June 12, 2014

Shareholder Meetings: The Challenges of Vote Counting

There is nothing more stressful – with perhaps the exception of a major disruption – at an annual shareholder meeting than having to postpone and adjourn the meeting. As reported in Mike Melbinger’s blog, last week, Cheniere Energy filed these supplemental proxy materials to postpone a special shareholder’s meeting as a result of a lawsuit alleging improper compensation disclosures and some fishy counting of votes (see also Jill Radloff’s blog and this WSJ article).

This came on the heels of Cortland Bancorp having to postpone its annual meeting because its transfer agent’s tallies couldn’t be trusted in the wake of an enforcement action filed by the SEC. In our “Annual Shareholder’s Meetings” Practice Area, I have posted sample supplemental proxy materials and Form 8-Ks dealing with meeting postponements and adjournments – and here’s a blog from Keith Bishop about abstentions in the news…

Back to the fishy counting of votes, for those that have watched my videos about “usable” proxies, you will see that I have highlighted companies that used a chart to clearly describe how abstentions and broker non-votes are counted for each agenda item. The Cheniere Energy lawsuit highlights the need to have good disclosure in this area – and it will be interesting to see if the plaintiffs firms will be scouring 8-Ks for proposals that reportedly passed, but should not have passed had abstentions and broker non-votes been counted properly (and vice versa), as well as Section 14(a) claims for incorrect descriptions of the vote required…

PCAOB Adopts “Related Parties & Unusual Transactions” Auditing Standard

As noted in this blog by Gibson Dunn’s Michael Scanlon, the PCAOB recently adopted Auditing Standard #18 that expand audit procedures required to be performed with respect to three important areas: (1) related party transactions; (2) significant unusual transactions; and (3) a company’s financial relationships and transactions with its executive officers. The standards also expand the required communications that an auditor must make to the audit committee related to these three areas. They also amend the standard governing representations that the auditor is required to periodically obtain from management.

Thanks for the Gumball Mickey: The Women’s 100

I’m still receiving “thank you’s” from the attendees of last week’s inaugural “The Women’s 100 Conference.” Here’s a short video of the women playing homage to Mickey:

– by Broc Romanek