July 17, 2019

Overboarding: New Investor Policies Causing Huge Drops in Director Support

This isn’t news to those of you who experienced it – and unfortunately, plenty of people I’ve talked to have. But this PJT Camberview memo highlights the unusually low votes that some directors are getting this year (in the 70th percentile range) – as a result of new overboarding policies at some institutional investors (especially those that were announced once proxy season was already underway, since at that point it was really too late to do anything about it). Here’s an excerpt:

In a sign of growing investor assertiveness, significant opposition to directors of Russell 3000 companies this year increased to its highest level since 2011 despite a year-over-year decrease in negative proxy advisor recommendations, according to a June ISS Analytics report. A contributor to this decline was new or stricter overboarding policies put in place by leading institutional investors such as Vanguard, BlackRock and Boston Partners. Active public company executives sitting on more than two boards were particularly hard hit, and a number of directors saw their support drop 25 or more percentage points on a year-over-year basis.

Investors’ stated concern with ‘overboarded’ directors is that they may not have sufficient time to dedicate to their roles, particularly when an activism, M&A or crisis event hits one or more of the companies on which they serve. Tighter overboarding policies may become more prevalent in the coming years, with direct implications for board diversity, succession planning and the way that directors and companies manage and track their board commitments.

Auditor Ratification: This Year’s Biggest (Almost) Losers

Each year, auditors at a handful of companies manage to irritate shareholders enough to motivate a notable “against” vote on the auditor ratification proposal. This “Audit Analytics” blog says that last year, there were 21 companies with more than 20% of votes “against” ratification. And according to the blog, 2018’s biggest (almost) losers were:

– Dynasil – 44% against
– Amber Road – 40% against
– MusclePharm – 37% against

If you think today’s headline is catchy, that’s because I stole it from John’s blog last year. He observed that most companies go on to reappoint their auditor despite shareholder objections – and that remains true…

EGC Transitions: Interplay With Revenue Recognition

Earlier this year, the Center for Audit Quality published notes from a spring meeting between its “SEC Regulations Committee” and the Corp Fin Staff. The Staff is considering the impact of the new leasing standard on the contractual obligations table – and has “pointed views” about the leasing standard’s impact on EBITDA disclosures (see this “Compliance Week” article). It also clarifies that an Item 2.01 Form 8-K is required to report an acquisition, even if the Staff grants a Rule 3-13 waiver that allows a company not to file acquired entity financials. The Staff also covered EGC transition issues, including:

Question: If an EGC loses status after it submits a draft registration statement or publicly files a registration statement, then it will continue to be treated as an EGC until the earlier of the date on which the issuer consummates its initial public offering (IPO) or the end of the one-year period beginning on the date the company ceased to be an EGC. If the EGC had elected private company transition for new accounting standards in the IPO, how and when is it required to transition to the new accounting standards for filings subsequent to its consummation of the IPO assuming that was the earliest date?

Answer: FRM 10230.1 states if an EGC loses its status after it would have had to adopt a standard absent the extended transition; generally,the issuer should adopt the standard in its next filing after losing status. EGCs that take advantage of an extended transition period provision are encouraged to review their plans to adopt accounting standards upon losing EGC status and to discuss with the staff any issues they foresee in being able to timely comply with new accounting standards already effective for public business entities in the next filing.

Question: When is quarterly information under Item 302 of Regulation S-K required to be revised under ASC 606 for a registrant that loses its EGC status?

Answer: FRM 10230.1 states if an EGC loses its status after it would have had to adopt a standard absent the extended transition; generally, the issuer should adopt the standard in its next filing after losing status. For example, a registrant that has elected the private company transition and loses its EGC status on December 31, 2019 would be required to reflect the adoption of ASC 606 in its December 31, 2019 annual report on Form 10-K. Since the issuer is not an EGC as of December 31, 2019 it is not provided the accommodation for Item 302 quarterly information, in FRM 11110.2, in that Form 10-K. That is, for the example provided, the issuer would reflect the adoption of ASC 606 in its 2019 quarterly financial information in its December 31, 2019 annual report on Form 10-K.

