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."
I know. This is low-hanging fruit for those in the disclosure business but the mass media is actively batting this question around in the wake of the revelation that Yahoo!’s new CEO is six months pregnant – but that fact wasn’t disclosed when her hiring was announced. My take on this issue is in Francine McKenna’s Forbes article. It’s clearly not required to be disclosed – nor is voluntary disclosure something that is a sound practice. It’s none of anyone’s business – and it shouldn’t be an issue for investors.
And on the employment law side of it, federal law prohibits sex discrimination (most states have comparable laws). So just like an employer should not ask a prospective hire about age or religion, companies should steer clear of asking about pregnancy. Thanks to Mike Cramer of Ogletree Deakins for his employment law expertise…
With the media’s focus on new CEO Melissa Mayer, we haven’t heard yet whether the folks at Yahoo! consider their say-on-pay to have technically passed, but either way the company’s comp committee has some work to do given the voting results filed on Tuesday: Votes “For” = 50.12% of Votes “For” + “Against.” But the company’s proxy statement discloses that abstentions will be counted as a vote against – so votes “For” = 49.86% of Votes “For” + “Against” + “Abstain.” Thanks to Karla Bos of ING for pointing this out!
JOBS Act: Under Fire
Lately, there have been a number of mass media articles critical of certain aspects of the JOBS Act. Here are a few:
This July-August issue of the Deal Lawyers print newsletter was just sent to the printer and includes articles on:
– Proxy Access Proposals: 2012 Review & 2013 Outlook
– M&A Indemnification Provisions: What Drafters May Be Critically Missing
– Private Equity Clubs Today: Keeping It In The Family
– Boilerplate Matters: Severability Clauses
This is the second match of the 4th round – the battle among the Elite Eight! As noted in these rules (and keep sending more pics for the next tourney), please vote for one of the following two cubes below:
– Average quorum levels were 82.7% as shares voted with shareholders’ instructions partially offset a decline in broker votes
– Over 95% of all of the shares voted through Broadridge were voted electronically through ProxyEdge, ProxyVote.com and automated voice response
– Over 60% of all mailings were either delivered through electronic platforms or consolidated, by specialized processing, into a single delivery or e-delivery for households and managed accounts, a 13% increase over last season
– Mobile voting grew to over 445,000 shareholders, a fourfold increase over last season
As noted in this press release, the Securities Transfer Association released a study last week on proxy fees. This STA study evaluated 33 Broadridge invoices for proxy distribution services from 2010-2012. The STA then applied the proxy fee schedule proposed by the NYSE Proxy Fee Advisory Committee in May to these 33 invoices. The study concludes that this new proxy fee schedule will increase costs for issuers in several fee categories – with cost increases will be more dramatic for small cap and mid cap issuers.
Transcript: “Proxy Season Post-Mortem: The Latest Compensation Disclosures”
We have posted the transcript from the recent CompensationStandards.com webcast: “Proxy Season Post-Mortem: The Latest Compensation Disclosures.”
Deal Cube Tournament: Elite Eight; 1st Match
This is the first match of the 4th round – the battle among the Elite Eight! As noted in these rules (and keep sending more pics for the next tourney), please vote for one of the following two cubes below:
I’m going off-script to blog about a personal experience. The USA Olympic Basketball teams played Brasil in exhibition games here in DC last night and it was magical. Not just because Lebron, Kobe, Durant, Chris Paul, etc. were on the same team. Nor because the President, First Lady, Malia and VP Biden sat just across the way from us. But because the crowd was in such a state of excitement that you could hardly sit still. I now “get” what it feels like to go to the Olympics in your home country. Here are a bunch of photos I snapped:
Brasil’s National Anthem (they spell it “Brasil”; not “Brazil”)
Our Team’s Introduction w/ Members of Military (everyone was screaming!)
The President & Vice President (place went wild when President arrived; chanting “USA”!)
