August 22, 2007

They’re Here! Corp Fin Comments on Executive Compensation Disclosures

It appears that the SEC Staff has begun sending its first wave of comment letters on proxy statements, as part of Phase One of its compensation disclosure review project (Phase Two will involve a Staff report that summarizes what the Staff has seen overall – and more importantly, what the Staff expects next year). Often, Corp Fin Staffers are calling in advance to warn of a comment letter being faxed. A few members have already forwarded a few of these letters to me – and I hear that the flood gates are about to open.

If you receive a comment letter, please share it with us. I promise we will not post it nor forward it (nor publicize it or the company in any way); we just want to observe the comment letter trends since we will be providing guidance regarding how you should be drafting executive compensation disclosures going forward in the upcoming Sept-Oct issues of The Corporate Executive and The Corporate Counsel. Both of these special issues will be mailed sometime after Labor Day. To receive these issues, try a “No-Risk Trial” at 1/2 price for the rest of the year.

And of course, join John White and Paula Dubberly of Corp Fin – as well as a host of other exec comp disclosure experts – for our upcoming Conference: “Tackling Your 2008 Compensation Disclosures: The 2nd Annual Proxy Disclosure Conference.” You can attend either live in San Francisco or by nationwide video webcast. Register today!

Now Available: SEC’s Comment Letters on Blackstone’s IPO

Speaking of comment letters, I note that the Staff has posted its comments on the Blackstone IPO prospectus. The SEC’s database can be a bit hard to navigate, so here are direct links to the comment letters:

Form S-1

Amendment No. 1

Amendment No. 2

Amendment No. 3 (accounting comments)

Amendment No. 3 (tax opinion comment)

Amendment No. 4

The responses are embedded in the cover letter of the amended filings (we wrote about the practice of burying responses within filings on page 6 of our Nov-Dec 2005 issue of The Corporate Counsel) as follows:

Response to comments on Form S-1

Response to comments on Amendment No 1

Response to comments on Amendment No. 2

Response to comments on Amendment No. 3

Response to comments on Amendment No. 4

If you’re wondering when comments are typically made public, you might recall that the Staff’s informal policy is that comments and responses will be posted “no earlier than 45 days from when comments are cleared.”

Improving the Public Comment Process

Here’s an entry from Professor Bainbridge’s Blog that I have been meaning to share for quite some time: “The US PTO has come up with a very interesting idea: The Patent and Trademark Office is starting a pilot project that will not only post patent applications on the Web and invite comments but also use a community rating system designed to push the most respected comments to the top of the file, for serious consideration by the agency’s examiners.

Why not do the same thing for other administrative actions? For example, like all other federal agencies, the SEC currently invites public comments on rulemaking prceedings, but lacks the community rating system. Given the widely available technology for creating such a system, however, there’s no reason why the SEC couldn’t follow in the PTO’s footsteps. Comments by respected securities law academics (ahem) presumably would get pushed up, while duplicate astroturf comments presumably get pushed down. Or maybe not, as we might see astroturf campaigns to affect the ratings. Yet, it seems a worthwhile experiment.

If adopted, an area of particular interest will be the possible intersection with judicial review. Suppose the most respected commenters propose A, but the agency adopts B. Should a reviewing court give less deference to the agency in such cases?”

– Broc Romanek