Liz Dunshee

July 16, 2019

Corp Fin Issues “LIBOR Transition Risks” Statement

LIBOR is going away in 2021 – and the SEC Staff is reiterating that companies should prepare – and adequately disclose the associated risks. Last week, Corp Fin issued a joint statement with the Division of Investment Management, Division of Trading & Markets and Office of the Chief Accountant to say that companies should identify their exposure under contracts that extend past 2021 and consider whether future contracts should use an alternative rate. Corp Fin’s portion of the statement also says:

As companies consider the questions in the section above entitled “Managing the Transition from LIBOR” and address the risks presented by LIBOR’s expected discontinuation, it is important to keep investors informed about the progress toward risk identification and mitigation, and the anticipated impact on the company, if material. In deciding what disclosures are relevant and appropriate, CF encourages companies to consider the following guidance.

– The evaluation and mitigation of risks related to the expected discontinuation of LIBOR may span several reporting periods. Consider disclosing the status of company efforts to date and the significant matters yet to be addressed.

– When a company has identified a material exposure to LIBOR but does not yet know or cannot yet reasonably estimate the expected impact, consider disclosing that fact.

– Disclosures that allow investors to see this issue through the eyes of management are likely to be the most useful for investors. This may entail sharing information used by management and the board in assessing and monitoring how transitioning from LIBOR to an alternative reference rate may affect the company. This could include qualitative disclosures and, when material, quantitative disclosures, such as the notional value of contracts referencing LIBOR and extending past 2021.

At this stage in the transition away from LIBOR, we note that companies most frequently providing LIBOR transition disclosure are in the real estate, banking, and insurance industries. We also note that, based on our reviews to date, the larger the company, the more likely it is to disclose risks related to LIBOR’s expected discontinuation. However, for every contract held by one of these companies providing disclosure, there is a counterparty that may not yet be aware of the risks it faces or the actions needed to mitigate those risks. We therefore encourage every company, if it has not already done so, to begin planning for this important transition.

Buybacks: Rulemaking Petition Wants to “Repeal & Replace” Rule 10b-18

A few weeks ago, the AFL-CIO and 18 other organizations submitted this rulemaking petition to call for more comprehensive rules around stock buybacks. Here’s an excerpt from this Wachtell Lipton memo (also see this Cooley blog):

The petition contends that the current rule has “failed to prevent executives from using repurchases to boost a company’s stock price or meet other performance goals at the expense of investing in its workers,” and that the existing disclosure requirements are inadequate. The petitioners cite evidence that corporations devote substantial capital to buybacks, noting the recent uptick following the enactment of the Tax Cuts and Jobs Act, and argue that the funds would be better spent on “wages, training, hiring” and other capital investments. The petitioners request that the SEC develop a “more comprehensive framework” to deter manipulation and protect workers, and propose that the SEC consider certain suggestions made in prior rulemaking processes (including additional disclosure requirements and tighter trading limits) and consider adopting regulatory features imposed in certain other countries (such as shareholder approval requirements and prohibitions on executive trading).

The History of Stock Buybacks

This WSJ article posits that “Share buybacks are as American as mom, apple pie and hot dogs on the Fourth of July.” They’ve been around since the 1800s – and were often mandatory back then, in order to keep management from pocketing extra profits. Bloomberg’s Matt Levine suggests that maybe the changing sentiment about this practice has more to do with our modern expectations for “corporate purpose” than with the supposed unfairness of profits going to shareholders rather than workers:

In the olden days, you’d start a company and call it like Pennsylvania Tin Folding Ltd., and its purpose would be to fold tin in Pennsylvania, and it would never occur to you to fold tin in Ohio, or to fold nickel, or to twist tin, or to do anything else not in the name. You’d raise money from investors for a purpose, and do the purpose, and if it was profitable you’d give the money to the investors; you’d stay in your lane.

