Broc Romanek is Editor of CorporateAffairs.tv, TheCorporateCounsel.net, CompensationStandards.com & DealLawyers.com. He also serves as Editor for these print newsletters: Deal Lawyers; Compensation Standards & the Corporate Governance Advisor. He is Commissioner of TheCorporateCounsel.net's "Blue Justice League" & curator of its "Deal Cube Museum."
Tune in tomorrow for the CompensationStandards.com webcast – “Law Firms & Independence: What to Do Now” – as law firms – and their compensation committee clients – are scrambling to comply with the new rules regarding independence for consultants. Hear from Troutman Sanders’ Brink Dickerson; Gibson Dunn’s Ron Mueller; Bryan Cave’s Randy Wang and Skadden’s Joe Yaffe.
Now 51 Say-on-Pay Failures This Year
There have been many more failures during the past few days, including:
– Abercrombie & Fitch – Form 8-K (19% – also failed 2012 with 25%)
– Discovery Laboratories – Form 8-K (42%)
– Morgans Hotel Group – Form 8-K (25%)
– Sonus Networks – Form 8-K (49%)
– Consolidated Water – Form 8-K (49%)
– Vocus – Form 8-K (45%)
– Lifepoint Hospitals – Form 8-K (43%)
– Spansion – Form 8-K (49%)
– FTI Consulting – Form 8-K (41%)
Thanks to Karla Bos of ING for the heads up on these!
More on our “Proxy Season Blog”
We continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Combating Tech’s Conflict Minerals With Disclosure
– Rethinking the Annual Meeting
– Project: Create Sustainability Standards for 10-K Disclosures
– How to Open & Close Annual Meeting Polls
– What Will You Do if a Proponent Does Not Show to Present the Shareholder Proposal?
– Goldman Sachs to Enhance Lead Director Duties in Deal with CtW
Recently, I blogged not only that Nabor Industries had failed to gain majority support on its say-on-pay for three years in a row – but two comp committee members also failed to receive majority support and tendered their resignations, which were not accepted by the board. And as noted in this WSJ article, the company engaged in some shady vote counting on its proxy access proposal. Here is a Forbes article from Paul Hodgson on this situation.
Here’s ten cents from inspector of elections Carl Hagberg: “Further to the good advice of “looking harder” at Charter and By Law or Bye Law provisions, look at my “Primer” on tabulating and reporting voting outcomes. A major problem in recent years has to do with the perfectly awful language that’s snuck into so many proxy statements along the way – and which has been mindlessly copied by brain-dead &/or lazy-bones drafters – is the statement that non votes – and abstentions – count (or, slightly better) “have the same effect as Votes NO.” This is sort of correct – to the extent that they take votes away from the pool of votes that must vote YES in order to PASS…or (more correctly, to “approve” a proposal, since, unless it’s a binding by-law proposal it’s the Directors who must officially “pass it” …But clearly, they can not be COUNTED in the total of Votes NO….since they are NOT.”
And another member notes: “Nabors has about 9% of their outstanding shares as treasury stock. If those shares are held by a subsidiary, under Bermuda law, they can actually vote those shares in favor of management’s proposals, as noted in this article. If that is the case (and it is unclear where the treasury shares are held), the vote may have even been worse than it appears.”
Voting Counting: How to Interpret Bermuda Law
Here’s one reaction that I received from a member:
It is tough to defend a lot of what Nabors has done, and I think their investor relations person may well have the toughest job in America. Nevertheless, Nabors has said that it has counted its votes in “very strict conformance” with Bermuda law, and there does seem to be at least some uncertainty among Bermuda issuers about how non-votes should be treated. Perhaps more importantly, there also appears to be language in Nabors’ charter documents that it can point to in support of the way it handled broker non-votes this year.
For an example of the uncertainty among Bermuda corporations about how to treat non-votes, take a look at a company called Lazard Ltd. Lazard has a provision in its Bye-laws (that’s how they spell it in Bermuda) on voting that is similar to the language included in Nabors’ Bye-laws.
