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."
Yesterday, the SEC issued this fee advisory that sets the filing fee rates for registration statements for 2016. Right now, the filing fee rate for Securities Act registration statements is $116.20 per million (the same rate applies under Sections 13(e) and 14(g)). Under the SEC’s new order, this rate will dip to $100.70 per million, a 13.3% drop. Nice to see another reduction after last year’s 10% drop (which combined with a drop in the rate two years ago, offsets a hefty price hike from three years ago).
As noted in the SEC’s order, the new fees will go into effect on October 1st like the last four years (as mandated by Dodd-Frank) – which is a departure from years before that when the new rate didn’t become effective until five days after the date of enactment of the SEC’s appropriation for the new year – which often was delayed well beyond the October 1st start of the government’s fiscal year as Congress and the President battled over the government’s budget.
Board Succession Planning Databases
In this podcast, Equilar’s David Chun discusses the latest in Equilar’s line of services – BoardEdge, including:
– What is “BoardEdge”?
– How does it compare to a company hiring a recruiter?
– Any surprises since you launched?
Our “Q&A Forum”: The Big 8500!
In our “Q&A Forum,” we have blown by query #8500 (although the “real” number is much higher since many of the queries have others piggy-backed on them). I know this is patting ourselves on the back, but it’s over 14 years of sharing expert knowledge and is quite a resource. Combined with the Q&A Forums on our other sites, there have been well over 28,000 questions answered.
You are reminded that we welcome your own input into any query you see. And remember there is no need to identify yourself if you are inclined to remain anonymous when you post a reply (or a question). And of course, remember the disclaimer that you need to conduct your own analysis and that any answers don’t contain legal advice.
Yesterday, I ran a popular poll about whether folks thought that Apple’s Tim Cook violated Regulation FD by emailing CNBC host Jim Cramer about how Apple was faring in China. The poll results indicated that 15% thought it was nowhere near a violation – and 21% indicated it might look that way to the untrained eye (but that it wasn’t). 29% thought it was clearly a violation – and 29% thought it was a toss-up and depended on how the SEC approached it (7% didn’t realize that Seinfeld is available around-the-clock on Hulu these days).
In my blog about it, I indicated that the facts as we know them are semi-sparse. Based on the facts as we know them, here’s my 10 cents:
1. I Agree That The Optics Aren’t Good – In a great illustration of “perception matters,” a plain face reading of the email that Cook sent to Cramer makes the securities lawyer in me cringe. The 2nd paragraph is about how Apple is experiencing strong growth in China, etc. Even worse is the start of the 3rd paragraph about “our performance so far this quarter is reassuring.” This all comes after Cook’s intro about how Apple doesn’t give mid-quarter updates. This “perception” is probably why so many in our community think it’s a clear-cut violation.
2. But Communications to Journalists Aren’t Reg FD Violations – To the extent Cook’s email was directed to Cramer as a member of the media (so intention matters) – and reasonably understood that way – there likely isn’t a problem (absent other facts). This is supported by this excerpt from the SEC’s adopting release in 2000:
Rule 100(b)(1) enumerates four categories of persons to whom selective disclosure may not be made absent a specified exclusion. The first three are securities market professionals — (1) broker-dealers and their associated persons, (2) investment advisers, certain institutional investment managers and their associated persons, and (3) investment companies, hedge funds, and affiliated persons. These categories will include sell-side analysts, many buy-side analysts, large institutional investment managers, and other market professionals who may be likely to trade on the basis of selectively disclosed information. The fourth category of person included in Rule 100(b)(1) is any holder of the issuer’s securities, under circumstances in which it is reasonably foreseeable that such person would purchase or sell securities on the basis of the information. Thus, as a whole, Rule 100(b)(1) will cover the types of persons most likely to be the recipients of improper selective disclosure, but should not cover persons who are engaged in ordinary-course business communications with the issuer, or interfere with disclosures to the media or communications to government agencies.[FN]
[FN 27] While it is conceivable that a representative of a customer, supplier, strategic partner, news organization, or government agency could be a security holder of the issuer, it ordinarily would not be foreseeable for the issuer engaged in an ordinary-course business-related communication with that person to expect the person to buy or sell the issuer’s securities on the basis of the communication. Indeed, if such a person were to trade on the basis of material nonpublic information obtained in his or her representative capacity, the person likely would be liable under the misappropriation theory of insider trading.
I’ve always wondered (or worried) about the journalist exception when the journalist is a conduit for the market. It’s possible that FN 27 wasn’t written to address this type of situation. For example, it may have been included to assure company officials that communicating high demand to a supplier in an effort to secure additional supplies would not violate Reg FD – even if the supplier is a “holder’ (which likely should have been written in the regulation as “owner”) of company securities.
And the thing about the press is that it’s not usually a very good way to plan for Reg FD compliance (although the live interview situation is probably not subject to the usual concerns about what the press will actually report – and when they’ll actually report it publicly).
3. Doubtful Directed to Cramer In His Investor Capacity – So far at least, there is no indication that Cook intended his email to be received by an investor. If so, any misuse by Cramer would create problems for Cook. Barring that type of situation, this is merely an exclusive with media. Done all the time.