In modern times, you start a company and call it like Alphabet Inc., and its purpose is be to sell online advertisements against search results, and when that turns out to be an extraordinarily lucrative business it will get into other businesses like email and self-driving cars and human immortality. And no one thinks this is the least bit weird; everyone says “well of course who should end the tyranny of death if not the search-ad guys?” And this becomes the normal way of thinking, so that any profitable mobile-phone or social-networking or whatever company that doesn’t plow its profits back into grandiose moonshot projects is somehow failing in its duty to humanity. How are we going to fund our most ambitious collective goals, if not by social-media startup founders making whimsical decisions about what to do with their retained earnings?

Liz Dunshee

July 15, 2019

CAMs: PCAOB Answers FAQs from Audit Committees

Every 2-3 months this year, the PCAOB has been publishing resources to explain the “critical audit matters” disclosure that’ll appear in upcoming audit reports (here’s our blog about their May guidance). The latest two pieces came out last week – one is directed to investors and the other is directed to audit committees – in addition, the CAQ also published this primer on CAMs for investor relations teams.

Here’s a couple responses to “frequently asked questions” that the PCAOB has gotten from audit committees about CAMs (also see pg. 6 for a list of questions that audit committees should ask auditors):

1. Will the new requirement of the auditor to communicate CAMs change required audit committee communications?

Other than a new requirement for the auditor to provide and discuss with the audit committee a draft of the auditor’s report, the PCAOB’s requirements for audit committeecommunications remain the same. Any matter that will be communicated as a CAM should have already been discussed with the audit committee and, therefore, the information should not be new.

2. Does the audit committee have a role in determining and ap-proving CAM communications?

No. While the auditor is required to share the draft auditor’s report including any CAMs identified with the audit committee, CAMs are the sole responsibility of the auditor. The standard is designed to elicit more information about the audit directly from the auditor. As the auditor determines how best to comply with the communication requirements, the auditor could discuss with management and the audit committee the treatment of any sensitive information.

COSO’s “ERM” Framework Now Includes “ESG”

This DFin memo summarizes current trends in ESG reporting & oversight. On pages 11-14, it points out that COSO’s enterprise risk management framework was updated last fall to include risk-related ESG controls & analysis. Here’s an excerpt:

As boards are expected to provide oversight of ERM, the COSO framework supplies important considerations for boards in defining and addressing risk oversight responsibilities. The COSO ERM – ESG framework is built on the five pillars of existing ERM reporting.

1. Governance & Culture for ESG-Related Risks

2. Strategy & Objectives for ESG-Related Risks

3. Performance for ESG-Related Risk – identifies risk, assesses & prioritizes risks, implements risk responses

4. Review & Revision for ESG-Related Risks

5. Information, Communication & Reporting for ESG-Related Risks

Tomorrow’s Webcast: “How to Handle Hostile Attacks”

Tune in tomorrow for the webcast – “How to Handle Hostile Attacks” – to hear Goldman Sachs’ Ian Foster, Cleary Gottlieb’s Jim Langston & Innisfree’s Scott Winter provide insights into the art of responding to a hostile attack.

Liz Dunshee

July 12, 2019

Universal Proxies: Understanding the Difference Between EQT & SandRidge Energy

Yesterday, I blogged about how a dissident group won control of EQT’s board through a proxy fight that was waged using a universal proxy card. According to this Olshan memo, this marked the first time that such a card was successfully used in a control proxy contest in the US.

In the wake of the blog, a member asked this in our “Q&A Forum” (#9949):

In today’s blog, it says it’s the first time a dissident won control of a company’s board after a proxy fight using a universal proxy card. What about SandRidge Energy last year? SandRidge was considered the first company in the U.S. to let an activist board nominee onto its ballot. I didn’t follow that proxy fight very closely, but thought Carl Icahn ended up taking over SandRidge’s board.

