The Practical Corporate & Securities Law Blog

By Broc Romanek

Go to TheCorporateCounsel.net

 
New Pension Plan Disclosures For Next Year

On Tuesday, the FASB took action on the proposed new disclosures for pension plans and other postretirement benefit plans, including a Project Update dated November 12. These are reported as tenative decisions until the final Statement, which the FASB staff was directed to draft, is issued.

The FASB's changes will be effective for fiscal years ending after December 15, 2003, with a few exceptions. The FASB decided to defer - until fiscal years ending after June 15, 2004 - the new disclosures on the projected value of all benefit payments and any new disclosures not previously required regarding foreign plans. The FASB has not yet decided on the effective date for new disclosures about plan assets.

FYI, on AccountingDisclosure.com, we have a section devoted to pension plan disclosure.

Does Governance Impact Corporate Performance? (or "Do Bankers Really Care?")

This is one of those $64 questions - read my interview with Marc Zenner, formerly a banker with Citigroup to glean some insight into "Investment Banking and Corporate Governance."

SEC to Adopt Nominating Committee Disclosure Requirements

Next Wednesday, the SEC will hold an open Commission meeting at 2 pm to consider the outstanding proposal regarding disclosure of shareholder communications and nominating committee activities.

All indications are that the SEC intends to apply these new requirements to the upcoming proxy season - see the Eleven Actions You Should Consider Now regarding this proposal in our "Shareholder Access" Portal.


posted by broc at 8:52 AM

 
PLI Notes about Attorney Responsibility Standards

Last week's PLI conference had quite a few panels about "reporting up" - including a speech by SEC Chair Donaldson - but the SEC did not tip its hat regarding whether its outstanding "noisy withdrawal" proposal will be adopted.

For TheCorporateCounsel.net subscribers, we have posted notes from one of the panels from the PLI Pre-Conference on attorney responsibility standards - the panel that included Jack Bostelman, Stan Keller, SEC staffer Richard Humes and others.

Results from the Microsoft Annual Meeting

At Tuesday's annual meeting, Microsoft shareholders approved a proposal to let employees be paid with restricted stock units instead of options - a plan that was opposed by CalPERS. CalPERS voted against the proposal because Microsoft didn't say what percentage of stock grants would carry performance criteria and because those criteria aren't strong enough. Calpers owns 55.7 million shares of Microsoft stock.

A number of investor groups have expressed displeasure over the fact that Microsoft did not put its underwater exchange option arrangement with JP Morgan on the ballot.

Also noteworthy, former Microsoft president and board member Jon Shirley was removed from the company's audit committee after complaints from CalPERS and the Ohio Public Employees Retirement System (the funds said a former employee shouldn't sit on the committee).


posted by broc at 7:13 AM

 
A Sad Day

It is with great sadness that I tell you that Linda Quinn passed away yesterday. Linda was the Director of the Division of Corporation Finance when I first joined the SEC back in the late '80s and not only was one of the finest lawyers around, she was one of the nicest people to work for. My best wishes to her family and friends.

Learn How to Improve Your Chances of Obtaining Shareholder Approval

Today, the NASPP is conducting a webcast - The New Stock Plan Approval Rules—Immediate Action Items & Guidance - at 4 pm eastern time. The panel consists of Art Meyers of Palmer & Dodge, Ron Mueller of Gibson Dunn & Crutcher and David Drake of Georgeson Shareholder.

A surprising number of lawyers belong to the NASPP as it offers the most relevant compensation guidance around - take advantage of the no-risk trial to access the webcast live or by archive.

Odds & Ends

Today, the PCAOB is meeting to proposed audit documentation standards, among other matters.

Yesterday, the SEC posted the adopting release for its Rule 10b-18 modifications.
posted by broc at 7:40 AM

 
Are You Having Trouble Overseas with Your Codes of Ethics?

I have been hearing that US-based, multinational companies are having difficulties implementing their Codes of Ethics in overseas units. Some companies are getting pushback from employees in some countries just because their cultures do not lend themselves to this new type of oversight (particularly Italy, Spain, Germany).

