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Yesterday President-elect Biden announced several additional picks for his administration, including his intention to nominate Gary Gensler to serve as SEC Chair.  Gensler is currently a professor at MIT’s Sloan School of Management, previously served as Chairman of the Commodity Futures Trading Commission and is a former Goldman Sachs executive.  Speculation about who President-elect Biden would nominate for the SEC chair position has been swirling for a while now, although over the last week, several media outlets began reporting that Gensler would get the nomination – here’s a NYT story from last week.

With the incoming administration, the NYT reports that the SEC might focus on disclosures relating to climate change risk, political donations and boardroom diversity, while also potentially rethinking rules around stock buybacks. Some have noted that Gensler taught courses on cryptocurrencies at MIT and speculate that rules on digital currencies may also come into focus.  He’s also likely to step up enforcement efforts at the agency and some are saying he will favor aggressive regulation for financial institutions and companies.

It’s hard to say exactly when the agency’s new chair will be confirmed.  Back in 2017 when former Chairman Clayton was nominated, the timeline went like this: nomination announced in early January, Senate Banking Committee met to approve the nomination in early April and full Senate confirmation came along in early May.

Glass Lewis Refines Policy on Virtual Shareholder Meetings

In our webcast last week, one of the topics Courteney Keatinge, Glass Lewis’s Senior Director of ESG Research, talked about was the proxy advisor’s policy on virtual shareholder meetings. Glass Lewis supports virtual participation in shareholder meetings but has concerns when a company doesn’t provide “robust” disclosure about shareholder participation rights. There’s been a refinement to that policy, which Glass Lewis shared in a recent blog post.

One tweak in the proxy advisor’s expectations relates to when there are restrictions on the ability of shareholders to question the board during the meeting. In these situations, the proxy advisor expects a transparent disclosure about the company’s commitment to post questions and answers on the company’s shareholder meeting or IR website. The blog post also provides insight about the proxy advisor’s views relating to hybrid meetings, in-person meetings, amendments allowing virtual or hybrid meetings and allowing virtual participation by directors and executives. After last year, many, if not most, companies have experience holding a virtual shareholder meeting so shareholder expectations about information they need to participate and ask questions will likely be higher.  Here’s an excerpt about the proxy advisor’s VSM disclosure expectations:

Companies can mitigate risk of reduction in shareholder rights by transparently addressing:

– When, where, and how shareholders will have an opportunity to ask questions related to the subjects normally discussed at the annual meeting, including a timeline for submitting questions, types of appropriate questions, and rules for how questions and comments will be recognised and disclosed to shareholders.

– In particular where there are restrictions on the ability of shareholders to question the board during the meeting – the manner in which appropriate questions received prior to or during the meeting will be addressed by the board; this should include a commitment that questions which meet the board’s guidelines are answered in a format that is accessible by all shareholders, such as on the company’s AGM or investor relations website.

– The procedure and requirements to participate in the meeting and/or access the meeting platform.

– Technical support that is available to shareholders prior to and during the meeting.

In the most egregious cases where inadequate disclosure of the aforementioned has been provided to shareholders at the time of convocation, we will generally recommend that shareholders hold the board or relevant directors accountable and depending on a company’s governance structure, country of incorporation and meeting agenda Glass Lewis may recommend shareholders vote “against” members of the governance committee, board chair or other agenda items relating to board composition and performance.

Inauguration Day: Business as Usual for Edgar

With the inauguration tomorrow, some have SEC filings top of mind.  For those that do, the SEC issued an announcement that Edgar will operate normally that day.  The announcement is somewhat matter of course for the agency as it issued a similar announcement for the 2017 inauguration.

– Lynn Jokela