Brasil’s Women’s Team Sat Right Behind Us (they played the game before; they cheered loudly in Portuguese)
The President & First Lady on “Kiss Cam” (she had just arrived & they didn’t know what to do; they had a “do-over” later in the game)
From “The Daily Beast“: Guess Michelle’s not a fan of on-cue PDA. The First Lady rejected a kiss from President Obama at the Olympic basketball team tune-up game against Brazil Monday night. The couple was shown getting cozy on the Jumbotron during the first half of the game, but when the “kiss cam” video display prompted some smooching, Michelle failed to comply. The audience booed as the president appeared to lean in for a kiss, only to get Michelle shaking her head with a smile. Obama broke her down in the 4th quarter though, when the couple leaned in for a crowd-pleasing kiss. Maybe the campaign ran some numbers? Or maybe Michelle just likes to keep the romance alive by making the Commander-in-Chief work for his sugar. Either way, it was a confidence-boosting night for the U.S. men’s team, with a 80-69 win against Brazil.
On Friday, the SEC’s Office of Chief Accountant issued its final IFRS work plan report. Since the SEC has no timeframe now to decide whether to switch to IFRS – and since its a Presidential election year – it’s truly uncertain when that decision will be made.
Sleeper Alert: CFTC’s New Rule Might Force You to Get Special Board Approval for Interest-Rate Swaps
As Nate Endrud blogged last week, the CFTC has approved its final rule on the so-called “end-user exception” to Dodd-Frank’s mandatory clearing requirement applicable to swaps required to be cleared (roughly, standardized swaps). Under the exception, as provided by the Act, a swap counterparty may elect not to clear a swap if the counterparty:
(i) Is not a “financial entity” (e.g., swap dealer, major swap participant, investment fund, bank, or pension plan);
(ii) Is using the swap to “hedge or mitigate commercial risk,” as further defined; and
(iii) Provides certain information along with the swap to a swap data repository or the CFTC.
I don’t think many companies realize they are going to need special board approval to deal with run-of-the-mill interest rate swaps – and this could be applicable before you know it.
Transcript: “How to Cope with the M&A Litigation Explosion”
We have posted the transcript for our recent DealLawyers.com webcast: “How to Cope with the M&A Litigation Explosion.”
Society of Corporate Secretaries Annual Conference: Fun in DC
Back from this year’s conference – in my hometown – and in keeping with last year’s tradition of posting a picture illustrating some class, below are Martin Bischoff and Laurent Rouyres of Labrador at Friday’s Newseum event (here are conference notes from Davis Polk’s Ning Chiu):
Spanking brand new. Posted in our “Risk Factors” Practice Area, this comprehensive “Risk Factors Disclosure Handbook” provides a heap of practical guidance about the disclosure obligations under Item 503(c) of Regulation S-K. This one is a real gem – 37 pages of practical guidance…
Corp Fin Updates Financial Reporting Manual (Again)
A few days ago, Corp Fin indicated that it has updated its Financial Reporting Manual for issues related to age of interim financial statements, use of pro forma information in MD&A, age of financial statements for smaller reporting companies, periods required for financial statements filed by Canadian issuers on Form 40-F, as well as other changes.
Insider Traders Beware! SEC Votes to Strengthen Trading Audit Trail
Yesterday, in a 3-2 vote, the SEC adopted a rule that directs the national securities exchanges and FINRA to establish a market-wide consolidated audit trail that will significantly enhance regulators’ ability to monitor and analyze trading activity. This serves as a good reason to remind insiders of their obligations under the law and corporate insider trading policies.
Deal Cube Tournament: Sweet Sixteen; 4th Match
This is the last match of the 3rd round – the battle among the Sweet Sixteen! As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:
We have posted the survey results regarding board minutes and auditors, repeated below:
1. When it comes to board minutes, our company
– Provides copies of board minutes to auditors upon request in electronic form only – 26.5%
– Provides copies of board minutes to auditors upon request in paper form only – 18.4%
– Provides copies of board minutes to auditors upon request in electronic and paper form – 20.4%
– Doesn’t provide copies of board minutes to auditors – but we do allow inspection of minutes onsite – 34.7%
– Doesn’t provide copies of board minutes to auditors – nor do we allow inspection of minutes onsite – 0.0%
2. Our auditors ask for copies or inspection of board minutes
– Each quarter – 93.9%
– Once a year – (2.0%
– On irregular basis – 4.1%
– They never ask for board minutes – 0.0%
Please take a moment to participate in this “Quick Survey on Insider Trading Policies: Pledges & Margin Accounts” (remember the recent attention on margin accounts used by insiders thanks to the Green Mountain Coffee chair’s margin call) and “Quick Survey on Rule 10b-18 & Buybacks.”