The more serious issue is that local counsel are telling employees that forcing these types of codes upon them may generally violate local country laws (employee-protection types of laws), union agreements or can be viewed as a change in terms of their employment that cannot be made without consent/consideration.

In particular, these local counsel don't like the fact that a Board of Directors can make changes to the Codes and those changes apply to them, regardless if employees agree (which is bizarre, because this has always been the way that general employee handbook provisions work). Please email me if you have had similar problems.

For TheCorporateCounsel.net subscribers, we have launched a "Code of Ethics" Portal, which is being managed by in-house lawyer Michael Goldblatt.

Nominating Committee Disclosure Proposal as the "Sleeper"

Under the SEC’s proposal regarding nominating committee activities, if the nominating committee received a nominee recommendation from a shareholder or group of shareholders that has beneficially owned more than 3% of the company’s voting common stock for at least one year as of the date of the recommendation, and the committee decided not to nominate that candidate, the company would be required to disclose the name of the stockholder that recommended the candidate and the specific reasons that the nominating committee decided not to include the candidate as a nominee.

I have long felt that this proposal was a "sleeper" and was receiving not enough attention compared to its more controversial sibling, shareholder access. At the PLI conference, my feelings were bolstered when Sarah Teslik, Executive Director of the Council of Institutional Investors, stated that she believes this disclosure proposal will be more effective in changing nominating committee behavior than the shareholder access proposal.

For TheCorporateCounsel.net subscribers, I have stuck my neck out and put together a list of eleven actions that companies should contemplate now in the face of the SEC's two proposals that implicate the nominating committee.

posted by broc at 9:45 AM

 
NYSE Companies to Receive Clarifying Guidance on What to Disclose

Later this week, the NYSE will be sending out emails to listed companies to help them understand what to disclose in their 2004 proxy statements regarding their obligations under the new governance listing standards. [Note that my early morning blog regarding relief for 10/31 FYE companies was not accurate.]

I also hear that the NYSE intends to roll out a web page on corporate governance by next fall.

Notes from PLI's "SEC Hot Buttons" Panel

For TheCorporateCounsel.net subscribers, we have posted notes on the "SEC Hot Buttons" panel that featured Shelley Parratt, Deputy Director for Disclosure, Division of Corporation Finance and Norman Slonaker, Partner of Sidley Austin Brown & Wood.

We will be dribbling out more notes over the week as we clean them up.

'33 Act Reform - Is the End of Paper Nigh?

During one interesting segment of the PLI Conference, Bill Williams of Sullivan & Cromwell went over a potential framework of how it might look. Corp Fin Director Alan Beller noted that the SEC staff was working on a proposed framework and it was his belief (not speaking for the Commission) that it would be out "not too far in '04."

Regarding the ongoing "access vs. delivery" debate, Alan stated his belief (again, just his own beliefs) that the policy decision regarding whether investors had sufficient Internet access had already been made - so that delivery didn't seem to make sense except for preliminary prospectuses in the IPO context.

By the way, the SEC staff is taking great pains to not use the ill-fated "aircraft carrier" terminology when referring to this '33 Act reform project.

Governance Woes Continue on All Sides

In my humble opinion, one of primary problems with the SEC's shareholder access proposal is that the governance practices of many investors are no better than those of public companies. That is now becoming all too clear in the case of mutual funds (check out today's editorial by Nell Minow in the USA Today).

The recent disclosure of the $9 million compensation earned by TIAA-CREF's CEO, Herbert Allison - who interestingly enough was just named to be on the NYSE new board - is another case in point. Here is what the NY Times said on Saturday:

"Some experts questioned the size of the package. Ashton McFadden, managing principal of James Beck Global Partners, a New York executive recruitment firm specializing in the asset management industry, said that a $9 million package put Mr. Allison on the high end of chief executive pay in the asset management industry, even considering the amount of assets TIAA-CREF manages. He also said that a $24 million severance package and a lifetime pension were unusual."


posted by broc at 7:45 AM