– Section 1701 of Lazard’s Bye-laws says that “Except as otherwise provided by the Act or these Bye-Laws, in all matters other than the election of Directors, the affirmative vote of a majority of the combined voting power of all of the Shares present in person or represented by proxy at the meeting and entitled to vote on the matter, voting together as a single class, shall be the act of the Shareholders.”
– Section 22 of Nabors’ Bye-laws says that “Except as may otherwise be provided for in these Bye-laws, and subject to Applicable Law, at each meeting of Shareholders if there shall be a quorum, the affirmative vote of the holders of a majority of Shares present in person or represented by proxy and entitled to vote thereat, shall decide all matters brought before such meeting.”
Until recently, Lazard interpreted Bermuda law in exactly the way that Nabors now does, but changed that interpretation in 2012. See page 2 of the 2011 proxy statement (non-votes count as “no” votes) v. page 2 of the 2012 proxy statement (non-votes don’t even count as being present at the meeting). Nabors appears to have changed the way it interprets Bermuda law and its bylaws as well, but in the exact opposite direction. In its 2012 proxy statement, it said that non-votes wouldn’t count on the one proposal (ratification of its auditor) requiring the approval of a majority of the shares present or represented by proxy and entitled to vote thereon. In this year’s proxy statement, Nabors said that a broker non-vote would count as a no vote on all proposals requiring this level of approval.
What Nabors may be hanging its hat on for this interpretation is the language in its Bye-laws that I highlighted. Instead of speaking in terms of the votes of a majority of shares “entitled to vote on the matter,” as a company like Lazard does, Nabors’ Bye-laws say that matters presented to shareholders generally must receive the approval of a majority of the shares “entitled to vote thereat,” which they may interpret to mean “entitled to vote at the meeting.” They may be taking the position that these non-voted shares are present and entitled to vote at the meeting, and therefore it is appropriate to take them into account in determining the outcome of all matters presented at the meeting, regardless of whether they are non-voted on a particular matter.
Nabors’ spokesperson said that there was “no intentional change” in the way that it tallied non-votes. With all due respect, that just can’t be right. Some sentient being somewhere made a decision that the company would treat non-votes differently than it had in the past, since the disclosures in its 2012 proxy statement about that issue are just not consistent with the ones it included in this year’s filing. The timing is pretty suspicious and the optics are downright horrible – but on the other hand, if I knew that my company was facing a contentious annual meeting, I think I’d take a very hard look at all my proxy disclosures, and make sure that I was comfortable that we were doing things correctly, including tallying the vote in accordance with applicable law and charter provisions.
By the way, if TheCorporateCounsel.net would like to finance my investigation, I would be happy to go to Bermuda and personally get to the bottom of this for you. I can’t imagine it would take much more than three or four weeks. Among other things, I would need a cigarette boat and several cases of Goslings rum in order to properly investigate the situation. Just let me know and I’ll be on the next plane.
More Voting Counting: How to Interpret Bermuda Law
Here’s another reaction that I received from a member:
Having looked at 2012 Nabors proxy, it appears a change has been quietly made. The weird thing is that it’s a change from a rather odd interpretation to a more logical one. (I tried to verify this switch by looking at Nabors’ Item 5.07 8-K from last year, hoping that it would show how they actually counted the votes. Unfortunately, the company merely gave raw numbers and not percentages, so it’s impossible to be sure how they ultimately decided to count the votes last year.)
According to the company’s 2012 proxy, they counted (i) abstentions, (ii)”withheld votes” (essentially, votes against directors) and (iii) broker non-votes (BNVs) as being “present” for purposes of establishing a quorum. Arguably inconsistent with this analysis, however, they state that BNVs “will not affect the outcome” of the vote. The only way this could have been true was if they were not counting BNVs as shares “present” for voting purposes. Thus, they were excluding BNVs from the denominator when determining whether a proposal received a majority of votes “present.” It does not seem that this approach was even remotely mandated by their bye-laws, however, and certainly not by Bermuda law.
