August 2, 2017

Proxy Access: “Fix-It” Proposals 3.0

Proxy access “fix-it” proposals – which ask companies with mainstream proxy access bylaws to make them more shareholder-friendly – were prevalent during this proxy season. We don’t expect the trend to go away anytime soon – we’ve already seen two versions of the proposals & a third is now on the map!

Companies have been seeking no-action relief to exclude the proposals as “substantially implemented” – but Corp Fin denied many requests. Now a new “fix-it” proposal has emerged, and was also required to be included in the company proxy statement. Here’s a teaser from Ning Chiu’s blog:

Like the later season proposals, this type also asks that a company amend the restrictions on the size of the nominating group, but this time from 20 shareholders to an unlimited number of shareholders, and without any other proposed revisions.

The SEC staff recently rejected a company’s request for no-action relief on the basis of substantial implementation, after extensive correspondence between the parties involving 5 letters from the issuer and what must be an unprecedented 21 letters from the proponent. The volume of correspondence likely led to the staff’s taking more than three months from receipt of the initial no-action letter to publish a decision.

In other proxy access news, a different company changed its aggregation limit to 50 to negotiate a withdrawal on a similar proposal.

So although the proposals that went to a vote have been averaging less than 30% support among shareholders, they aren’t without risk…

Check out our “Proxy Access” Practice Area for more resources on this topic.

Audit Reports: SEC Requests Comment on PCAOB Standard

The SEC recently issued a notice for comment on the PCAOB’s expanded audit report standard – see our earlier blogs announcing the PCAOB’s action – and predicting battles over “critical accounting matters.”

Comments are due this month. If approved by the SEC, parts of the new standard will be effective in 2018.

Name Change: “NYSE MKT” Is Now “NYSE American”

To the delight of “MKT” haters, the NYSE’s previously-announced rebranding to “NYSE American” is now effective, with most of the website now revamped.

The name change was accompanied by other updates designed to facilitate trading in small & mid-cap companies, including expanded trading hours and assignment of an “electronic designated market maker) – with quoting obligations – to each listed security. Hat tip to Goodwin Procter’s John Newell for alerting us to this development!

Liz Dunshee