January 8, 2008
Smaller Companies: How Your 10-K Changes This Proxy Season
With the SEC’s recent overhaul of the regulatory framework that applies to smaller companies, we have decided to do a webcast – “Smaller Companies: How Your 10-K Changes This Proxy Season” – in two weeks to help you navigate the changes to your Form 10-K this proxy season. This webcast will not just recap the new rules; instead, you will receive practice pointers on how to prepare your Form 10-K this proxy season, with a focus on what changes you need to make this year due to the new rules and regulations.
On the webcast, John Jenkins of Calfee, Halter, Harry Pangas of Sutherland Asbill and I will address – among other topics:
– What are the less obvious changes to your 10-K that you need to be aware of?
– What are the pros and cons of the a la carte approach? Where does it make a real difference regarding the amount of work – and does it have any ramifications to use the reduced disclosure in one place and not in others?
– Do smaller companies have to change their 10-K or 10-KSB this year?
– A laundry list of practice pointers to help you hit the ground running
Since all memberships are on a calendar-year basis, you will need to renew your membership to catch this webcast as well as the one featuring Pat McGurn on January 22nd: “Forecast for 2008 Proxy Season: Wild and Woolly.”
Corporate Governance Survey Results from Shearman & Sterling
Recently, Shearman & Sterling released its annual survey on corporate governance practices of the 100 largest U.S. public companies. Among the trends described in the survey are:
– Majority voting continues to make headway as companies respond to shareholder pressure, with 56 of the 100 largest companies now requiring directors to be elected by a majority of the votes cast rather than a plurality (except, for the most part, in contested elections).
– Anti-takeover measures such as “poison pills” and classified boards continue to be on the decline. Only 17 of the 100 companies surveyed had poison pills in place, down from 33 in 2004, while 33 companies had classified boards, down from 54 in 2004.
– Independent directors comprise 75% or more of the boards of 87 of the surveyed companies, while the CEO is the only non-independent board member at 40 of the 100 largest companies.
– Of the 22 top 100 companies at which separate individuals serve as Chairman and CEO, only 5 have adopted policies requiring separation of those roles.
– Half of the surveyed companies have placed a limit on the number of boards on which a director may serve, up from 29 of the top 100 companies in 2004.
– Of the 66 surveyed companies addressing the topic of term limits for directors, only 3 have adopted mandatory term limits for their directors.
– 86 of the top 100 companies have disclosed a mandatory retirement age for their non-employee directors, with 72 being the most common mandatory retirement age.
– Of the top 100 companies, 71 disclosed related person transactions, with employment of a relative of a related person being the most commonly disclosed transaction.
Delinquent Filer ABCs
Last Friday, the SEC imposed 10-day trading suspensions on twelve companies, all starting with the letter “A.” The SEC said that it suspended trading in the securities of these companies because they had not filed periodic reports in over two years. A temporary trading suspension may last well beyond the 10 business day period contemplated in Exchange Act Section 12(k), because brokers cannot resume quotations until they determine that the issuers have satisfied the informational requirements of Rule 15c2-11. Often, the SEC will follow temporary trading suspensions with actions to revoke the company’s Exchange Act registration under Exchange Act Section 12(j). Here is the order for the first six companies and the order for the second six companies.
Given that they only got to Alford Refrigerated Warehouses, Inc. so far, it looks like the Enforcement Staff is just getting started on a potentially long list of delinquent issuers to target in 2008.
– Dave Lynn