Obviously, the company feared that, had it stayed the course this year a number of shareholder proposals that management opposed would have passed, so in 2013 they seem to have opportunistically begun to count BNVs as “present” for voting purposes as well, with the (much desired) consequence of bumping up the denominator. The odd thing is that this new – and arguably manipulative – method seems more logical than the old one was. I mean, if BNV shares are deemed “present” for quorum purposes, shouldn’t they be “present” for voting purposes as well? Also, if you “abstain” from voting on an item and your shares are still counted as “present” at the meeting, isn’t it even more logical that having your shares actually voted “FOR” or “AGAINST”- even if by an uninstructed agent with discretion – means that they are “present” at the meeting?
One could argue both ways, of course, as to how much conscious participation is really needed to make one’s shares “present,” but it’s hard to say that counting BNVs as present for voting purposes is clearly wrong. It’s even harder – frankly impossible – to say that it violates their bye-laws or Bermuda law.
While it does look like a desperate move by a management feeling “cornered” – and thus may not “pass the smell test” – I don’t think that what Nabors has done can be attacked as illegal or a violation of charter provisions. Also, while the company didn’t exactly say in 2013 “for this year, we’re completely changing the way we count your votes” – it also expressly disclosed how it intended to handle things, without pointing out the change.
Ricky, The Honey Badger: Summer Solstice!
Last week, I blogged about Randall, the Honey Badger at NIRI’s Conference and how my wife said “we need that.” I found Randall’s brother – Ricky – and we have adopted him. Here he is enjoying the summer solstice:
On Tuesday, SEC Chair White make remarks – in a speech unpublished so far – indicating that Enforcement’s “settlement without admission” policy will undergo an “incremental” change. The change will only apply to “certain” cases – and decisions on when admissions will be required will be made on a case-by-case basis.
Here’s a Cooley news brief from Cydney Posner:
The Wall Street Journal is reporting that, at a WSJ CFO Network conference, SEC Chair Mary Jo White said that, while the ability to settle cases without insisting on an admission of guilt remains an important tool, the SEC plans to “require certain defendants to admit to wrongdoing as a condition of settling securities-fraud charges.” Ms. White said that the new policy “would apply to only a select number of cases, and suggested they would have to involve allegations of egregious fraud or significant harm to investors.” The Staff will be developing guidance regarding the types of cases that would require admissions of guilt. The SEC has already changed its long-standing practice by precluding defendants from denying guilt when, at the same time, they have admitted to, or have been convicted of, criminal violations in parallel cases brought by the Justice Department.
The SEC’s long-standing position that allowed defendants in settlements to neither admit nor deny wrongdoing has come under recent scrutiny. For example, in considering the settlement in the Citigroup case, Judge Rakoff issued a blistering criticism of the practice. In addition, the House Financial Services committee had indicated at one time that it was planning to hold hearings to examine the practice. The article reports that another federal judge “questioned the practice in March, saying it is ‘counterintuitive’…. In May, Sen Elizabeth Warren (D., Mass.) said she worried the policy could undercut regulators’ ability to crack down on financial fraud.”
SEC officials’ rationale for the SEC’s historic position has been that “pursuing litigation solely to obtain an admission of guilt isn’t likely to result in greater penalties, noting that the agency’s enforcement attorneys only recommend the commission settle a case when they believe they have negotiated for roughly the same amount in penalties that they could reasonably expect to win at trial. Officials also have cited the agency’s limited resources.”
Here’s related articles from Reuters, Washington Post and Cady Bar the Door Blog (and here’s a video clip of Harvey Pitt). This follows indications that SEC Chair White was reviewing the SEC’s policy in this area from a few weeks ago.
SEC Speeches Posted Going Back to 1929!
A surprising element of this announcement is that it wasn’t made in a scripted speech – although the speech may eventually be posted. It’s been a while since a SEC Chair made an announcement of this magnitude that wasn’t in writing. Of course, there is no requirement to post a speech – but it helps spare the SEC’s Office of Public Affairs some phone calls.
