Yesterday, the SEC settled Reg FD enforcement charges against Office Depot and two of its executives after they selectively conveyed to analysts and institutional investors that the company would not meet analysts’ earnings estimates. This is another case brought due to its unique circumstances indicating that “signaling” was going on, without overt statements being made. As noted in this Davis Polk memo, the settlement “is distinctive because the challenged statements appear to have been crafted – unsuccessfully, as it turned out – to walk the FD compliance line by avoiding express references to changes in the company’s business.”
It’s the third Reg FD enforcement action from the SEC in a year, after a four year hiatus. And it makes it a dozen Reg FD enforcement actions that the SEC has brought since Reg FD was adopted a decade ago – see the list in our “Regulation FD” Practice Area.
Winn-Dixie Fails to Exclude Annual “Say-on-Pay” Proposal
Here is news from Ted Allen of ISS:
The SEC staff has rejected a no-action request by Winn-Dixie Stores to omit a proposal from Schultze Asset Management that seeks an annual “say on pay” vote. The Florida-based grocery retailer argued that it had “substantially implemented” the proposal because its board adopted a governance policy in July that calls for a biennial vote on compensation. Winn-Dixie plans to hold its first advisory vote at its 2010 annual meeting on Nov. 10. The staff of the SEC’s Corporation Finance Division did not agree, noting: “We are therefore unable to conclude that Winn-Dixie’s policies, practices, and procedures compare favorably with the guidelines of the proposal such that Winn-Dixie has substantially implemented the proposal.”
The staff ruling is potentially significant because many U.S. companies likely will seek to hold less frequent advisory votes after the 2011 proxy season, and some activist investors may continue to use shareholder resolutions to press for annual votes. The Dodd-Frank Act requires U.S. issuers to hold a pay vote at their first annual meeting after Jan. 21, 2011, and directs companies to conduct a vote on the frequency of future pay votes at that meeting (and then once every six years). Given this mandated vote on frequency, companies may have better luck in their efforts to exclude similar shareholder proposals next season. However, the SEC may rule differently on 2012 proposals when a frequency vote will not be on corporate ballots.
Our “Q&A Forum”: The Big 6000!
In our “Q&A Forum,” we have blown by query #6000 (although the “real” number is much higher since many of these have follow-up queries). I know this is patting ourselves on the back, but it’s over eight years of sharing expert knowledge and is quite a resource. Combined with the Q&A Forums on our other sites, there have been over 19,000 questions answered.
You are reminded that we welcome your own input into any query you see. And remember there is no need to identify yourself if you are inclined to remain anonymous when you post a reply (or a question). And of course, remember the disclaimer that you need to conduct your own analysis and that any answers don’t contain legal advice.
– Broc Romanek