After conferring with Andrew Freedman of Olshan, I provided this response:

Yes, there actually is a big distinction. SandRidge used a universal proxy, but Icahn could not. It relates back to the issue that Olshan covers in their alert about how company counsel is using advance notice bylaws and/or director nominee questionnaires to extract “consents” from dissident nominees, while not agreeing to provide reciprocal consents for the Company’s nominees to the dissident. Thereby creating a one-way advantage for the company to use a universal proxy card – while the dissident is left with a card that can only name the dissident’s nominees. The Rice Team & Olshan didn’t let EQT get away with that – they went to court.

The Challenges of Disclosing a CEO’s Illness

Over the years, I have blogged numerous times about the challenges of disclosing an illness for a senior executive (see this blog – and this blog). My good friend Bob Lamm delves into this sensitive topic in this blog about some recent CEO illnesses and the related disclosures…

Abigail Disney’s “Mini-Crusade” Against Disney’s Pay Ratio

Following up on this blog that I wrote on, here’s a note from Anders Melin’s “The Pay Letter”:

I was out hiking in Laguna Beach the day Abigail Disney began her mini-crusade against Disney’s CEO pay ratio of 1,424-to-1. She laid it all out in a bunch of tweets. “Jesus Christ himself isn’t worth 500 times median workers’ pay,” she had said just weeks earlier.

Supporters and critics quickly jumped into their respective trenches. The former decried capitalism. The latter brushed off her remarks as socialist propaganda. (I exaggerate, but you get the point.)

Among her critics was Jeff Sonnenfeld, the ever-present Yale management professor. He pointed to Disney’s 580% stock return under Iger and the 70,000 jobs it’s created, and that the CEO’s pay still pales in comparison to that of some hedge fund managers, who don’t really create anything. “When pay and performance is properly aligned as it is at Disney, we need to recognize it,” he wrote.

What most of Abigail’s critics, including Sonnenfeld himself, failed to grasp was her actual point: That the wealth Disney’s created hasn’t been shared equitably with most of its employees.

In her lengthy series of tweets, she took a swipe at the shareholder-centric model of running companies and the consequences that sometimes follow for workers, the environment and surrounding communities. “When does the growing pie feed the people at the bottom?” she rhetorically asked the universe.

This question about what’s a fair sharing ratio — how much of the monetary gains of a successful company should be reaped by the single person in charge — is something I will explore in a series of stories later this year. (A sneak peek would be my piece from April about the CEO of a tiny California bank who took home twice as much as Jamie Dimon last year.)

Broc Romanek

July 11, 2019

Universal Proxies: Dissidents Win Board Control for First Time!

As John blogged today on the Blog, here’s big news on the universal proxy front: yesterday, at EQT Corporation’s annual meeting, a dissident group won control of the company’s board through a proxy fight waged using a universal proxy card. According to this Olshan memo, this marks the first time that such a card was successfully used in a control proxy contest in the US. Here’s an excerpt:

The universal ballot adopted by both EQT and the Rice Team named both EQT’s and the Rice Team’s nominees on their respective proxy cards. The only difference related to the presentation of the two cards, in which each side highlighted how it desired shareholders to vote. Copies of the two cards can be found here (Rice Team) and here (EQT).

As shown, the Rice Team made clear on its proxy card a recommendation for all seven of its nominees and for five of the Company’s nominees that it did not oppose, to permit shareholders to vote for all 12 available spots. Similarly, the Company recommended a vote for all 12 of its nominees and against the Rice Team’s nominees, other than existing director, Daniel Rice IV, who was nominated by both EQT and the Rice Team.

The Rice Team obtained public support from many of EQT’s largest shareholders, including T. Rowe Price Group Inc., D.E. Shaw & Co., Kensico Capital Management Corp. and Elliott Management Corp., along with proxy advisory firms Institutional Shareholder Services (“ISS”) and Egan-Jones Ratings.