As an aside, I just realized that the SEC has posted speeches going way, way back – back as far as 1929, four years before the SEC was even born! Here is the oldest speech posted – from a conference held in French Lick, Indiana, the home of Larry Bird! I guess they weren’t worried about holding a conference in a city with a major airport back then…
SEC Enforcement Co-Chief Calls ‘Em Like He Sees ‘Em
Meanwhile, this Morrison & Foerster memo starts off with: “Led by a new team of co-directors, the Enforcement Division of the SEC is poised to create new initiatives dedicated to efficiency, greater staff discretion and specialized areas of focus. This was co-director George Canellos’ message as he addressed a panel of SEC alumni and other practitioners sponsored by the Federal Bar Association’s Securities Law Section on June 17th. While Canellos laid out some ambitious plans for the SEC, he stressed the limits of those plans and the challenges that the agency may face in implementing them. And he also tried to satisfy the attendees’ desires to hear some Division ‘inside baseball’.”
I’ve been wanting to get more into video for a long time. A really long time. And now that most of us have iPads and other devices attached to our hips, I am making that push with the launch of my regular series entitled “Take Two.” The idea is very short videos – two minutes long (hence the series name) – on random topics, with the arthouse production of someone working out of their garage. In other words, for me to have fun – and hopefully you too. I’m sure my process and production will evolve as I experiment – so please feel free to share criticism, ideas and feedback.
My first episode is “BlackRock: Investor Gigante” – which gives you the gist of this recent NY Times article. A quick and dirty way to learn about the largest investor out there:
Are Severance Agreements Violating the SEC’s Whistleblower Laws?
Jill Radloff of Leonard Street gives us this news via this blog:
Two partners from a self-described law firm that specializes in the representation of whistleblowers have sent a letter to the SEC Commissioners complaining about the use of severance agreements to prevent employees from participating in the SEC whistleblower program. The letter complains about contractual clauses inserted in severance agreements with departing employees such as:
– Employee agrees that he will not use or disclose any Company information at any time subsequent to the execution of the Agreement, except as required by law. Company information does not include information or knowledge which Employee is required to disclose by order of a governmental agency or court after timely notice of the order has been provided to the Company.
– Employee represents that he has not filed any lawsuit, claim, charge, or complaint regarding the Company with any local, state, or federal agency, self-regulatory organization, or court.
– Employee hereby irrevocably assigns to the federal government, or relevant state or local government, any right Employee may have to any proceeds, bounties or awards in connection with any claims filed by or on behalf of the government under any laws, including but not limited to, the False Claims Act and/or the Dodd-Frank Act (and/or any state or local counterparts of these federal statutes or any other federal, state or local qui tam or “bounty” statute) against the Company. Employee also represents and promises that Employee will deliver any such proceeds, bounties or awards to the United States government (or other appropriate governmental unit).
– Employee will inform the Company within ten (10) days of receipt of a subpoena or inquiry requesting information relating to the Company and will cooperate with the Company in any investigation, regulatory matter, arbitration and/or any third-party lawsuit in which the Company is a subject or party.
The letter requests the SEC issue a regulation or an opinion clarifying the breadth of actions that the SEC views as likely to “impede” communication with the SEC under the whistleblower program. The law firm believes this would stem the growth of what they believe is an apparent effort to discourage whistleblowers from providing information to the SEC.
Meanwhile, the SEC has made its second whistleblower award – memos on this development are being posted in our “Whistleblowers” Practice Area.
