September 29, 2015

ISS Policy Survey Results: Proxy Access Restrictions Problematic for Most Investors

As noted in this press release, ISS has released the results of its annual policy survey (here’s the full summary of the results). Here’s a few highlights (and more from Ning’s blog):

1. Proxy access – Survey responses fell close to the ISS policy adopted last year as “large majorities” of investors believe ISS should issue negative recommendations if management adopts a higher-than-3% requirement – with 90% investors seeking negative recommendation if the threshold exceeds 5% or if the ownership requirement exceeds 3 years. Large majorities (ranging from 68-80%) believe negative recommendations are warranted if the aggregation limit is fewer than 20 shareholders – or if a cap on nominees is less than 20% of the existing board size.

2. Overboarding – For directors who are not CEOs at the company, 34% of investors believe that a 4-directorship limit is appropriate; 18% believe that 5 is acceptable, and 20% believe that 6 is fine (which is the status quo for ISS policy). 16% said “it depends/other” suggesting a 3-directorship limit – and 12% didn’t support any limit. For CEOs at the company, 48% of investors believe that 2 seats (including the CEO’s own company) is an appropriate limit, while 32% believe that 3 seats is fine (the status quo for ISS policy) – and 12% didn’t support any limit.

If you’re up in the Northwest, you may want to check out the Society’s “Essentials Express Seminar & Western Regional Conference” on October 7-9 in Seattle.

Yates Memo: Assistant AG Weighs In

As we continue to post oodles of memos on the DOJ’s “Yates memo,” we get word from this Mintz Levin blog about some commentary from Assistant AG Leslie Caldwell that fleshes it out. Here’s an excerpt:

As recently reported in our Health Law & Policy Matters blog, a central tenet of the Yates memo is that in order to qualify for cooperation credit, a corporation must identify all individuals involved in the wrongdoing and provide all relevant evidence implicating those individuals to the government. AAG Caldwell explained “This means that companies seeking cooperation credit must affirmatively work to identify and discover relevant information about culpable individuals through independent, thorough investigations. Companies cannot just disclose facts relating to general corporate misconduct and withhold facts about the responsible individuals. And internal investigations cannot end with a conclusion of corporate liability, while stopping short of identifying those who committed the criminal conduct.“

Expanding upon DAG Yates’ remarks last week at NYU Law School, AAG Caldwell stated “We recognize, however, that a company cannot provide what it does not have. And we understand that some investigations – despite their thoroughness – will not bear fruit. Where a company truly is unable to identify the culpable individuals following an appropriately tailored and thorough investigation, but provides the government with the relevant facts and otherwise assists us in obtaining evidence, the company will be eligible for cooperation credit. We will make efforts to credit, not penalize, diligent investigations. On the flip side, we will carefully scrutinize and test a company’s claims that it could not identify or uncover evidence regarding the culpable individuals, particularly if we are able to do so ourselves.” AAG Caldwell also explicitly recognized that DOJ can sometimes obtain evidence that a corporation cannot.

To the extent that practitioners read the Yates memo as erecting an impossible hurdle to cooperation credit, AGG Caldwell’s remarks indicate that each case will be evaluated on its facts. AAG Caldwell made at least one other point worth noting: the Yates memo does not change existing DOJ policy regarding the attorney client privilege and work product protection. Prosecutors will not be seeking corporate waiver of these protections.

Poll: Will Change in NYSE’s “Material News” Policy Impact Timing of Quarterly Earnings?

Dave blogged a few weeks back about the NYSE’s new “material information” policy (see the memos in our “NYSE Guidance” Practice Area). In response to this query in our “Q&A Forum” – “Is it expected that companies will begin to announce quarterly earnings before 7 am to avoid the NYSE requesting that the announcement be delayed until after market or recommending a halt in trading if earnings differ significantly from market expectations?” – I am running this anonymous poll:


– Broc Romanek