TheCorporateCounsel.net

September 12, 2008

The Need for Hold-Til-Retirement Provisions

In the September-October issue of The Corporate Executive – which was just mailed – the primary focus of the issue was on the need for companies to implement hold-til-retirement provisions for equity awards and how to pick what’s right for your company. With much help from Marc Trevino and Joseph Hearn of Sullivan & Cromwell, this issue contains a roadmap of the considerations you need to analyze when adopting these provisions.

In connection with this issue, we have updated our list of companies that we have identified as having hold-til-retirement requirements and the total is now over 40 companies (thanks to Equilar for helping spot some new companies). In comparison, at least two-thirds of S&P companies have some form of traditional stock ownership guideline, whereby executives are required to acquire and retain a certain value of company stock (usually a multiple of salary).

Thanks to Marc and Joseph, we have posted a slew of new sample documents in our “Hold-Til-Retirement” Practice Area on CompensationStandards.com, including:

Sample Reports to Shareholders Describing HTR Requirements

Sample Proxy Disclosure of HTR Requirements

Sample HTR Requirement Policies

Sample Letters to Executives Announcing HTR Requirements

Sample Agreements Incorporating HTR Requirements

In addition, we have posted a number of other illustrative documents courtesy of ExxonMobil.

The September-October issue of The Corporate Executive specifically includes articles on:

– “Hold ‘Til Retirement” Requirements for Equity Awards: How to Pick and Implement What’s Right for Your Company
– Forms of HTR Requirements
– Reasons to Adopt
– Addressing Potential Criticisms
– Ten Steps to Designing the Program That Is Right for You
– An Additional Comment on ExxonMobil’s Approach
– Proposed Regulations for Section 6039 Returns
– Proposed Regulations for ESPPs
– A Roadmap to Comply with the SEC’s New Regulation FD Guidance

Take advantage of a “Rest of ’08 for Free” no-risk trial to have this issue sent to you immediately.

House Passes the Securities Act of 2008

Seventy-five years after passage of the “original” Securities Act, the House passed a bill yesterday titled the “Securities Act of 2008.” In a statement, SEC Chairman Cox applauded the House for passing legislation that seeks to enhance investor protections and provide more tools for the SEC’s enforcement program, noting that the bill incorporates recommendations that the SEC made to Congress. The bill was introduced earlier this summer by Representative Paul Kanjorski (D-PA).

It appears that the principal aim of the bill is to add provisions to the federal securities laws that would permit the SEC to assess and impose civil penalties in cease and desist proceedings, ranging in amount under a three-tier system from $65,000 to $650,000.

The remainder of the bill includes tweaks to a wide variety of provisions. For instance, the bill would authorize the SEC to censure, place limitations on the activities or functions of, or investigate any person who at the time of specified alleged misconduct was: (1) a member or employee of the Municipal Securities Rulemaking Board; (2) a person associated or seeking to become associated with a government securities broker or dealer; (3) a person associated with a member of a national securities exchange or registered securities association; (4) a participant of a registered clearing agency; (5) an officer or director of a self-regulatory organization; and (6) an officer or director of an investment company. In addition, the bill would amend the Exchange Act and the Investment Advisers Act to permit the SEC to bar certain persons from being associated with a broker, dealer, investment adviser, municipal securities dealer, or transfer agent who has engaged in alleged misconduct.

On the Corp Fin side of things, the bill would amend the Securities Act of 1933 to exempt from blue sky regulation any warrants or rights to subscribe to or purchase covered securities.

In addition to making amendments to the Securities Investor Protection Act, fingerprinting requirements and provisions relating to the nationwide service of subpoenas, the bill seeks to make a large number of technical corrections, some of which arising from the repeal of the Public Utility Holding Company Act. The bill would enhance protections for the confidentiality of material submitted to the SEC. Finally, a provision in the bill would require the SEC, the FASB, and the PCAOB to give oral testimony annually to the House Financial Services Committee on efforts to reduce the complexity in financial reporting.

– Dave Lynn