E-Minders October 2014


In This Issue:

E-Minders is our monthly e-mail newsletter containing the latest developments and practical guidance for corporate & securities law practitioners.

We view TheCorporateCounsel.net as the gathering place for the community and encourage those who may not yet be members to take advantage of a "Free for Rest of '14" Risk Trial to see what you are missing. Here are 10 Good Reasons to try us now.

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Just Announced: "Alan Dye's Section 16 Hands-On Training Workshop": One of the most frequent requests heard by Alan Dye is "can you recommend a Section 16 training class for beginners?" Until now, the answer is "there is none." But no more. On January 9th, Alan & Broc Romanek are holding a Section 16 training workshop in DC: "Alan Dye's Section 16 Hands-On Training Workshop." This is key now that the SEC's recent Section 16 enforcement initiative has boards asking for reports about compliance.

Since this is a workshop, there is limited seating - so you should act now if you are among those that need it. The agenda is posted - and includes sessions on these topics:

- The Basics
- Nuts & Bolts: Understanding Forms 3, 4 and 5
- How to Obtain Reporting Guidance & Support
- 10 Most Common Types of Filings
- Overcoming Your Fears of Complex Filings
- Navigating EDGAR & Other Filing Issues
- Establishing Filing Compliance Programs
- Yikes! What to Do If There's a Filing Error: Corrections & Disclosure
- The In-House Perspective

2015 Edition of Romanek's "Proxy Season Disclosure Treatise": Broc Romanek has wrapped up the 2015 Edition of the definitive guidance on the proxy season— Romanek's "Proxy Season Disclosure Treatise & Reporting Guide" - is done and it was just mailed to those that ordered it. You will want to order now so that you can get your copy as soon as it's done being printed. With over 1450 pages—spanning 32 chapters—you will need this practical guidance for the challenges ahead.

Popular "Romeo & Dye Section 16 Forms & Filings Handbook": Good news. Alan Dye just completed the 2014 edition of the popular "Section 16 Forms & Filings Handbook," with numerous new—and critical—samples included among the thousands of pages of samples. Remember that a new version of the Handbook comes along every 4 years or so—so those with the last edition have one that is dated. The last edition came out in 2009.

Act Now: If you don't try a '14 no-risk trial to the "Romeo & Dye Section 16 Annual Service," we will not be able to mail this invaluable resource to you now that it's done being printed. The Annual Service includes a copy of this new Handbook, as well as the annual Deskbook and Quarterly Updates.

1st Edition of Morrison & Romanek's "The Corporate Governance Treatise": Wrapping up a project that Randi Morrison & Broc Romanek feverishly commenced two years ago, we are happy to say the inaugural 2014 Edition of Morrison & Romanek's "The Corporate Governance Treatise" was just finished being printed. You will want to order now so that you can get your copy as soon as it's being mailed to those that ordered it. With over 900 pages—including 212 checklists—this tome is the definition of being practical. You can return it any time within the first year and get a full refund if you don't find it of value.

Upcoming Webcasts on TheCorporateCounsel.net: Join us on October 15th for the webcast - "Private Company Trading Markets: The Latest" - to hear NASDAQ Private Market's Greg Brogger, SecondMarket's Annemarie Tierney, ACE Portal's Peter Williams and our own Dave Lynn of Morrison & Foerster discuss how the private company trading exchanges are evolving as the Nasdaq and NYSE have recently got into the game.

And join us on November 5th for the webcast - "Reg D Offerings: What Is Happening Now" - during which McCarter & English's Joe Bartlett, Cohen Gresser's Bonnie Roe and Davis Wright's Joe Wallin will provide a "bring-down" of what's happening now in the Reg D area, including what are the open issues and how are practitioners handling them - as well as provide practical guidance about what you should be doing in this area.

And join us on January 14th for the webcast - "Governance Roadshows: In-House & Investor Perspectives" - during which Vanguard's Sarah Goller, BlackRock's Michelle Edkins, Morrow & Co's Bill Ultan and Global Governance Consulting's Susan Wolf will explain governance roadshows - including provide practice pointers about what works - and what doesn't.

