while back, Keith Bishop posted this blog explaining who's the third largest securities exchange operator in the United States and where is it located. The exchange operator is called BATS and it is based outside of Kansas City. BATS is derived from an initialization of Better Alternative Trading System.

- Broc Romanek

February 7, 2012

Hewlett-Packard Will Put Proxy Access Bylaw to 2013 Vote

Just ahead of becoming the first major company with a proxy access shareholder proposal in its proxy materials, Hewlett-Packard filed its proxy statement on Friday without the proposal as it negotiated the withdraw of the shareholder proposal instead. Here is a WSJ article explaining that the company agreed to put up a proxy access bylaw for a vote at the 2013 annual meeting at the access threshold previously adopted by the SEC (3% ownership for 3 years), though nominations would be limited to 20% of the board:

In a major victory for activists, Hewlett-Packard Co. agreed to a step that could give investors more power to oust its board members. The Palo Alto, Calif., technology giant will give its stockholders the chance to approve so-called proxy access through a bylaw vote at its 2013 annual meeting. If the measure passes, investors who own at least 3% of H-P shares for at least three years would be allowed to nominate up to 20% of the company's directors, the company said. The vote would be binding, meaning H-P would be bound by the results. Currently, proxies only list directors that the company nominated.

Activist shareholders have been trying to get proxy access for some time. In the case of H-P, Amalgamated Bank's LongView Fund, which owns around 400,000 shares of H-P, was expected to succeed at bringing such a nonbinding proposal to a vote at H-P's 2012 annual meeting, which takes place in March. But a proposal wasn't included in H-P's proxy materials, which were filed Friday.

Instead, an H-P spokesman said in a statement that the company had already reached a deal with Amalgamated Bank. Under the agreement, H-P has "agreed to put a board-recommended proxy access proposal to a vote at our 2013 annual meeting of stockholders," he said, noting that the company "is committed to good corporate governance and open and frequent communication with its stockholders."

A spokesman for Amalgamated Bank said it withdrew its proposal after H-P agreed to present a proxy-access proposal in 2013. H-P's move represents "a recognition by a significant company that proxy access has potential merit and number two, that the shareholder resolution probably would have passed without management support,'' said Charles Elson, head of the Weinberg Center for Corporate Governance at University of Delaware's business school. Proponents say proxy access should improve returns by forcing boards to be more responsive to shareholders. Without proxy access, investors keen to shake up boards must wage costly campaigns and foot the bill for distributing their own ballots.

Last year, the Securities and Exchange Commission decided not to appeal a federal court ruling throwing out an agency rule that broadly required proxy access at U.S. companies. The agency put the rule on hold in August after business groups sued to overturn it. H-P's board has come under scrutiny several times in recent years for issues including a spying scandal and its ousting of a popular chief executive. Last year, a shareholder watchdog criticized the involvement of its then-CEO Leo Apotheker in the selection of five new board members. The 3% ownership bar is a high one, however, as only four H-P shareholders own that much of the technology company, according to filings.

Inadequate Cost-Benefit Analysis: Plaintiffs Challenging CFTC Rulemaking Dealt Setback

Back in December, I blogged about how SIFMA and the International Swaps and Derivatives Association filed a complaint in US District Court for DC to challenge the CFTC's new rule that seeks to curb excessive speculation (like proxy access, this rule was approved 3-2 by the CFTC Commissioners). The groups had petitioned the higher US Court of Appeals for the DC Circuit to hear the case - which is the court that ruled against the SEC in the proxy access lawsuit filed by the Business Roundtable and US Chamber of Commerce. And like that lawsuit, this one claims the CFTC didn't conduct a proper cost-benefit analysis. In his "Dodd-Frank.com Blog," Steve Quinlivan notes that the US Court of Appeals for the District of Columbia Circuit recently dismissed the petition for review.

In this report issued a few weeks ago, the SEC's Inspector General provided its latest review of Dodd-Frank rulemaking's cost-benefit analysis.

More on "Is Corp Fin Too Lenient with Waiver Letters?"

Last week, I blogged a note from an anonymous member - which I had received before the NY Times made front-page news of its own thoughts - about Corp Fin's practice of considering waiver requests for being an "ineligible issuer" under Rule 405.

I received a number of emails from members who stated that their experience with the Staff has been contrary to what the anonymous member wrote. They noted they had submitted a request to Corp Fin and struck out - as a result, they thought the Staff was pretty miserly in granting these requests. So I the NY Times' article perhaps was driven by the often erroneous perception that regulators are in the back pocket of Wall Street. I don't think this perception is necessarily fair, but "it is what it is" in this post-financial crisis era...

