October 16, 2013

A Biggie! SEC Chair’s Speech on Disclosure Reform

Although it’s been clear that SEC Chair White’s priorities are in the enforcement area, it appears that she intends to make an impact in the area of corporate disclosure. Yesterday, she delivered this speech on disclosure reform that expresses concern for information overload and summarizes the history of other reform projects over the years.

The speech notes that the Regulation S-K study mandated by the JOBS Act – which is coming soon – is just the first step towards a project with a larger scope. There is a mention of social media (but none of mobile devices). And the last paragraph before the “Conclusion” raises the prospect of companies filing a “core document” or “company profile” with information that changes infrequently – a concept that has been kicked around internally at the SEC for a while. And of course, this was a project that Meredith Cross was dying to undertake while Corp Fin Director until the financial crisis got in the way. It will be interesting to see how folks react to this important speech (comments like this one have been sent in over the years) – this Reuters article states that both investors and corporates were happy with it…

Say-on-Pay: Now 61 Failures

Last week, Masimo Corporation became the 61st company to fail its say-on-pay in ’13 – see the Form 8-K – with 48% support (the company failed last year with only 37% support). Note that the 8-Ks doesn’t quite characterize the vote as a failure, as it just provides the share data. However, the proxy statement states that abstentions have the effect of an “against” vote – so when the math is done, the company received less than majority support.

With 61 failures, this year now ties last year with the number of failures. Thanks to Karla Bos of ING for the heads up on this!

Pay Ratio Proposal: Chamber & Others Request 60-Day Extension

Since my “Pay Ratio Roadmap” webcast on was wildly popular, I have a calendared a new webcast for next Thursday, October 24th that drills down even more: “Drilling Down: Statistical Sampling for Pay Ratios.”

And last week, the Chamber of Commerce and 13 other organizations sent this letter to the SEC requesting a 60 day extension of the pay ratio comment deadline. A little early in the comment process in my opinion to seek an extension – but it’s not a surprise given how outspoken some of these groups have been about this provision of Dodd-Frank…

Meanwhile, Towers Watson has these survey results about how respondents felt would be the biggest challenges if the SEC adopted a pay ratio rule (56% concerned with complying; 31% concerned about where ratio stands compared to peers; 21% concerned about explaining process of determination).

– Broc Romanek