February 17, 2015

Virtual Annual Meetings: Could Hewlett-Packard Build Momentum?

Recently, I blogged last year’s stats for virtual annual meetings – noting that growth was relatively flat in 2014. Virtual-only meetings has grown slowly, with 53 meetings in ’14, 35 in ’13 and 27 in ’12. The notable thing about all these virtual meetings, however, are that the companies doing them are not household names. That is about to change. As noted in this Reuters article, Hewlett-Packard will hold a virtual annual meeting next month. Wow! Here’s the table of contents for H-P’s proxy statement – and here are the FAQs about how the meeting will work.

Over the years, I have blogged numerous times about virtual annual meetings (and even have a set of FAQs about them posted in our “Virtual Shareholder Meetings” Practice Area. CII and some institutional investors continue to rail against them – and I continue to believe it’s a problematic practice if the company is facing turbulent waters (as noted in this blog). It will be interesting to see how H-P’s shareholders react…

Speaking of annual meetings, Whole Foods has filed this Form 8-K announcing it has postponed its meeting due to its proxy access flap, with the SEC reversing course on its no-action request. Meanwhile, Jim McRitchie blogs that the SEC has reversed two (i)(9) no-action responses related to special meetings upon reconsideration…

The SEC Is Closed Due to Snow: Form 5s & Schedule 13Gs Still Due Today!

In DC, all federal government agencies are closed due to a snowstorm. I’ve blogged numerous times over the years about the impact of a closed government on the operations of the SEC and Corp Fin specifically. Even though there is no weather-related information posted on the SEC’s site so far today, we can assume that the information in this blog holds true today. The main points are:

EDGAR Still Operational – Federal government closings due to weather doesn’t shut down EDGAR – so filings can continue to be made despite the snow storm. Form 5 and Schedule 13G filings are still due today! I understand that the SEC has Staffers at home who are processing requests for new Edgar filing codes. And snowstorms that close the federal government in DC still are “business days” for purposes of counting when a Form 4, etc. is due.

Critical Registration Statements Can Still Be Declared Effective – Corp Fin has procedures in place to help as Staffers are available to assist with filings even though the government is shut down by the storm. When OPM shuts down the government in DC, emergency personnel (ie. “essential”) still must show up for work – and as a result there will be Corp Fin staffers available to ensure that essential operations continue. In addition, with the Staff now having remote access to their databases, etc., any Staffer can access their EDGAR in-box from home. An Assistant Director (or Office Chief) can take a filing effective just as easily from home as from the office.

The most important thing when faced with this situation is getting in touch with someone at the SEC – leaving a message with the examiner assigned to your filing probably isn’t going to be sufficient. Rather, you will need to work the phones to get in touch with (or leave a message for) the Assistant Director of the group that is handling your filing, or call the Corp Fin Front Office. These numbers are available in our constantly-updated “Corp Fin Staff Organization Chart.” To play it safe, you should attempt to make contact with the Staff as soon as possible if you anticipate a need to go effective this week so that any last minute issues can be resolved (although the snow here isn’t all that much and my guess is that the government will be open as usual tomorrow).

Non-Critical Registration Statements Not Going Anywhere Today – If you are expecting comments from Corp Fin and there is no urgent need to go effective, you may experience some delay in the processing of your filing thanks to the snow. There is no need to contact the limited Staff available to ask about the status of your comments, because they probably won’t be able to step in and move the process along, particularly right now. The Staffers that are available during the government shutdown are really there to deal with the most urgent situations, so bogging them down with less urgent matters isn’t the best idea…

NYSE Proposes to Clarify Proxy Solicitation Mechanics

Here’s a blog from Stinson Leonard Street’s Jill Radloff:

The NYSE proposes to amend Section 402.05 of the Listed Company Manual to clarify that listed companies soliciting proxy material through brokers or other entities must comply with SEC Rule 14a-13. Rule 14a-13 mandates that listed companies must inquire of the record holder whether other persons are beneficial owners of the subject shares and, if so, how many copies of the relevant proxy or other soliciting materials must be provided to supply such materials to the beneficial owners. SEC Rule 14a-13 further sets forth the timeline on which inquiry of the record holder must be made.

The Listed Company Manual, in addition to requiring compliance with Rule 14a-13, also separately states that a listed company’s inquiry of brokers must be made not less than 10 days in advance of a record date. The NYSE imposed this absolute 10 day minimum in recognition of the fact that the provisions of SEC Rule 14a-13 allow, in certain limited circumstances, for a listed company to inquire of brokers less than 20 days in advance of a record date for a special meeting (but not for an annual shareholders’ meeting).

The NYSE believes that the 10-day period presently described in Section 402.05 is in conflict with the requirements of Rule 14a-13. For example, although the NYSE makes specific reference to the SEC’s 20-day advance inquiry rule (i.e., SEC Rule 14a-13), the NYSE believes Section 402.05 could be read as requiring only a 10-day advance inquiry.

The NYSE proposes to revise Section 402.05 of the Listed Company Manual to clarify that listed companies soliciting proxy material through brokers or other entities must comply with the provisions of SEC Rule 14a-13 and that the NYSE does not impose any additional requirements with respect to the relevant inquiry of brokers. Further, the NYSE proposes to delete the requirement in Section 402.05 of the Listed Company Manual that listed companies immediately advise the NYSE if it becomes impossible for them to make an inquiry of brokers at least ten days before a record date. Given that listed companies are required to comply with SEC Rule 14a-13 and the NYSE has no authority to waive compliance with such rule, the NYSE believes that such notice requirement is unnecessary.

Farewell to Harvey Goldschmid!

Sad to hear about the passing of former SEC Commissioner Harvey Goldschmid. Harvey also served as the General Counsel for the SEC before he came back as a Commissioner. As noted in this statement by SEC Chair White and NY Times article, Harvey was very active teaching at Columbia and was the driving force behind adopting Reg FD. Here’s a nice piece by the New York Law Journal – and here’s Harvey’s obituary.


– Broc Romanek