And join us on January 20th for the always entertaining webcast - "Pat McGurn's Forecast for 2015 Proxy Season" - when Davis Polk's Ning Chiu and Gunster's Bob Lamm join Pat McGurn of ISS and the proxy season expert to recap what transpired during the 2014 proxy season and what to expect for 2015.

There is no cost for these webcasts if you are a member of TheCorporateCounsel.net. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up for this no-risk trial online, send us an email at info@thecorporatecounsel.net - or call us at 925.685.5111.

Upcoming Webcasts on CompensationStandards.com: Join us on January 15th for the webcast - "The Latest Developments: Your Upcoming Proxy Disclosures" - 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 the latest SEC positions-and the other compensation components of Dodd-Frank, as well as how to handle the most difficult ongoing issues that many of us face.

And join us on January 28th for the webcast - "Executive Compensation Litigation: Proxy Disclosures " - to hear Pillsbury's Sarah Good, Shearman & Sterling's Doreen Lillenfeld and Winston & Strawn's Mike Melbinger as they drill down on how proxy disclosure-related lawsuits are faring and what you can do to avoid them.

No registration is necessary - and there is no cost - for these webcasts for CompensationStandards.com members. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up online, send us an email at info@compensationstandards.com - or call us at 925.685.5111.

Upcoming Webcasts on DealLawyers.com: Join us on October 7th for the webcast - "The Art of Negotiation" - during which Cooley's Jennifer Fonner Fitchen, Perkins Coie's Dave McShea and Sullivan & Cromwell's Krishna Veeraraghavan will teach you how to negotiate with the best of them in a chock-full of practical guidance program.

And join us on October 22nd for the webcast - "Anatomy of a Proxy Contest: Process, Tactics & Strategies" - during which experts with different perspectives on proxy contests will catch us up on all the latest: ISS' Chris Cernich, Joele Frank's Dan Katcher, Greenberg Traurig's Cliff Neimeth and MacKenzie Partner's Paul Schulman.

And join us on January 29th for the webcast - "Proxy Solicitation Tactics in M&A" - to hear Okapi Partners' Chuck Garske, Alliance Advisors' Waheed Hassan, Managing Director and Innisfree's Scott Winter discuss the latest techniques used to sway opinion and bring in the vote - including social media - as well as how traditional tactics have evolved.

No registration is necessary - and there is no cost - for these webcasts for DealLawyers.com members. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up online, send us an email at info@deallawyers.com - or call us at 925.685.5111.

Upcoming Webcast on Section16.net: Join us on January 27th for the 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.


Wow! SEC Launches "Section 16 & Schedule 13D" Enforcement Initiative

In mid-September, as noted in Alan Dye's blog on Section16.net, the SEC announced a major enforcement initiative in which it has brought enforcement actions against 28 insiders (directors, officers and 10% owners) for failing to file timely Section 16(a) reports and Schedules 13D and 13G. Twenty-seven of the 28 have agreed to settled - and it appears that many (if not all) agreed to pay civil money penalties (totaling $2.6 million!).

In addition, 6 companies settled allegations that they failed to disclose their insiders' Section 16(a) violations as required by Item 405 of Regulation S-K. As noted in this Reuters article, it's the 1st time that the SEC has systemically targeted insiders & companies for beneficial ownership reporting violations - Alan will report more in his blog after he reads all of the individual orders.

This could mean a new era of enforcement of beneficial ownership requirements. I read one of the settlements that penalized the company and the SEC said that the company's employees were negligent in not timely filing the reports for the insiders...