More on “The SEC Comment Process: What is a Bedbug Letter?”
When you blog, you can never guess which blogs will produce the most commentary. Surprising to me, this blog from long ago on bedbug letters resulted in numerous emails from members. And the types of responses were all over the lot.
For example, Francine McKenna (of re:theauditors fame) wondered why the SEC bothered with this type of letter when the Obama Administration was touting General Motors’ IPO as a “win” for the bailout when the company has repeated material deficiencies in internal controls and multiple year adverse opinions on its controls. See this Bloomberg article and this Accounting Onion Blog.
Another member emailed me this:
This letter is a perfect example of government waste – as in, waste of words. Do you mean to tell me it takes three paragraphs and over one hundred words to say, in effect “This registration statement violates United States securities’ laws and regulations. If you do not make the necessary revisions, we will request that the Enforcement Division take action against you.”
For goodness sakes, do you mean to tell me that anyone in their right mind (other than a securities’ lawyer) could consider that form letter anything other than unintelligible. Hello – “plain English” please! It is the kind of non-sensical correspondence like this bed-bug letter that results in bankers and accountants making fun of the lawyers on a deal.
And then David Westenberg of WilmerHale notes his book has the etymology of the term:
Occasionally, the staff finds that a Form S-1 is so poorly prepared or beset with such serious problems that it declines to provide comments until a remedial amendment is filed. In egregious cases, the staff may suggest that the company consider withdrawing the filing. The staff communicates this message in what is often termed a “bedbug letter.”* Bedbug letters are generally provoked only by blatant noncompliance with applicable rules, such as filing a Form S-1 with incomplete or stale financial statements, or submitting a document that contravenes specific pre-filing staff guidance or instructions. If the company receives a bedbug letter, some soul-searching–and perhaps new counsel–may be appropriate.
*The phrase seemingly emanates from the apocryphal tale of an aggrieved customer in a fine hotel who complains about bedbugs and receives written assurances that the problem was a one-time occurrence; however, the response is inadvertently accompanied by instructions from the complaint’s recipient to an assistant to send the customer “the standard bedbug letter.” The application of this phrase to deficient SEC filings is, however, a mystery.
Deal Cube Tournament: Sweet Sixteen; 3rd Match
This is the 3rd match of the 3rd round – the battle among the Sweet Sixteen! As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:
Most lawyers are horrible about marketing themselves. I’m not quite sure why that is, but it’s a fact. But in this day and age of low job security – regardless if you’re in a law firm or in-house – it is critical for you to network and get your name out there, even if you never care to become a rainmaker. Luckily, the online world allows you to network without leaving your office.
One person who “gets it” is Boris Feldman of Wilson Sonsini. I’ve been seeing his name for as long as I can remember. He has a site whose domain name is his own name (even if it’s bare bones). And when he writes something, he lets those who report about such things know about it. Hence, his most recent piece – “Shareholder Litigation After the Fall of an Iron Curtain” – has showed up on about every corporate blog that I regularly read (egs. Keith Bishop’s blog and Kevin LaCroix’s blog). All Boris did is send me a brief email noting that he had written this article and shared its link – I imagine that’s all he did with these other influencers.
So what can you do to enhance your profile? Shoot me an email. It doesn’t have to be about an article you’ve written. It can be an interesting anecdote you’ve come across (or a fond financial printer memory). It can just ask what you can do to enhance your profile and I’ll give you my ten cents. It’s a new era and time for you to make some new virtual relationships. So go ahead and start making them. I love interacting with my community and look forward to hearing from you. And if you’re attending the Society of Corporate Secretaries’ Annual Conference this week, come on up and say hello…
Our New “MD&A Handbook”
Spanking brand new. Posted in our “MD&A” Practice Area, this comprehensive “MD&A Handbook” provides a heap of practical guidance about the disclosure obligations under Item 303 of Regulation S-K.