Speaking of perceptions, this piece entitled "Ex-Lehman Brothers Trader: Only On Wall Street Could You 'Get Paid So Much For Doing So Little'" won't be good for how the public views the Street...

- Broc Romanek

February 6, 2012

SEC Names GAO Auditor to PCAOB Board - But Aguilar Dissents!

On Friday, the SEC announced that it had replaced outgoing PCAOB board member Dan Goelzer (the last remaining "founding" board member) with Jeanette Franzel, who currently "leads all aspects of GAO's financial audit oversight of the U.S. federal government." The SEC's press release included welcomes from Chair Schapiro and Chief Accountant Kroeker. But in the first of its kind, as noted in this Reuters article, SEC Commissioner Luis Aguilar issued the following separate dissent:

Today, the Commission has failed to fulfill its legal obligation. It has appointed a member to the Public Company Accounting Oversight Board ("PCAOB") who has no demonstrable record of investor advocacy. Thus, the Commission has failed to satisfy its basic statutory mandate to appoint an individual who, among other factors, has "a demonstrated commitment to the interests of investors. Accordingly, I do not support and must respectfully dissent for the reasons outlined below.

Congress established the PCAOB in response to scandalous audit failures, like Enron and WorldCom, that cost investors billions. In doing so, Congress entrusted this Commission with the significant responsibility of appointing the members of the PCAOB. In exercising this responsibility, the Commission is required to abide by the statutory criteria to appoint individuals "who have a demonstrated commitment to the interests of investors."

My objection to this appointment is based on the fact that the Commission must appoint individuals who have "demonstrated commitment to the interests of investors." This is not the case here. Although the appointee is an experienced government auditor, and I appreciate her years of service, there is nothing in the evidentiary record that reflects a commitment to the interests of investors, or a history of advocacy for investor rights. I believe the Commission is bound to appoint an individual whose actions, public statements, and reputation demonstrate a clear and steadfast advocacy of the rights and interests of investors.

In reaching this decision, I considered many factors in the evidentiary record, including the professional biographies of each of the finalists for this position, my own interviews with the candidates, and the candidates' published writings and remarks. I also considered the many letters received by the Commission from investors, respected members of the accounting profession and academic community, members of Congress, and others who supported the appointment of an investor advocate.

I also reviewed comment letters previously submitted to the PCAOB by the finalists for this position. In that connection, I was struck that not once in any of the four letters signed by today's appointee, discussing topics such as the engagement quality review and risk assessment, was there any mention of the interests of investors. In fact, the word "investor" was not mentioned.

This appointment is being made at a critical time for the PCAOB. There is much at stake. The recent financial crisis exposed an auditing process that continues to be seriously flawed. In response, the Board has embarked on various projects to enhance the relevance, credibility and transparency of audits, including important initiatives on auditor independence, audit transparency, and the auditor reporting model. The success of these projects will require a Board fully committed to investors as the owners of public companies, the providers of capital, and the primary beneficiaries of financial statements.

I believe that the Commission has failed to meet its obligation to appoint an individual with "a demonstrated commitment to the interests of investors. Unfortunately, as a result, I am forced to dissent.

Carlyle Drops Forced-Arbitration Clause In IPO

After heavy criticism - as noted in this WSJ article - the Carlyle Group abandoned a plan to ban shareholders from filing class-action lawsuits, a plan that could have delayed the private-equity firm's IPO. Here is my blog from two weeks ago noting the criticism.

More on our "Proxy Season Blog"

We continue to post 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:

- A Closer Look at Proxy Access Proposals
- Should Annual Meetings Be Held Less Often?
- A Tipping Point for Social and Environmental Issues?
- Survey on Shareholder Proposals
- 2011 Proxy Season Review: United Kingdom

- Broc Romanek

February 3, 2012

Is Corp Fin Too Lenient with Waiver Letters?

A few months ago, I received this from an anonymous member:

You may have seen the recent article in the NY Times regarding how firms continue to make promises in settlements to the SEC and when those promises are broken, nothing happens. For me, this story triggered another topic that I think goes largely unnoticed, waiver letters for being an "ineligible issuer" under Rule 405. Under the Staff's WKSI waiver standard, it seems like it's not difficult to convince Corp Fin to take a position that grants leniency to a company that settles with the SEC for violating anti-fraud provisions of the securities laws (especially for failing to disclosure material information) such as this JPMorgan waiver letter. I think this stuff flies under the radar - even though publicly posted on the SEC's website - because the benefits of waivers are not apparent to many that are not securities lawyers.

I appreciate the adverse implications of not granting waiver letters in these situations because eligibility to be in the market is necessary for many of their offered products. But this just begs the question, what's the point of having an ineligible issuer rule if issuers know that it is not enforced anyway?