Just Announced! "Alan Dye's Section 16 Hands-On Training Workshop": One of the most frequent requests heard by Alan is "can you recommend a Section 16 training class for beginners?" Until now, the answer is "there is none." But no more! On January 9th, Alan & Broc are holding a Section 16 training workshop in DC: "Alan Dye's Section 16 Hands-On Training Workshop." Since this is a workshop, there is limited seating - so you should act now if you are among those that need it. The agenda is posted - and includes sessions on these topics:

- The Basics
- Nuts & Bolts: Understanding Forms 3, 4 and 5
- How to Obtain Reporting Guidance & Support
- 10 Most Common Types of Filings
- Overcoming Your Fears of Complex Filings
- Navigating EDGAR & Other Filing Issues
- Establishing Filing Compliance Programs
- Yikes! What to Do If There's a Filing Error: Corrections & Disclosure
- The In-House Perspective


The House's New JOBS Act Bill: A Closer Look

In mid-September, the House passed a JOBS Act-related bill called the "Promoting Job Creation & Reducing Small Business Burdens Act." HR 5405 is a collection of 10 separate Acts plus more. It's amazing the House passed anything given that Congress is only working 8 days from mid-July until the end of November!

If enacted into law, it could present a bunch of new Congressionally-mandated tasks for Corp Fin to tackle (a mere 60 days to implement Section 1101′s adjustment to Rule 701 threshold) - thereby reducing the likelihood that we will get effective disclosure reform anytime soon (although Section 1003 requires a study that sounds awfully similar to what Corp Fin is already doing in this area). Or maybe it would ramp up that effort as Section 1002 gives the SEC only 180 days to scale back disclosure requirements for smaller companies - and reduce "duplicative, overlapping, outdated or unnecessary" disclosure requirements for all companies.

There are a number of things in HR 5405 that are already required. Shocker. For example:

- Liquidity pilot program is already required by the JOBS Act and the SEC has a pending proposal from FINRA and the exchanges to implement it.
- Review/streamlining of S-K is already required by the JOBS Act.

Then there is always at least one idiotic thing that finds its way into the work of Congress. In this case, it's Section 1001 - it would force the SEC to adopt a rule that "allows" companies to use a summary page for its Form 10-K - but companies could only do this if the summary page includes links to more deeper discussions in the 10-K. I'm pretty sure that is already allowed if a company wanted to do it - and it sounds pretty similar to an amplified table of contents...

By the way, HR 5405 includes some Dodd-Frank technical corrections - but it doesn't include the "wish list" item that stops the SEC's adoption of a pay ratio disclosure rule. Note that the Chamber issued a letter supporting this bill. And note the controversy over collateralized loan obligations - dealt with in this bill and in a companion bill - as noted in this article. Meanwhile, SEC Commissioner Gallagher delivered this speech last week about institutionalizing a small business focus...


Poll Results: How Are You Responding to Your SDX Shareholder Engagement Letter?

Last month, Broc ran a poll in this blog to address the query about how companies were responding to the SDX engagement letter. Here are the results:

- Responded indicating have adopted shareholder-director engagement policy - 0%
- Responded indicating will consider adopting shareholder-director engagement policy - 0%
- Responded saying ‘thanks for the letter' - 17%
- Decided not to respond at all - 32%
- Undecided; intend to discuss at board meeting what to do - 26%
- Undecided; might not even share with the board - 25%

Please take a moment to participate on this "Quick Survey on Earnings Releases and Earnings Calls" - and this "Quick Survey on Whistleblower Policies & Procedures."


PCAOB Staff Practice Alert: Revenue Auditing

Recently, the PCAOB issued "Staff Audit Practice Alert No. 12" about auditing revenue, including revenue recognition, presentation and disclosure. The Alert cited "frequently observed significant audit deficiencies" regarding revenues during auditor inspections of audit firms - and focuses on these areas:

- Testing the recognition of revenue from contractual arrangements
- Evaluating the presentation of revenue-gross versus net revenue
- Testing whether revenue was recognized in the correct period
- Evaluating whether the financial statements include the required disclosures regarding revenue
- Responding to risks of material misstatement due to fraud associated with revenue
- Testing and evaluating controls over revenue
- Applying audit sampling procedures to test revenue
- Performing substantive analytical procedures to test revenue
- Testing revenue in companies with multiple locations


CII: Investors Seek Proxy Disclosure of Board Evaluation Process

As noted in this blog by Davis Polk's Ning Chiu, CII has issued this report about "Best Disclosures of Board Evaluation Process." Based on a survey of CII members, investors want disclosure of the board evaluation process (but not the actual evaluation results themselves).

