TheCorporateCounsel.net

When preparing financial statement footnotes and other disclosures, practitioners may need more than the guidance provided by FASB statements and SEC rules. They may also need information about other companies’ disclosures. By identifying and measuring the most common practices and variations of disclosures, this research can aid companies as they strive to improve the quality of their own disclosures. Based on a review of publicly available comment letters on the SEC website posted during the first eight months of 2006, this report provides a recap of reporting topics and trends and the most common comments made by the Staff. Categorization of each comment type included a review of each comment and, if available, the company response to the comments. Many of the key areas identified in the report (refer to the table in the executive summary) seem to be consistent with other information provided by the SEC.

Directors Harder to Recruit

As reported by Financial Week back in November: An executive from Korn Ferry estimated that 10 years ago it took roughly 90 days to fill a directorship; it can take up to 180 days these days. Of 391 new directors hired by S&P 500 companies, only 29% are active CEOs, a 38% decline from 2001. Meanwhile, the number of CFOs and other high-ranking execs among the new director hires jumped 67% over the same time period, and this year accounted for 15% of all new slots, according to executive search firm Spencer Stuart.

Shearman & Sterling’s Annual Corporate Governance Survey

Shearman & Sterling’s 4th annual survey examines the corporate governance practices of the 100 largest US public companies, including these notable trends:

– Poison pills and classified boards continue to decline. The number of companies with poison pills fell by nearly 50% over the past two years and the number of companies with classified boards fell by over 30% in that same period.

– Of the 24 top 100 companies at which separate individuals serve as chairman and CEO, six have adopted policies requiring separation of the two functions.

– A majority of companies continue to exceed the minimum independent director requirements of the NYSE and NASDAQ. Independent directors continue to comprise 75% or more of the boards of the majority of companies.

– The number of board and committee meetings continues to increase. Given this increased time commitment, investors have focused on the number of boards on which directors serve.