October 14, 2011

Going Even More Electronic: Corp Fin’s New No-Action Request “Upload” Framework

Yesterday, Corp Fin launched a new way for practitioners to send in formal exemptive, interpretive and no-action requests to its Office of Chief Counsel – they can now be uploaded via this form. A caveat is that Rule 14a-8 shareholder proposals requests are not permitted to be uploaded via this form – they should continue to be submitted via email to (to the extent that they are submitted electronically at all). Before yesterday, electronic submission of no-action requests were required to be sent by email via rather than uploaded. Of course, paper submissions are still permitted.

From the stats I have heard, the vast majority of no-action requests are being submitted electronically these days, which is not surprising considering how correspondence related to SEC filings has been submitted electronically via Edgar for quite a while now. In addition, we all have been accustomed to submitting comments on proposed rules electronically for years. [In comparison, most requests for informal guidance are still made by phone rather than electronically.] So I am sure the transition to uploading instead of emailing will be fairly smooth…

ISS Releases Final ’11 US Postseason Report

Yesterday, ISS released its Final 2011 U.S. Postseason Report, which includes vote results for meetings held before September 1st, with findings that include:

– During 1st year of mandatory say-on-pay, investors overwhelmingly endorsed companies’ pay programs, providing 92.1% support on average.

– 38 Russell 3000 companies, or just 1.6% of the total that reported vote results, had their say-on-pay voted down. The primary driver of these failed votes appears to be pay-for-performance concerns, which were identified at 28 companies. Almost half of the failed-vote firms have reported double-digit negative three-year total shareholder returns. Also contributing to investor dissent were issues like tax gross-ups, discretionary bonuses, inappropriate peer benchmarking, excessive pay, and failure to address significant opposition to compensation committee members in the past.

– Investors overwhelmingly supported an annual frequency for SOP, with a majority (or plurality) support at 80.1% of companies in the Russell 3000 index, as compared to triennial votes, which won the greatest support at 18.5% of issuers.

– Management preferences did not appear to have a significant influence on the outcome of this year’s frequency votes. Investors had defied management recommendations for triennial votes at 538 of 892 Russell 3000 companies. Shareholders also were not swayed by biennial recommendations at 34 out of 47 Russell 3000 firms.

– The number of directors at Russell 3000 firms that failed to garner majority support fell by nearly half as say on pay votes presented shareholders with an alternative to votes against compensation committee members. Poor meeting attendance, the failure to put a poison pill to a shareholder vote, and the failure to implement majority-supported shareholder proposals were among the reasons that contributed to majority dissent against board members this year.

– Among governance proposals, the biggest story of this year was the greater support for shareholder proposals that seek board declassification. These resolutions averaged 73.5% support, up more than 12% from 2010, and won majority support at 22 out of 23 large-cap firms.

– Majority voting proposals averaged almost 60% support, while proponents reached settlements with more than 30 firms. Independent chair proposals fared better this year, winning majority support at four companies.

– Investor support for shareholder resolutions on environmental and social (E&S) issues continues to rise. This year, there was a 20.6% average approval rate for these proposals, the first time this support level had reached the 20% mark. Five proposals received a majority of votes cast, a new record.

– Investors were more receptive to the Center for Political Accountability’s long-running proposal campaign for more disclosure on corporate political spending. This year, the average support for those resolutions was 32.5%, up from 30.4% for similar proposals in 2010.

Only Two Weeks Until the Big Conference! ISS & Glass Lewis on 4 Different Panels!

As happens so often, there is now a mad rush for folks to register for our upcoming pair of say-on-pay conferences (one regarding disclosure and one regarding pay practices – both combined for one price). Come hear the views of ISS and Glass Lewis, as representatives will sit on a total of 4 panels during the two days of action. See the agendas.

Act Now: Come join 2000 of your colleagues in San Francisco – or thousands more watching live (or by archive) online – to receive a load of practical guidance and prepare for what is promising to be a challenging proxy season. Register now.

– Broc Romanek