Exemplars of disclosure about the mechanics of the evaluation process include Potash, Agrium and General Electric - while the report points to BHP Billiton, Dunelm and Randstad Holding (all non-US companies) for "particularly effective" disclosures of the most recent board evaluations.


Shareholder Proposals: Different Outcomes for Political Contribution Proposals

Broc narrowly missed the hubbub outside the SEC's DC headquarters as protestors gathered in support of the petition asking the SEC to require political contribution disclosures in mid-September - the group now has a website: "SECDisclose.org." It's still a hot topic. The protest celebrated the 2011 rulemaking petition that now has over 1 million supporters. Wow!

Here's news from this blog by Davis Polk's Ning Chiu: The SEC staff recently disagreed with Procter & Gamble's no-action letter, which sought to exclude a shareholder proposal on ordinary business grounds, although a similar proposal sent to Johnson & Johnson was allowed to be kept out of its proxy statement this past February.

Both proposals requested reports to shareholders explaining the congruency between the companies' stated "corporate values" and the company's political contributions, with "justifications for...exceptions" for those contributions which may appear to be misaligned with the values. While the SEC staff did not explain their reasoning in the P&G decision, the different results seem to lie in the focus of the examples used to demonstrate the alleged incongruency.

The J&J proposal questioned the company's public commitment to the Patient Protection and Affordable Care Act (ACA), since, according to the proponent, 30% of the company's political contributions were directed at legislators who voted against ACA and related regulations, or to politicians who favored legislation to prohibit the enforcement of ACA. In that case, the SEC staff stated that the proposal was directed toward specific political contributions that relate to the operation of the business, not general political activities, and therefore permitted the company to exclude the proposal.

Procter & Gamble's shareholder proposal focused on two different issues. The proposal criticized making donations to politicians who voted to deregulate greenhouse gasses as contrary to the company's stated goal toward environmental sustainability. In addition, the proposal also questioned the company's support of candidates who voted against hate crimes legislation or who disfavored same sex marriage, which the proponent claimed is at odds with the company's stated nondiscrimination policy.

In a letter, the proponent's attorney distinguished the P&G proposal, noting that in the J&J proposal the focus was on a single issue, the ACA, which was of direct relevance to J&J's business because the company is a "healthcare industry stakeholder." According to the attorney, the examples of legislation used in the P&G proposal, however, are "general public policy issues" and not aimed at legislation that directly affected the company.


Nasdaq Annual Listing Fees: Going Up

Broc narrowly missed the hubbub outside the SEC's DC headquarters as protestors gathered in support of the petition asking the SEC to require political contribution disclosures in mid-September - the group now has a website: "SECDisclose.org." It's still a hot topic. The protest celebrated the 2011 rulemaking petition that now has over 1 million supporters. Wow!

Here's news from this blog by Davis Polk's Ning Chiu: The SEC staff recently disagreed with Procter & Gamble's no-action letter, which sought to exclude a shareholder proposal on ordinary business grounds, although a similar proposal sent to Johnson & Johnson was allowed to be kept out of its proxy statement this past February.

Both proposals requested reports to shareholders explaining the congruency between the companies' stated "corporate values" and the company's political contributions, with "justifications for...exceptions" for those contributions which may appear to be misaligned with the values. While the SEC staff did not explain their reasoning in the P&G decision, the different results seem to lie in the focus of the examples used to demonstrate the alleged incongruency.

The J&J proposal questioned the company's public commitment to the Patient Protection and Affordable Care Act (ACA), since, according to the proponent, 30% of the company's political contributions were directed at legislators who voted against ACA and related regulations, or to politicians who favored legislation to prohibit the enforcement of ACA. In that case, the SEC staff stated that the proposal was directed toward specific political contributions that relate to the operation of the business, not general political activities, and therefore permitted the company to exclude the proposal.

Procter & Gamble's shareholder proposal focused on two different issues. The proposal criticized making donations to politicians who voted to deregulate greenhouse gasses as contrary to the company's stated goal toward environmental sustainability. In addition, the proposal also questioned the company's support of candidates who voted against hate crimes legislation or who disfavored same sex marriage, which the proponent claimed is at odds with the company's stated nondiscrimination policy.