The use of a universal ballot for a majority slate of directors is unprecedented and, in our view, may become more common in future proxy contests given the Rice Team’s success here. In fact, ISS noted the following in its report recommending that shareholders vote for all of the Rice Team’s nominees on that team’s universal proxy card:

“The adoption of a universal card was an inherently positive development for EQT shareholders (as it would be in any proxy contest), in that it will allow shareholders to optimize board composition by selecting candidates from both the management and dissident slates.”

Despite pushing for the adoption of universal proxies, some activists had recently cooled on their potential use. For instance, as we blogged last fall, Starboard Value’s CEO Jeff Smith expressed concern that in its current form, the universal ballot might tip the playing field in management’s favor. It will be interesting to see if the outcome of yesterday’s EQT vote causes people to recalibrate that assessment.

Looking at Vote Requirements

Here’s an interesting piece from ISS Analytics’ Kosmas Papadopoulos about vote requirements. Here’s the intro:

At the general meeting of Tesla Inc. on June 11, 2019, two management proposals seeking to introduce shareholder-friendly changes to the company’s governance structure failed to pass, despite both items receiving support by more than 99.5 percent of votes cast at the meeting. To get official shareholder approval, the proposals needed support by at least two-thirds of the company’s outstanding shares. However, only 52 percent of the company’s share capital was represented at the general meeting; based on turnout alone, there was no possible way for the proposal to pass.

As strange as the voting outcome at Tesla may seem, it is not a very unusual result. Every year, dozens of proposals are not considered to be “passed,” even though they receive support by an overwhelming majority of votes cast at the meeting. Supermajority vote requirements may be responsible for a large portion of these failed votes with high support levels (62 percent of instances since 2008). However, using a base of all outstanding shares for the vote requirement is an even more common corresponding factor (92 percent of instances). The increase in failed majority-supported proposals in recent years can be directly attributed to the change in the rules pertaining to the treatment of broker non-votes.

The History of Proxy Solicitation

This piece by Alliance Advisors’ Michael Mackey – published in Carl Hagberg’s “Shareholder Service Optimizer” – coincides with two of my favorite topics: history and proxy solicitation. Here’s the bottom line of the piece:

The most important takeaway for readers, as we have often noted here; this is ultimately a “people business” – where all the talent leaves the business every night – but where “the people at the top of the house” – and the people who are assigned to you own account – are the most important factors, we say, in choosing a solicitor…as the record clearly indicates if one studies the many ups and downs with care.

Broc Romanek

July 10, 2019

Delaware Chief Justice Strine to Step Down (Ahem, “Retire”)

Two days ago, Delaware Chief Justice Leo Strine announced that he would retire from the bench. This isn’t a surprise. It’s been kind of an open secret in Delaware for the past several months – he didn’t hire clerks for the next term. Leo isn’t quite “retirement age,” so I imagine we will see grander things yet from this very grand lawyer. As noted in this article, there is speculation that Leo will run for governor in Delaware in 2024.

Over on the blog yesterday, John gave a nice summary of just how important Leo has been to the Delaware judiciary for the last few decades. And here’s a statement from SEC Chair Clayton…

SEC Approves Nasdaq’s “Liquidity” Proposal

Here’s the intro from this blog by Cooley’s Cydney Posner:

The SEC has approved, on an accelerated basis, the recent Nasdaq proposal (as amended by new amendment no. 3) to revise its initial listing standards to improve liquidity in the market. Prior to the amendments, under the initial listing rules, to list its equity on any Nasdaq tier, a company was required to have a minimum number of publicly held shares, calculated to include restricted securities. Nasdaq proposed, among other things, to revise the initial listing criteria to exclude “restricted securities” from the calculations of a company’s publicly held shares, market value of publicly held shares and round lot holders, given that restricted securities are not freely transferable and are generally illiquid.

To that end, the Nasdaq proposal added new definitions for “restricted securities,” “unrestricted publicly held shares” and “unrestricted securities.” As a result of these changes, only securities that are “freely transferable will be included in the calculation of publicly held shares to determine whether a company satisfies the Exchange’s initial listing criteria under these rules.” No changes were proposed to the continued listing requirements. To allow companies adequate time to complete in-process transactions based on the existing rules, the changes will become effective 30 days after approval (July 5) by the SEC (August 4).

