November 29, 2012

Survey: What Type of Compensation Consultant Conflicts Disclosure Will You Make in ’13?

Over on his “Proxy Disclosure Blog” on, Mark Borges has been analyzing the latest proxy statements and commenting upon their compensation consultant conflicts disclosures. As hopefully you know, new Item 407(e)(3)(iv) of Regulation S-K requires disclosure if a conflict of interest has arisen in connection with the work of a compensation consultant (whether selected by management or the compensation committee). To satisfy this disclosure requirement, companies will need to conduct a conflicts of interest assessment.

This raises the question of whether companies will include voluntary disclosure (so-called “negative disclosure”) in their proxy statement when a determination of “no conflict” has been made. To attempt to get a handle on what folks are planning to do, I have posted this “Quick Survey on Compensation Consultant Conflicts Disclosure.” Please take a moment to participate – all responses are anonymous as always…

The SEC’s Latest Clawback Court Victory

Kevin LaCroix’s blog recently covered the latest court decision over a SEC clawback under Section 304 of Sarbanes-Oxley: SEC v. Baker and Gluk. Here is a note on the opinion from Brink Dickerson of Troutman Sanders:

Baker is a succinct, well-written opinion from a conservative District Court – the Western District of Texas in Austin. It involves the clawback of executive compensation under SOX 304 from executives who were not the cause the underlying restatement, and, like Jenkins in Arizona, the court rejects the defendants’ claims that there had to be misconduct on their part. As importantly, the court also rejects claims that Section 304 is unconstitutional and is barred by the Civil Asset Forfeiture Reform Act, arguments that the court in Jenkins did not reach. With there now being two solid decisions finding against the misconduct argument, I think that it is settled for good.

Speaking of clawbacks, check out this Paul Hodgson piece entitled “It is time for real bank clawbacks“…

Say-on-Pay: Now 61 Failures

I’ve added one more company to our failed say-on-pay list for 2012 on as DFC Global failed with 25% support. One of only 7 of the 61 failures so far this year have the honor of 25% support or below. I missed this one until now since the results were in the 10-Q for 9/30 rather than an 8-K. Hat tip to Karla Bos of ING Funds for keeping me updated.

Related to failures #59 and 60 in recent weeks, notice that the PMFG Chair, who is the retired CEO and on the comp committee, lost the vote also for his own re-election to the board. This, along with Oracle’s compensation committee members losing their re-election vote if you exclude the CEO Ellison’s shares, should be sending a chill to directors. Hat tip to Fred Whittlesey for pointing this out!

– Broc Romanek