In a letter, the proponent's attorney distinguished the P&G proposal, noting that in the J&J proposal the focus was on a single issue, the ACA, which was of direct relevance to J&J's business because the company is a "healthcare industry stakeholder." According to the attorney, the examples of legislation used in the P&G proposal, however, are "general public policy issues" and not aimed at legislation that directly affected the company.


The SEC's 2014-2018 Five-Year Strategic Plan

In mid-September, the SEC released its final 60-page strategic plan for the next five years - 2014 through 2018 - as required by the Government Performance and Results Act of 1993 (the last one was released in 2010). Broc has blogged before about how he dislikes five-year horizons for any plan since unforeseen events often change priorities and needs.

A quick perusal of the strat plan doesn't reveal anything earth-shattering. Broc thinks the SEC realizes that five-year horizons are foolish too as he doesn't see much of anything beyond what we already expect to potentially come out of the SEC. On page 9, it is artfully worded how Congress places limits on the SEC's resources. The Corp Fin-related content mostly is on pages 37-39. The influence of the Investor Advisory Committee is felt in the strat plan - for example, on pages 20-21, there is discussion about "enhancing" the no-action letter process - and more accurately and promptly responding to informal guidance requests.


Conflict Minerals: Commerce Department Publishes List (A Year Late)

The excerpts from the two blogs below best describe this year-late list of "all known conflict mineral processing facilities worldwide" from the Commerce Department. The list is required by Dodd-Frank's Section 1502(d)(3)(C) - but it does "not indicate whether a specific facility processes minerals that are used to finance conflict in the Democratic Republic of the Congo or an adjoining country. We do not have the ability to distinguish such facilities."

From Stinson Leonard Street's Steve Quinlivan blog:

But the provision of the Dodd-Frank Act that requires this list is entitled "Report on Private Sector Auditing" and it looks like Commerce hasn't begun to tackle that responsibility. Annually, beginning 30 months after passage of the Dodd-Frank Act, Commerce is required to submit a report to Congressional subcommittees that includes: "An assessment of the accuracy of the independent private sector audits and other due diligence processes described under the conflict minerals provisions. Recommendations for the processes used to carry out such audits, including ways to (i) improve the accuracy of such audits and (ii) establish standards of best practices."

I know only one or two or a very few issuers submitted private sector audits with the first round of required conflict minerals filing. Perhaps Commerce has concluded it's not worth the effort to make the evaluations or maybe the evaluation is underway. Since the standards for the audits have been published, Commerce certainty could provide recommendations as to the processes used to carry out the audits and establish standards of best practices.

From Cooley's Cydney Posner blog:

The disclosure by Commerce may be helpful for issuers in a couple of ways. The list of smelters and refiners produced by Commerce may actually be useful for issuers in their conflict minerals compliance efforts because it compares and reconciles information about smelters and refiners from a number of sources. Moreover, the admission of the challenges faced by Commerce (with all of its resources) highlights and legitimizes the difficulty that issuers have faced in trying to comply with the conflict minerals rules. We can only hope that the acknowledgement by Commerce of its inability to distinguish which facilities are used to finance conflict in the DRC will encourage the SEC to be a bit indulgent in the conduct of whatever type of review-and-comment process it may undertake for conflict minerals reporting and perhaps lead to some constructive and practical guidance or even revisions of the rules, where necessary.

Also check out this piece by Elm Consulting entitled "Conflict Minerals Math: When 1/11 Equals 100%"...


Corp Fin Comment Letters: Insiders Selling Ahead of Their Public Availability?

Geez, Broc doesn't know what to make of this Forbes article - which describes this study that found an abnormal level of selling by insiders in the days before Corp Fin comment letters that contained revenue recognition comments were made public. The total amount of abnormal selling in the 2006-2012 study period was $463 million, or $356k on average. We suppose insiders should be savvy enough to understand accounting comments from Corp Fin and their implications - but we still tend to think this couldn't be happening on a widespread basis? Let Broc know what you think.

Comment letters (and the related responses) are made public no earlier than 20 business days after all comments are resolved. Learn more in our "SEC Comment Letter Process Handbook."


