February 12, 2015

Proxy Access: Did GE (& Others) Just Open a New Front in (i)(9) Battle?

Yesterday, General Electric filed this Form 8-K, disclosing that the company has adopted a proxy access bylaw, so that a shareholder, or a group of up to 20 shareowners, owning 3% of the company’s common stock continuously for at least 3 years to nominate directors constituting up to 20% of the board. This blog notes two other companies have done this too: HCP and CF Industries. So it looks like these companies have figured out a way to avoid placing competing proxy access proposals on the ballot, etc. – and perhaps they will now file a no-action request with Corp Fin, making a “substantially implemented” argument under Rule 14a-8(i)(10). We’ll see.

There is some pretty good analysis in this article entitled “Did GE Just Become More Activist-Friendly… Or Activist-Minded?” – including a list of GE’s largest shareholders. Also see these articles from Reuters and the WSJ

ISS’ Compensation Policies: 104 New FAQs

Yesterday, ISS posted 104 new FAQs – over 43 pages – on its US compensation policies, covering all sorts of topics…

Trouble in SEC Commissioner Paradise Continues: Lost Comment Letter Triggers Dissent

This WSJ article by Andrew Ackerman describes a situation that will not help the already-soured relationships among some of the SEC Commissioners (also see this Reuters article):

Shortly after the Securities and Exchange Commission voted on January 14 to finalize a batch of post-crisis rules for the multi trillion-dollar swaps market, SEC staffers realized they forgot something: they had lost a comment letter filed by a key industry group. The 20-page letter was one of several filed by the International Swaps and Derivatives Association. It outlined a range of technical points about the rules, which would establish data hubs to collect and store information on swaps trades for the portion of the market overseen by the SEC. Unfortunately, the SEC misplaced it because of a clerical error.

Because the letter was not considered by the five-member agency when it met last month to complete the rules, staff scrambled to quickly analyze it, amend the final rules and vote on the measure again this week. While the substance of the rules didn’t change, the modified version includes references to the previously-omitted letter.
For the multitrillion-dollar derivatives industry, that is good news, as the SEC on Wednesday was finally able to post the text of the final rules on its website, nearly a month after the initial vote.

But that’s not the end of the story. The SEC’s two Republican commissioners, Daniel Gallagher and Michael Piwowar, who voted against the rules in January, lodged another dissent to the amended text. They cited the fact the letter was not considered by staff in developing their original recommendation to the commission nor published on the SEC’s website for the benefit of the general public. “The innocent nature of this mistake does not alter the fact that a fully transparent public comment process is the foundation of the SEC’s rulemaking process,” the two commissioners wrote in a joint statement Wednesday. “We cannot support the publication of this modified rulemaking release, as it glosses over a significant failure of our internal processes.” ISDA, for its part, had no comment on the matter.

– Broc Romanek