California Reports on Mandatory Women Directors

Here’s the intro from this blog by Allen Matkins’ Keith Bishop:

As noted yesterday, the California Secretary of State published a report on its website concerning publicly domestic or foreign corporations with principal executive offices are located in California. This report was required to document the number of these corporations “who [sic] have at least one female director”. Cal. Corp. Code § 301.3(c). The report, which is in the form of Excel spreadsheets, includes two tables. The first, entitled “SB 826 Corporations By SEC Data”, lists some 537 corporations. The second, entitled “Reporting in Compliance”, lists 184 corporations.

It is hard to know what these tables actually represent. For example, the second table identifies Ball Corporation among the 184 corporations “reporting in compliance”. However, Ball Corporation doesn’t appear on the first list of “SB 826 Corporations By SEC Data”. That isn’t too surprising if one looks at the cover sheet of Ball Corporation’s most recently filed Form 10-K which identifies it as an Indiana corporation with its principal executive offices located in Colorado. As such, it would not be subject to SB 826. That of course begs the question of why it is listed among the compliant and the more philosophical question of whether a corporation that is not subject to the law can be considered compliant.

Broc Romanek

July 9, 2019

SEC Will Evaluate Settlement Offers & “Bad Actor” Waiver Requests Simultaneously

Last week, SEC Chair Clayton issued this statement indicating that Enforcement will process settlement offers at the same time that “bad actor” waiver requests are made if so requested by the settling party. Here’s an excerpt from the Chair’s statement (we’re posting memos in our “SEC Enforcement” Practice Area):

I have consulted with the Office of the General Counsel and the Division of Enforcement regarding the mechanics of the Commission’s consideration of a simultaneous offer of settlement and waiver request. Based on these discussions, I generally expect that, in a matter where a simultaneous settlement offer and waiver request are made and the settlement offer is accepted but the waiver request is not approved in whole or in part, the prospective defendant would need to promptly notify the staff (typically within a matter of five business days) of its agreement to move forward with that portion of the settlement offer that the Commission accepted.

In the event a prospective defendant does not promptly notify the staff that it agrees to move forward with that portion of the settlement offer that was accepted (or the defendant otherwise withdraws its offer of settlement), the negotiated settlement terms that would have resolved the underlying enforcement action may no longer be available and a litigated proceeding may follow.

Tomorrow’s Webcast: “Current Developments in Capital Raising”

Tune in tomorrow for the webcast – “Current Developments in Capital Raising” – to hear Skadden’s Ryan Dzierniejko, Locke Lord’s Rob Evans, Shearman & Sterling’s Lona Nallengara and Wilson Sonsini’s Allison Berry Spinner explore the latest developments in raising capital and all the various alternatives, including ICOs, PIPEs and registered direct offerings, “at-the market” offerings, equity line financings and rights offerings.

Financial Reporting Structures: The Charts

Here’s an odd page that a member spotted on the SEC’s website. It contains three charts related to financial reporting structures: a blue print; a flow chart; and a segment chart. They were authored in the Spring of 2018 by Wes Bricker and Ying Compton from the SEC’s Office of Chief Accountant. Even though most companies will have their own unique circumstances, these could be useful as a “gut check”…

Broc Romanek

July 8, 2019

Next Thursday: SEC Calendars “Short- vs. Long-Term” Roundtable

The SEC will hold a roundtable next Thursday – July 18th – to address short-term vs. long-term “isms.” There are two panels – one for each “ism.” This follows the SEC’s “request for comment” in December about the nature, content and timing of earnings releases & quarterly reports – see the comments submitted to the SEC on that so far. And here’s the related memos we have posted…

Meanwhile, Sagar Teotia has been named the SEC’s Chief Accountant – he had been serving as “Acting” in that capacity for a while…

Usable Disclosure: Plain English Helps

Here’s a nice short piece by Third Creek Advisors’ Adam Epstein about how smaller companies can become more effective storytellers. Here’s an excerpt:

If your company’s storytelling acumen is high, your test subjects will quickly and accurately grasp the zeitgeist of your company. If they struggle, it’s likely that lots of small-cap investors – many of whom are generalists – don’t sufficiently understand what your company does either.

