June 7, 2013

Now 42 Say-on-Pay Failures This Year – Including Two More Three-Peats!

There have been a dozen more failures during the past few days, including three more companies that have failed two years in a row – and two more have failed three years in a row! At three-peater Nabor Industries, two comp committee members failed to receive majority support and tendered their resignations, which were not accepted by the board – and as noted in this WSJ article, the company engaged in some shady vote counting on its proxy access proposal. Wow…

Here are the latest failures:

– Nabors Industries – Form 8-K (33%; also failed in 2012 with 25% and in 2011 with 42%)
– OpenTable – Form 8-K (47%)
– Big Lots – Form 8-K (31%; also failed in 2012 with 31%)
– East West Bancorp – Form 8-K (42%)
– Tutor Perini – Form 8-K (38%; a 3-peat with 38% in 2012, 49% in 2011)
– The Children’s Place Retail Stores – Form 8-K (17%)
– Gleacher & Company – Form 8-K (39%)
– Insite Vision – Form 8-K (38%; also failed in 2012 at 49%)
– Radioshack – Form 8-K (46%)
– Delcath Systems – Form 8-K (49% support)
– Equal Energy – Form 8-K (44% support)
– Healthways – Form 8-K (32% support; failed in 2012 with 33% support)
– Hercules Technology Growth Capital – Form 8-K (49%)

Thanks to Karla Bos of ING for the heads up on these! Also check out this Towers Watson article entitled “Smaller Companies Seeing More Say-on-Pay Failures.”

Loving this slow motion swimming video. A terrific sport…

More on “Confusion Reigns: Dealing with the New Independence of Advisors Requirement”

I told you that I could blog about this topic every day (hence this upcoming webcast – “Law Firms & Independence: What to Do Now“). Here’s a note that I received from a member:

As the July 1st deadline approaches, advisers to companies, particularly outside legal counsel, and board compensation committees have been focusing on what it means to “provide advice” as contemplated by the Instruction to Rule 10C-1(b)(4). The Securities Law Committee of the Society of Corporate Secretaries and Governance Professionals reported in a Society Alert that this question was discussed recently at its regular meeting with the Staff of the SEC’s Division of Corporation Finance.

At this meeting, Tom Kim, the Division’s Chief Counsel, clarified an informal Staff response to a question raised at the beginning of the month on how to determine whether a company’s outside legal counsel (or other outside adviser) was indirectly “providing advice” to a compensation committee. He indicated that, while the question does not lend itself to a “bright line” test, in-house legal counsel should be in the best position to make the determination and control the vetting process. For example, if in-house legal counsel has a lawyer outside the door of the compensation committee meeting and goes out and gets advice and then comes back in and transmits that advice, then obviously that adviser should have been vetted. He called this the “ventriloquist” scenario.

On the other hand, if in-house legal counsel speaks to several outside legal counsel as a matter of course and then is in a compensation committee meeting giving advice based on what he or she has heard and formulated in his or her own mind, this situation would not require that these counsel be vetted.

For everything else – including the more realistic scenario of in-house legal counsel talking to one outside law firm on a regular basis – it is up to the company to use its judgment as to whether, based on the relevant facts and circumstances, a party is providing advice to the compensation committee and, thus, an independence assessment is required.

Transcript: “FCPA Issues in Deals Today”

We have posted the transcript for the webcast: “FCPA Issues in Deals Today.”

– Broc Romanek