More on our “Proxy Season Blog”
We continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Harvard Hires Sustainable Investing VP
– Corp Fin: Lobbying Expenditure, Political Giving Not Duplicative
– Hewlett-Packard Directors Win Re-Election Despite Challenging Campaigns
– Proxy Season Preview: ESG Proposals – Part 2
– Divergent Corp Fin Decisions on Independent Chair Proposals
– Corp Fin Explains Analysis for Assessing Vague Shareholder Proposals Under (i)(3)
Last week, I ran this blog providing survey results on Rule 10b5-1 plans and received many emails in response. David Smyth of Brooks Pierce even blogged this analysis about them:
When I was on the SEC’s enforcement staff, I had a case once where we were pretty sure our prospective defendant had engaged in insider trading. Our conversation with his lawyer went something like this:¹
Us: Did your guy sell those shares on the basis of material, nonpublic information?
Him: No way. In fact, he had a 10b5-1 plan in place, and all of his sales were in accordance with that plan.
Us: Um, was that plan written down anywhere?
Him: No, it wasn’t written down, but it doesn’t have to be. If you look at the trading records, you’ll see the trades followed a regular pattern.
Us: Hmmm. We’ve actually reviewed those records. It looks like the plan was to sell all his shares as quickly as possible so he could get out before the share price cratered, as he knew was going to happen.
We recommended that the Commission bring an enforcement action against this person for insider trading, which it did. We settled the matter soon afterward. But let me tell you, if this defendant’s trading had followed a regular pattern, we wouldn’t have touched that case with a ten-foot pole. Even if we suspected that he was selling only to avoid suffering from the imminent death of the company whose shares he owned, an actual 10b5-1 plan would have protected him. We would not have wanted to attack sales that were obviously covered by such a plan, because the court would have rightly handed us our heads.
Rule 10b5-1 plans work like this: if, before becoming aware of material, nonpublic information, a corporate insider (1) enters into a binding contract to trade the securities; (2) instructs another person to trade the securities for the insider’s account; or (3) adopts a written plan for trading the securities, the trades are deemed not to be “on the basis of” that material, nonpublic information. The rule goes on in greater detail, but the gist is that the trader must not have discretion to adjust the trades once the information becomes known. If the plan is to sell 100 shares per month, the insider can’t change that number to 10,000 when the draft of a horrendous quarterly earnings report is circulated to senior management but not yet to investors. But Rule 10b5-1 plans that are strictly followed are extremely strong defenses against insider trading charges.
Which is why it surprised me on Tuesday to see the results from Broc Romanek’s survey on Rule 10b5-1 plan practices. None of the 35 companies responding to the survey require corporate insiders to sell shares pursuant to a 10b5-1 plan, and 68% of those companies do not explicitly encourage their use. I don’t get this. It seems like such low-hanging corporate governance fruit to me to ask that senior executives cabin their trading in a way to minimize potential liability for themselves and their companies. Bruce Carton wrote a good piece in Compliance Week two years ago discussing the benefits of having a strong insider trading compliance program. They included:
– Avoiding control person liability for companies whose executives are found liable for insider trading;
– Protecting employees who don’t understand the intricacies of insider trading law, which are complex; and
– Avoiding reputational damage and legal fees from disruptive investigations.
A Rule 10b5-1 plan, faithfully followed and not gamed for the insider’s benefit, is one relatively easy way to avoid those things. I’m surprised that more companies are apparently not taking advantage of them.
1. Our actual conversation did not go like this. As we always did, we gathered facts in the investigation, and this “discussion” played out in the Wells process that followed.
And myStockOptions.com also covered the survey results in this blog…
SEC’s Chief Accountant Discusses New COSO Framework
A few weeks ago, SEC Chief Accountant Paul Beswick gave this speech about the updated COSO framework in which he said that the SEC staff will monitor the transition for companies to evaluate whether any SEC become necessary. In the meantime, companies are free to refer to the new COSO framework.
Insights Into Forming Your Own Firm
In this podcast, Ben Lieber of Potomac Law Group provides some insight into what it’s like to form your own law firm, including:
– What led you to create your own firm?
– What is the firm’s business model?
– How much corporate governance/corporate work does the firm do?
– Any surprises in making this leap?