One way to dramatically increase messaging effectiveness is through website videos. Notwithstanding the fact that in excess of five billion videos are watched daily on YouTube, a surprising number of small-cap companies don’t have an “about us” video easily accessible on the home page of their corporate websites. This is a big mistake; a two-minute, professionally-produced, easy-to-understand video can pay for itself almost immediately.

Corp Fin Updates “Financial Reporting Manual” (Again)

Last week, Corp Fin indicated that it has updated its “Financial Reporting Manual” to remove guidance related to presentation of selected financial data & acquired business financial statements in a Form 10 filed by a “Smaller Reporting Company”; clarify the application of Rule 3-13 and Note 5 to Rule 8-01 of Regulation S-X; and provide revisions for certain technical amendments (e.g., update EGC revenue threshold pursuant to SEC Release 33-10332 and replace FASB ASU references with the applicable ASC Topics).

Broc Romanek

July 3, 2019

Our 1st Annual “Cute Dog” Contest…

At the Society of Corporate Governance’s conference last week, Skadden’s Hagen Ganem had an idea. Why not run a cute dog contest? Genius. So here is our first annual contest (vote for the cutest dog; not the cutest owner of a dog) – the poll is at the bottom of this blog:

1. Skadden’s Hagen Ganem – Teddy the “Snoozer”

2. Morrison & Foerster’s Dave Lynn – Jack the “Ripper”

3. PJT Camberview’s Shannon Johnson – Mia the “Mini Bernedoodle”

4. Gibson Dunn’s Ron Mueller – Jack & Morgan the “Love Bugs”

5.’s Broc Romanek – Willa the “Wonderful”

Vote Now: “Cutest Dog Contest”

Vote now in this poll – anonymously – for the dog that you think is the cutest:


Broc Romanek

July 2, 2019

More on “Proofing Your Semantics When Drafting Disclosure”

A long, long while back, I blogged a story about an IPO prospectus that contained the term “certified pubic.” Here are a few more reactions from members about disclosure gaffes:

While I hadn’t heard of the “certified pubic accountant” goof previously, I can vouch for the IPO red herring that was circulated in the early 1970s with an “initial pubic offering” statement on the cover page. I never did see the SEC comment letter to know whether or not the Staff examiner commented on it.

And Charles Vaughn of Nelson Mullins commented:

I’m sitting here chuckling at my desk. I guess “certified pubic accountant” does beat “commom stock.” I admit I have caught the “pubic accountant” terminology a couple of times before the SEC filing was made. Given the number of times it is found on Edgar, I think we all need to include that global search in our checklists.

Sneaker Exchange & Other Online Marketplaces

Back when the Web was born in the mid-90s, I remember working on some no-action letters related to trading various things on this new thing called the “Internet.” Complex securities law issues – novel stuff. Flash forward twenty years and we have an amazing array of online marketplaces worth billions, as noted in this NY Times article

Transcript: “Proxy Season Post-Mortem – The Latest Compensation Disclosures”

We’ve posted the transcript for the recent webcast: “Proxy Season Post-Mortem – The Latest Compensation Disclosures.” Mark Borges, Dave Lynn & Ron Mueller shared their latest takes on these topics:

1. Say-on-Pay Results
2. Performance-Based Compensation Disclosure
3. Shareholder Responsiveness Disclosure
4. Perquisites Disclosure
5. Director Compensation Disclosure
6. CEO Pay Ratio Trends
7. Hedging Disclosure Rule
8. Status of Other Dodd-Frank Rulemaking
9. Shareholder Proposals
10. Proxy Advisors
11. Proxy Strike Suits

Broc Romanek