Can you believe it?

Yesterday, a group of pension plans held a press conference to object to the SEC’s director nomination proposal – the one that is supposed to be voted on by the Commission next Wednesday!

As reported today by the New York Times, the SEC’s proposal will involve a two-year process. In the first year, a triggering event – such as a sizable percentage of shareholders that abstain or withhold votes for nominees – would have to occur. In the second year, a contested election could take place, with candidates selected by the board running against shareholder candidates (one to three candidates depending on the board’s size). The shareholder candidates would have to certify that they have no conflicts of interest nor financial relationship/special ties to the investors that nominated them.

The pension plan press conference comes a few days after the Business Roundtable sent a letter to the SEC urging that the Commission study the related issues further before it takes action.

My initial reaction to this extraordinary level of pre-proposal activity is that institutional investors truly are getting their act together. Undoubtably, this exercise in lobbying the SEC will strengthen their relationships and communication channels – so that when it comes time to act as a group to meet any ownership thresholds imposed by this rulemaking, it will not be as difficult to accomplish as it might have been a year ago.

Meanwhile, from the company perspective, it will be difficult for management to get its act together to impact this rulemaking. Aside from the ASCS, ABA and BRT, many of the other associations whose members are impacted by this rulemaking think of lobbying the SEC as a sideline; not a primary mission. Another factor is that this rulemaking most directly impacts CEOs and directors; not CFOs, controllers and lawyers (which are the professions more accustomed to lobbying the SEC). CEOs tend to lobby in groups broken out by industry – and directors normally do not lobby in their roles as directors (as being a director typically is not a primary job).

Convertible Debt Offerings – “Happy Meals” and More

For TheCorporateCounsel.net subscribers, we have posted the transcript for last week’s “New Twists in Convertible Debt Offerings.” Personally, I learned a lot, including why a convert offering coupled with an issuer’s repurchase program is called a “Happy Meal” (answer – everyone goes home happy).

We have also posted an interview with Walter Van Dorn of Thatcher Proffitt on Internal Controls for Non-US Companies .

A lot has been reported over PCAOB Board Member Charles Niemeier’s comments that the PCAOB will closely scrutinze any instances of a company changing auditors, as I blogged about on September 23rd.

At the PLI’s Directors Institute, the question was raised whether threatening to fire an auditor for the next year over a legitimate disagreement over the current year’s accounting would be “coercion” prohibited by the new auditor influence rules. Commissioner Goldschmid was the only panelist who ventured an opinion on this, stating that these facts would not support a finding of coercion. Thanks to Nathan Dooley of Baker McKenzie.

PCAOB Adopts Investigations, Adjudication and Registration Withdrawal Rules

On September 29th, the PCAOB adopted rules regarding investigations and adjudications as well as withdrawal of registrations. New trivia question – what nickname for the PCAOB is Chairman McDonough pushing for?

Dick Grasso Trivia

On Monday, I asked the trivia question about which company rang the last bell with Dick. Shinhan Financial Group Co., Ltd. was the last to ring any bell with Dick, they rang the opening bell on September 16th. Sabre Holdings was the last listed company to ring the closing bell.

By the way, Christian & Timbers is conducting an online poll on “What do you think Dick Grasso will do next?” So far, writing a book is leading with 48%; becoming a CEO has 15%; consultant on regulatory issues has 13% and cable market analyst lags at 8% (heading another stock exchange has 2%).

As reported today by the NY Times, SEC officials noted after Chairman Donaldson’s Senate testimony on NYSE governance that the shareholder access rules will be considered next Wednesday, October 8th at an open meeting.

However, the Times incorrectly reported that the SEC would be approving these rules – hopefully, that was not the tone of the SEC officials! They have to be proposed and subject to public comment first.

October Eminders is Up – So is the “2004 Proxy Season Resource Center”!

We have posted our October Eminders – and launched the 2004 Proxy Season Resource Center.

For subscribers of TheCorporateCounsel.net, the 2004 Proxy Season Resource Center includes new activities for you to consider during this proxy season, either as required by law or as a matter of prudence.

There is ample commentary, analysis, sample disclosures and sample documents. For example, courtesy of John Newell of Goodwin Procter, we have posted a comprehensive “Time & Responsibility Schedule for Accelerated Filers.” We will be continuously adding new content as the proxy season wears on.