As I blogged six months ago, SEC Assistant Inspector General David Weber filed a $20 million lawsuit alleging he was fired for being a whistleblower (you may recall the complaint was full of juicy details, which may – or may not – be true). Last week, it was reported that Weber received a settlement of $580k for the lawsuit – as well as his job back and his record cleansed. That is pretty big number for a government settlement. Learn more in “Sex, Lies, Stupidity, Oh My!!: SEC Whistleblower David Weber Vindicated, Receives Huge $ettlement” (and this Reuters article and Washington Post article).
The SEC’s RiskFin Becomes DERA…
The SEC does some rebranding. As noted in this press release, the agency renamed Division of Risk, Strategy, and Financial Innovation (commonly known as “RiskFin”) to the Division of Economic and Risk Analysis. The Division was first created in ’09 – and its size and importance has dramatically increased since formation, primarily due to the intense scrutiny of the economic analysis given to rulemakings throughout the federal government. So what is the Division’s new nickname? DERA?
Economic Analysis of Rulemaking: SEC’s Inspector General Issues Two Final Reports
With economic analysis of rulemaking continuing to be a hot topic in the wake of the court case striking down the SEC’s proxy access rules – legislation in this area is still pending – the SEC’s IG office issued two reports last week. This report is the final one evaluating the SEC’s current use of guidance on economic analysis and contains six recommendations. This report is the final one evaluating the SEC’s implementation of this guidance and contains one recommendation. The evaluations were conducted per Congressional request.
Here are a few pics from the NIRI conference. This first one is a pic of a monitor set up in the hallway, which displayed graphics created by Marketwired of how many folks were tweeting at the conference during any given hour. Data visualization baby! A lot of people did tweet – sometimes at a clip of several hundred per hour. In fact, it was not uncommon to see folks holding up their phones and taking pictures of the panel or PowerPoint and then tweeting them. Never seen that before – but I joined the party and even took a pic of the audience and tweeted it while I was speaking:
Here is a cool give-away – Say-on-Pay T-shirt – from Laurel Hill:
The conference registration desk featured Randall, the Honey Badger. My wife said “we need that” but it wasn’t a give-away unfortunately:
In the exhibit hall, Wells Fargo went all out:
And the best for last, the after-party hosted by LiquidNet (invitation only – need a wristband):
From Lynn Turner: This is a fascinating – and startling – presentation made recently to students at the New School University in NY. Bevis Longstreth is a former SEC Commissioner, a successful investor, and former partner of Debevoise & Plimpton. The presentation notes that if current reserves of fossil fuels held on the balance sheets of oil, gas and mining companies are burned, the world simply cannot survive the global warming as we understand it today. Yet if those reserves are not allowed to be burned, the market capitalization of these companies – currently $4 trillion – will decline 40-60% with sharp losses to investors. It poses the question, what if anything, is the SEC doing to require disclosure to investors in this regard and proper reporting of such reserves?
This article from the Harvard Business Review is one of the best I have read on say-on-pay in terms of the “big picture”…
Google’s CEO & Disclosure of Health Issues
As noted in this Bloomberg article, Google recently revealed that its CEO Larry Page suffers from a health condition that can result in hoarse speech and labored breathing, though according to doctors won’t impede him from running the company. This disclosure was made through a blog posting. So far, I haven’t heard any complaints about Google’s disclosure (nor should there be IMHO) – unlike the fracas over the health of Apple’s Steve Jobs as noted in this blog.
Have trouble sleeping at night? According to this article, you are not alone. Bernie Madoff can’t sleep either…
Over on the “Mentor Blog,” I recently blogged about “New SEC Software Identifies Potential Fraud.” And I’ve been reading how the new SEC Chair is bringing in other prosecutors to work on the Staff (here’s the latest). So it was interesting to read this DealBook article – which first caught my eye due to its catchy title – about how Chair White intends to bring more financial fraud cases. Only 79 such cases were brought during the most recent fiscal year. Learn more in David Smyth’s blog.
