February 3, 2023
Say-on-Frequency Votes: The Form 8-K Conundrum
Item 5.07 of Form 8-K requires that an issuer must disclose its decision as to how frequently the company will conduct Say-on-Pay votes following each Say-on-Frequency vote (the Say-on-Frequency vote is advisory, so the company must ultimately decide the frequency of future Say-on-Pay votes). To comply with this requirement, a company must disclose the determination in the original Form 8-K or file an amendment to its original Form 8-K filing (or filings) that disclosed the preliminary and final results of the Say-on-Frequency vote.
The Form 8-K amendment is due no later than 150 calendar days after the date of the end of the annual meeting in which the Say-on-Frequency vote occurred, but in no event later than 60 calendar days prior to the deadline for the submission of shareholder proposals as disclosed in the proxy materials for the meeting at which the Say-on-Frequency vote occurred. Specifically with respect to Say-on-Frequency votes, an issuer must disclose the number of votes cast for each of the choices (every one, two or three years), as well as the number of abstentions in Item 5.07 of Form 8-K.
Failure to provide the required disclosure under Item 5.07 could impact an issuer’s ability to use Form S-3 and maintain WKSI status, therefore it is important to remember to include the necessary disclosure about the determination as to the frequency of future Say-on-Pay votes, even if there is no change from past practice. Back in 2011 when the first Say-on-Frequency vote was conducted, many issuers failed to timely disclose the board’s decision on the frequency of future Say-on-Pay votes, which resulted in a significant number of late Form 8-K filings. The Staff granted Form S-3 eligibility waivers fairly liberally at that time, but then became much less accommodating on this issue over time.
Most companies now opt for including the determination language in the original Form 8-K, rather than filing the amendment at a later date. To accomplish this, it is often necessary to ask the board of directors to approve the frequency of Say-on-Pay votes after the votes from shareholders are tallied.
– Dave Lynn