RIP Moxy Vote
Yesterday, Moxy Vote posted this explanation – mainly regulatory hurdles – of why it is shutting down…
Deal Cube Tournament: Sweet Sixteen; 2nd Match
This is the 2nd match of the 3rd round – the battle among the Sweet Sixteen! As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:
Yesterday, as noted in Gibson Dunn’s blog, the FASB – in a 5-2 vote – decided to remove modifying accounting for loss contingencies disclosure from its agenda after four years of controversy and comment. The majority of FASB members agreed that ASC 450’s requirements are sufficient. Corp Fin’s efforts to comment on litigation contingencies likely also had an impact on FASB’s decision to take its proposal off the table (see the memos in our “Contingencies” Practice Area like this one). Here is the FASB meeting handout.
IFRS: SEC Staff Report Coming Soon – But Without Timetable
A long-awaited SEC Staff report on IFRS is expected sometime over the next few weeks – but without a recommendation on whether, how or when the United States should transition to IFRS, as noted in this Compliance Week article. One of the reasons for the vagueness is the probable need for the due process of a SEC rulemaking to go in that direction.
For those fascinated about how the US Supreme Court’s decision on affordable health care was incorrectly reported initially by some in the mass media, check out this excellent detailed timeline put together by the SCOTUS Blog.
Concerned about the decline in the number of public offerings, the JOBS Act requires the SEC to amend Regulation A (or to adopt a new regulation) to raise the threshold for use of that registration exemption from $5 million to $50 million, and requires the GAO to study the impact of state securities laws on Regulation A offerings. The GAO has issued a report that examines:
– Trends in Regulation A filings,
– How states register Regulation A filings, and,
– Factors affecting the number of Regulation A filings and how the number of filings may change in the future.
The GAO provided a draft of the report to the SEC and the NASAA for their review and comment. Both provided technical comments, which the GAO incorporated as appropriate. In its letter, the NASAA concurred with the GAO’s findings that multiple factors have affected use of Regulation A, and suggested that the primary reason for its limited use is the “mini-public offering” process that businesses must complete. Stakeholders with whom the GAO did not consistently cite any single factor as the primary reason for the limited use of Regulation A. As noted in the report, the NASAA stated that it will be working to develop model state registration requirements for the larger Regulation A offerings allowed under the JOBS Act, and NASAA suggested that further changes to federal securities laws, particularly Regulation A, should be withheld until states implement a new system to address the JOBS Act’s changes. In considering any changes, the NASAA stressed the importance of balancing the needs of investors with the need to raise capital.
Deal Cube Tournament: Sweet Sixteen; 1st Match
This is the first match of the 3rd round – the battle among the Sweet Sixteen! As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:
As noted on Corp Fin’s “What’s New” page, they are now hiring attorney and accountants. This is notable because it has felt like there has been a permanent hiring freeze.
Recently, I was cruising YouTube and found this polished 4-minute video posted by the SEC entitled “Work at the Securities and Exchange Commission.” The video was uploaded in January 2009 but the thing is far older as it includes my friend Keir Gumbs and other folks that left the SEC long ago. It is among 50-plus videos posted by the SEC – most of the vids are opening remarks by SEC Chair Schapiro at open Commission meetings – and it is among the most popular of the SEC videos with over 3000 hits. The only other vids with sizable audiences are this one about a scheme targeting deaf investors and this video explaining what Investor.gov does.
Compare my own unpolished 5-minute video about “How to Get a Job at the SEC.” That has over 1000 visits itself…
Working at the SEC: Alternative Work Arrangements
When I worked at the SEC, it was fairly rare for anyone to be approved to work on a part-time basis, much less on an “alternative” basis. Now, it is common within the government (and the private sector too) to have flexible work arrangements. This 88-page report from the SEC’s Inspector General last year is instructive because it lays out and reviews the 8 different types of arrangements available.
Poll: Identify the SEC’s Flexible Work Arrangements
To test your knowledge of flexible work arrangements, click on the arrangements below which you believe are used at the SEC. Some of the choices are fictitious:
Last week, Business Roundtable issued an updated version of its “Principles of Corporate Governance.” The BRT’s principles were last updated in April 2010. Gibson Dunn’s blog covers the five major changes since the last update.
Another PCAOB Roundtable on Auditor Independence and Auditor Rotation
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:
– NYSE Director Steps Down After Majority Withhold Vote
– How Your Annual Shareholder Meeting May Be Covered: Social Media Style
– A Review of Corp Fin No-Action Rulings on E&S Proposals
– Big Fireworks at Wells Fargo Annual Shareholders Meeting
– Chesapeake: Poster Child For Poor Governance