Applying Fair Data Breach Standards to the Board

This recent article about ISS's sought-after ouster of the majority of Target's directors due to the company's data breach made several points worth highlighting. As background, the article notes Target's praise-worthy corporate governance platform, and informs that while ISS recommended shareholders withhold votes from most of Target's directors (those who served on the audit and corporate responsibility committees), Glass-Lewis took a different approach - indicating that there wasn't sufficient evidence available to conclude that the data breach resulted from the board's negligence. Along those lines, see Donna Dabney's (The Conference Board) earlier blog where she methodically set forth the then-publicly available information about the board's cybersecurity oversight practices - concluding that ISS's recommendation was unfounded. Ultimately, Target's shareholders elected all of the director nominees.

Among the article's key points are:

- Should directors, especially those whose performance of fiduciary duties is via adherence to good governance practices, be held responsible for all risks that might occur under their watch?

- What is the proper standard of fairness for holding directors responsible for cyber breaches?

- No organization can ensure absolute data/cyber-security - Target won't be (now, more appropriately, hasn't been) the only good company to suffer a large data brach.

- If directors will be automatically presumed negligent in the context of large data breaches - particularly in the context of otherwise good governance practices, what are the implications of that standard on director candidates' willingness to serve on corporate boards?

- The article concludes that we must find a fairer way to review board performance. If we don't, the negative consequences will be worse than the proposed remedy (i.e., ousting directors whose tenure includes a big breach)

The article indicates that "ISS is right to investigate what happened on Target's board and to get a feel for how the board handles its fiduciary duties. If it comes out that a board was negligent and isn't governance sensitive, then let the chips fall where they may." The only thing I would add is that - but for circumstances where all of the pertinent facts about the board's cybersecurity oversight are publicly available, I can't see how ISS or any other outside third party would ever be positioned to "investigate" and fairly evaluate a board's conduct to determine whether a data breach was due to board negligence. Fortunately, it appears that the majority of Target's shareholders held a similiar view.


Smaller Boards: Bigger Returns

According to this WSJ article, a recent study by GMI Ratings found that - among companies with a market cap of at least $10 billion, those with smaller boards produced substantially better shareholder returns over a 3-year period than companies with the largest boards. According to the reporter, the study isn't being made publicly available, so it's difficult to draw conclusions outside the confines of what's presented there.

However, as noted in a LinkedIn discussion on this topic, other research (for example, see "Higher Market Valuation of Companies with a Small Board of Directors" and "Larger Board Size and Decreasing Firm Value in Small Firms") has previously identified an association between smaller boards and higher market valuation for companies of all sizes. And those of us who have worked with various boards ranging in size from 7 to 13 or more members can personally speak to the many attributes associated with smaller boards compared to larger ones.

But there are some downsides to smaller boards as well. Here's an excerpt addressing some of the upsides and downsides of smaller and larger boards from our Board Size checklist posted in our "Board Composition" Practice Area on TheCorporateCounsel.net:

Smaller Board

  • More opportunities for all directors to actively participate and be engaged in board deliberations
  • Greater flexibility and ease in scheduling meetings, setting agendas, distributing materials, communicating on impromptu basis
  • Individual directors more likely to assume responsibility rather than deferring to others - more likely to be a greater sense of ownership & accountability than with a larger board
  • More likely to accommodate detailed materials & discussions
  • Easier and less costly for company personnel to manage, coordinate, facilitate
  • Directors know each other better, increasing likelihood of cohesive board with feeling of common purpose and more productive working relationships
  • Greater workload burden on individual directors may diminish effectiveness - time commitment required may exceed time available on a per person basis
  • May have difficulty effectively staffing committees - particularly with continued additional regulatory-imposed responsibilities that increase committee work load & time commitment
  • More likely lacks diversity of experiences and perspectives characteristic of larger boards
  • Easier to reach consensus
  • Meetings tend to be much more informal

