April 26, 2012

The Case Against Virtual Annual Shareholders Meetings: Martha Stewart as Exhibit A

Over the years, I have wavered – yes, even flip-flopped – over whether allowing companies to hold virtual annual shareholder meetings (ie. without any physical audience) is a good idea. More recently, I had gotten comfortable with the notion that it might be okay for companies that know that their meeting will be held without any controversy. The problem is how do companies really know this when so much of their vote comes in typically within the last 48 hours or so?

So now we have the news that Martha Stewart Living Omnimedia intends to hold its meeting as a virtual one – as noted in its proxy statement – complete with an online shareholders forum, as noted in these additional soliciting materials. And even though the company is a controlled one – by Martha Stewart herself and family – I can’t help but think this is a problem given Mark Borges’ blog that the company is the target of a shareholder class action lawsuit alleging that the company’s disclosure for a proposal to increase the share reserve of its omnibus stock plan was inadequate (plaintiff is seeking an injunction to prevent the company from bringing the proposal to a vote at its annual meeting in late May). A company with a controversy should have its management team and board available to face interested shareholders once a year…

In case you missed it, I blogged about the “Big Fireworks at Wells Fargo Annual Shareholders Meeting” on our “Proxy Season Blog” yesterday (by the way, Wells Fargo shareholder voted against the proxy access proposal on the company’s ballot – first one to go to a vote this season). And as noted in this Davis Polk blog, expect more Occupy Wall Street demonstrations at annual meetings this season…

Our New “Disclosure Deadlines Handbook”

Spanking brand new. Posted in various Practice Areas on the site, this comprehensive “Disclosure Deadlines Handbook” is 103 pages long and addresses these subject areas:

– Form 8-K
– Periodic Reports
– Proxy Materials & Annual Meetings
– Smaller Reporting Company Status
– Confidential Treatment Requests
– Regulation FD
– Exchange Act Registration
– Public Offerings
– Deregistration
– Schedule 13D & Schedule 13G
– Dividends, Stock Splits & Other Related Corporate Actions

SEC Chair Schapiro on SEC Rulemaking & Economic Analysis

Last week, SEC Chair Mary Schapiro gave this interesting testimony before a House Subcommittee about how the agency is grappling with the challenges of economic analysis in the wake of the proxy access court decision. As this WSJ article notes, the Staff must now abide by an internal 17-page document that provides rulemaking guidelines and that:

The agency also is hiring 17 new staff with economics doctoral degrees, which would nearly double the number of Ph.D. economists already on staff to assist with rule-writing, Schapiro said. The agency seeks to hire an additional 20 economists for the fiscal year beginning Oct. 1, she added.

And as noted in this Reuters article, Chair Schapiro noted that the SEC wouldn’t be revisiting the proxy access rulemaking anytime soon. That should be no surprise given all the JOBS Act and Dodd-Frank rulemaking still on Corp Fin’s plate. And here is more testimony from Chair Schapiro that she delivered yesterday about the status of the agency’s rulemaking and how many more Staffers they need going forward, etc.

– Broc Romanek