From the Staff’s perspective, financial fraud cases are a real bear. They chew up a lot of resources and require special expertise as an accounting background is necessary for some members of the investigatory team. Unlike insider trader cases – which often can be a slam dunk – financial fraud cases typically take years to bring, rather than months. And since the SEC tends to be graded – by Congress and the media – by how many cases it brings, financial fraud cases are mainly a lot of risk and little reward for the agency. So it will be interesting to see if the SEC’s approach does change and how it goes about pulling it off…
The One Word That Shouldn’t Exist in an Entrepreneur’s Vocabulary
Speaking of lessons learned, this blog by Mark Suster in “Both Sides of the Table” is fantastic. Share it with your loved ones and colleagues. It’s all about “You don’t ask, you don’t get,” which might sound trite in isolation – but Mark is such a wonderful story teller that he brings the concept to life…
Rare Study: CEO Evaluations
In this podcast, Professor Dave Larcker discusses his new study – conducted jointly by the Center for Leadership Development and Research at Stanford Graduate School of Business, Stanford University’s Rock Center for Corporate Governance and The Miles Group – about the annual evaluations that boards give their CEOs, including:
– How hard was it to find information about CEO evaluations?
– What were the findings that didn’t surprise you?
– What were the most surprising findings?
– Why do you think boards are not pressuring CEOs to do a better job in mentoring talent?
We have posted these survey results on Rule 10b5-1 plan practices:
1. Does your company require insiders to sell shares only pursuant to a Rule 10b5-1 trading plan?
– Yes, insiders are required to use Rule 10b5-1 plans in order to sell shares – 0%
– No, but they are strongly encouraged – 31%
– No, and they are not explicitly encouraged – 69%
– Not sure, it hasn’t come up – 0%
2. Does your company review and approve each insider’s Rule 10b5-1 trading plan?
– Yes, it is subject to prior review and approval by the company pursuant to the insider trading policy – 91%
n=2 (5.88%) Yes, but only the template plan is reviewed and not the actual trading schedule – 6%
– No, but we have a broker that we require to be used and have reviewed that brokers template – 0%
– No, and there is no requirement to go through a specific broker – 3%
3. Does your company allow sales of shares through Rule 10b5-1 trading plans during blackout periods?
– Yes – 91%
– No – 3%
– Not sure, it hasn’t come up – 6%
4. Does your company require a waiting period between execution of Rule 10b5-1 trading plans and time of first sale?
– Yes, it is a two week waiting period or less – 15%
– Yes, it is a one month waiting period (or close to it) – 44%
– Yes, it is a two month waiting period (or close to it) – 12%
– Yes, it is a waiting period until the next open window – 12%
– No – 18%
– Not sure, it hasn’t come up – 0%
5. Does your company allow insiders to voluntarily terminate a Rule 10b5-1 plan?
– Yes – 82%
– No, only terminations dictated by the trading plan are allowed – 18%
6. Does your company make public disclosure of the insiders’ Rule 10b5-1 trading plans?
– Yes, but only for directors and/or one or more officers – 15%
– Yes, for all directors and employees – 6%
– No – 79%
7. If your company makes public disclosure, how does it do it?
– Form 8-K – 50%
– Press release – 8%
– Website posting – 8%
– Combination of above – 8%
– Other – 25%
Please take a moment to participate in this “Quick Survey on Loan Prohibitions & Cashless Exercises” and “Quick Survey on Lead Directors.”
Relief Granted! Treasury Subsidiaries of Non-Financial Companies
Recently, I blogged about the dire need for relief from the CFTC over an unintended consequence of Dodd-Frank. Good news! In this no-action letter, the CFTC Staff granted that relief (learn more in this Davis Polk memo)…
Webcast: “Proxy Season Post-Mortem: The Latest Compensation Disclosures”
Tune in tomorrow for the CompensationStandards.com webcast – “Proxy Season Post-Mortem: The Latest Compensation Disclosures” – to hear Mark Borges of Compensia, Dave Lynn of CompensationStandards.com and Morrison & Foerster and Ron Mueller of Gibson Dunn analyze what was (and what was not) disclosed this proxy season.