 Larger Board

  • Can inhibit effective and equal opportunities for participation by individual directors
  • Larger boards tend to exhibit less questioning than smaller boards
  • Can interfere with effective functioning by limiting opportunities for meetings (due to conflicting schedules), necessitating formal procedures for communications, impeding collective input, discussion and consensus, etc.
  • Can more easily accommodate multiple committees effectively staffed
  • Conducive to more board work being delegated to committees (thus enabling active participation by individual directors that may be absent at the board level) - as opposed to remaining at full board level
  • Workload can be better allocated among larger number of directors regardless of committee structure
  • Can accommodate greater diversity in a traditional - as well as a broader - sense, thus allowing for broader range of viewpoints and ideas, which can lead to more thorough and thoughtful consideration of matters
  • More likely that few members will consistently dominate discussion while more reserved members fade into the background (consensus more likely achieved via a herd mentality)
  • At least some individual directors more likely to defer to others - not assume responsibility, accountability
  • Meetings tend to be much more formal out of necessity

Importantly, as noted in the LinkedIn discussion, even if there is an association between board size and shareholder returns, clearly board size is but one of many factors relevant to company performance - so this new study (and any other study) should be viewed in that context.


Cap'n Cashbags: The "Real" ALS Ice Bucket Challenge

Cap'n Cashbags - a CEO - doesn't try to avoid the ALS Ice Bucket Challenge in this trailer for the full feature film (here's his 1st attempt).


Mailed: September-October Issue of The Corporate Executive

The September-October issue of The Corporate Executive was recently mailed to subscribers. This issue includes important practical guidance on:

- Company Postpones its Annual Meeting Due to Lawsuit Over Stock Plan and Disclosures
- Lawsuits Against Non-Employee Directors Over Their Own Compensation Increase-And Why They Are Easier to Bring
- Formal Relief from Section 457A for Stock Options and Stock SARs
- Section 409B-Worse Than 409A?

Act Now: Get the "Rest of 2014 for Free" when you try a '15 No-Risk Trial now.


It's Mailed: 2015 Edition of Romanek's "Proxy Season Disclosure Treatise"

Broc Romanek has wrapped up the 2015 Edition of the definitive guidance on the proxy season - Romanek's "Proxy Season Disclosure Treatise & Reporting Guide" - and it's been mailed to those that pre-ordered. You will want to order now so that you can get your copy as soon as you can. With over 1450 pages - spanning 32 chapters - you will need this practical guidance for the challenges ahead.


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:

- Auditor Engagement Letters: No Company Intervention in Auditor-Directed Work
- PCAOB Roundtable: Mixed Views of Proposed Changes to Auditor's Report
- Perceived Board Effectiveness Linked to How Board Allocates its Time
- FINRA: Pre-IPO Selling Procedures Need to Be Adequately Supervised
- Board Trends at the S&P 1500
- PSLRA: Ineffective Motions to Dismiss
- Top Ten List of D&O Coverage Questions for Directors
- Bylaws Mandatory Arbitration Clauses Gaining Ground
- Survey: Board Tenure & Governance
- Weighing Pros & Cons of a Dual-Class Share Structure


People: Who's Doing What and Where

At the SEC, Brent Fields has been named as Secretary - and Victor Valdez has been hired as Enforcement's COO.

The SEC hired its 1st Ombudsman - Tracey McNeil - who will report to the head of the Office of the Investor Advocate. Dodd-Frank created this position as the ombudsman will act as a confidential liaison in resolving problems that retail investors may have with the SEC or self-regulatory organizations.

Meanwhile, the SEC created a new "Office of Risk Assessment" within Risk Fin - the new office will coordinate the data-driven risk assessment tools across the agency, like the ones that recently supported Enforcement's Section 16 initiative.

In Corp Fin, Paul Belvin has retired as Associate Director. Paul served two separate times in Corp Fin over the course of his career.


Conference Calendar


What's New on Our Websites

Among other new additions, during the last month we have:


Your Input, Please

Please let us know what you like - and don't like - so we can tailor TheCorporateCounsel.net to be more of a hands-on resource for you and your colleagues.

Because we view TheCorporateCounsel.net as a "community" site, let us know if you would like to contribute content to our site. E-mail comments, suggestions and other input to broc.romanek@thecorporatecounsel.net.

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