Well, this no longer is an obscure topic just for securities lawyers as the NY Times today ran this front-page article entitled "SEC Is Avoiding Tough Sanctions for Large Banks." The article cites a bunch of waiver stats over the past decade. Here is an excerpt with a quote from Corp Fin Director Meredith Cross:

"The purpose of taking away this simplified path to capital is to protect investors, not to punish a company," said Meredith B. Cross, the S.E.C.'s corporation finance director, referring to the fast-track offering privilege. "You're not seeing the times that waivers aren't being granted, because the companies don't ask when they know the answer will be no."

Wisconsin Judge Approves SEC Settlement Without Changes

As noted in this NY Times article, a Wisconsin judge who raised some of the same questions posed by Judge Jed Rakoff in the proposed SEC-Citigroup settlement six weeks ago has decided to bless the SEC's settlement with Koss Corporation after all - a nice victory for the SEC (this Wisconsin case was first noted in this blog of mine). The SEC was able to keep its proposed terms but agreed to redraft its settlement to more explicitly spell out all of the remedial actions required of Koss. It will be interesting to see how the SEC fares with Judge Rakoff...

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:

- Dodd-Frank: Revised Whistleblower Policies
- Top 10 Whistleblower Decisions of 2011
- Should/Must Corporate Minutes Be Signed?
- Conflicts of Interest: Serving on Another Company's Board
- More on "Ringing the NYSE's Bell"

- Broc Romanek

February 2, 2012

OMG: Facebook Files a Form S-1!

Oh, the Twitterverse was a-humming yesterday about 4:45 pm eastern as news of Facebook's filing of a Form S-1 - with a 150-page prospectus - went viral. Countless folks began "live tweeting" their read of all the lurid details (use "$FB" as a search term in your Tweetdeck to view the stream of comments), including this letter from Mark Zuckerberg ("building a better world, blah, blah" - see this NY Time's article about FB's social mission). Meanwhile, the SEC's Edgar felt the opposite of this exhibit from the S-1 as the level of traffic to the SEC's database went through the roof. Many members emailed me to say they couldn't access Edgar for more than an hour...

Updated Study: Benchmarking the Number of "Executive Officers"

Last year at this time, I worked with LogixData to produce a comprehensive benchmarking study (posted in our "Executive Officer Determination" Practice Area) to help companies benchmark against their peers regarding the number of employees designated as "executive officers." LogixData has now produced updated numbers to include 2011data (and more such as top index analysis as well as a SIC distribution). Last year's study is still useful for my narrative analysis of the law of the land in this area, etc...

Check out this video featuring Don Cornelius of Soul Train, who passed away yesterday. Once you get past the intro, you will see moves that you won't believe...

Transcript: "Activist Profiles and Playbooks"

We have posted the transcript for the DealLawyers.com webcast: "Activist Profiles and Playbooks."

- Broc Romanek

February 1, 2012

Survey Results: Disclosure Committees

We have posted the survey results regarding the latest disclosure committees trends, repeated below:

1. Back in mid-2008, we conducted a survey on disclosure committees (here are the results) - we are now canvassing to see if practices have changed. Our company:
- Has a disclosure committee - 96.7%
- Doesn't have a disclosure committee (if you check this box, you are done) - 3.3%

2. Our disclosure committee has:
- More than 10 members - 32.1%
- Between 8-9 members - 39.3%
- Between 6-7 members - 21.4%
- Between 4-5 members - 7.14%
- Has less than 4 members - 0%

3. Our disclosure committee has the following types of members:
- CEO - 27.6%
- CFO - 75.9%
- Controller - 86.2%
- General Counsel - 86.2%
- Securities Counsel - 82.8%
- Compliance or Risk Management - 41.4%
- Investor Relations Officer - 72.4%
- Internal Auditor - 55.2%
- Officer from a Business Unit - 55.2%
- Other - 55.2%

4. For our disclosure committee:
- Someone takes minutes of meetings - 72.4%
- We don't keep minutes of our meetings - 27.6%

Please take a moment to participate in this "Quick Survey on Blackout Periods" - and this "Quick Survey on Pay Ratios."

Webcast: "Ethics, Conflicts and Privilege Issues in Executive Compensation"

Tune in tomorrow for the CompensationStandards.com webcast - "Ethics, Conflicts and Privilege Issues in Executive Compensation" - to hear Christie Daly of Bryan Cave HRO, Mike Melbinger of Winston & Strawn and Mark Poerio of Paul Hastings analyze the tricky ethical, conflicts and privilege issues involved in setting executive pay. Please print out their presentation in advance.

Our February Eminders is Posted!

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

- Broc Romanek