As I understand it, Cramer is the manager of a charitable trust fund (at least, he’s portrayed that way), as well as the talking head on his own show. But if you ask 100 people what Jim Cramer does, my hunch is that at least 99 will say “media personality” or “news show host” – not “fund manager.”
On the other hand, there certainly is the argument that intent of the communicator is not intended to part of Reg FD – that it’s more mechanical. Instead, Cook might have a strong argument – similar to the “intent” concept – that the email to Cramer was not sent under circumstances that were reasonably foreseeable to Cook that Cramer would purchase or sell securities on the basis of the information contained in the email. More particularly, it seems reasonable that Cook could conclude that MSNBC has a policy, applicable to Cramer, that – to the extent it even allows trading in public securities – material information received by its personnel must be disseminated broadly before the personnel can trade securities of a company that is the subject of the information (or discuss the information in a selective forum, essentially equivalent to a “tip”). Thus, it seems reasonable that Cook could conclude that Cramer – even to the extent he is a manager of a fund that holds Apple stock – would be required to broadcast the material information in the email and allow for appropriate dissemination before using the information for another purpose. Presumably, that would not constitute a violation of Reg FD.
By the way, I have always wondered how MSNBC got comfortable with Cramer trading while running his own show, but that’s another ball of wax. And don’t forget to check out our comprehensive 119-page “Regulation FD Handbook“…
Conflict Minerals: GAO Says Most Companies Unable to Determine Source
On the same day that the SEC’s rules were dealt a blow by the DC Circuit last week (see our memos about that posted in our “Conflict Minerals” Practice Area), the GAO delivered this 60-page report about 2014 disclosures – not 2015! – and concludes that most companies were unable to determine the source of their conflict minerals. (And that conclusion seems unlikely to change in the report on 2015.) Here’s an excerpt from this Cooley blog:
Of those studied, 99% reported performing reasonable country-of-origin inquiries (RCOI) for the conflict minerals they used. The GAO spoke with some of the companies, which reported that they had “difficulty obtaining necessary information from suppliers because of delays and other challenges in communication.” According to the report, the vast majority of companies (94%) also conducted due diligence on the source and chain of custody of the conflict minerals they used, but 67% reported that they were unable to determine the source of the minerals (i.e., whether they came from the covered countries) and, not surprisingly, “none could determine whether the minerals financed or benefited armed groups in those countries.”
The report also indicates that 24% reported that the conflict minerals they used did not originate in covered countries, while 4% reported that they did source from the covered countries, but “indicated that they are or will be taking action to address the risks associated with the use and source of conflict minerals in their supply chains.” Only 2% indicated that their conflict minerals came from scrap or recycled sources.
The report estimates that only 47% of companies reported that they received responses from the suppliers they surveyed, while only 19 companies in the sample had response rates of 100%.
As noted in this MoFo blog, the SEC is seeking comment by next Monday for the the NYSE proposal to amend the shareholder approval rules (Sections 312.03(b) and 312.04) to exempt an “Early Stage Company” from having to obtain shareholder approval before issuing shares for cash to related parties (or their affiliates or entities in which they have a substantial interest), so long as the company’s audit committee (or a comparable committee comprised solely of independent directors) reviews and approves of the transactions prior to their completion. An “Early Stage Company” is defined as a company that has not reported revenues greater than $20 million in any two consecutive fiscal years since its incorporation; however, the company will lose that designation (and will not be able to regain it) at any time after listing on the NYSE that it files a Form 10-K with the SEC in which it reports two consecutive fiscal years (including periods prior to listing) in which it has revenues greater than $20 million in each year.
A member asked me to run a poll on whether folks thought that Apple CEO Tim Cook’s email to CNBC host & fund manager Jim Cramer about China trends violated Reg FD. The facts as we know them are semi-sparse. This MarketWatch article contains some scant Reg FD analysis – as well as a copy of CEO Cook’s email.
Take a moment to participate in this anonymous poll:
survey service
Corp Fin Updates Financial Reporting Manual: How Delinquent Filers Can “Catch-Up”
Yesterday, Corp Fin posted an updated Financial Reporting Manual to provide guidance about how delinquent filers can make a “catch-up” filing. This guidance seems to reflect the long-standing position taken in Corp Fin’s Office of Chief Counsel about how companies that haven’t filed their ’34 Act reports in a long time can come back into compliance without filing all of their missed reports (since most of those missed reports would provide little value to investors at this point). Read Section 1320.4 of the Manual – but the guidance essentially is that Corp Fin has the discretion to allow a company to catch-up:
– By filing the last due Form 10-K (with “all material information that would have been included in those filings”) and any subsequent 10-Qs due since that last 10-K (the Manual doesn’t mention the 10-Qs but that is the Staff’s position)
– This discretion doesn’t absolve the company of any potential liability it has for being delinquent (nor preclude SEC Enforcement action)
– Catching up this way doesn’t mean that the company is now “current” for S-3/S-8/Rule 144 or Reg S purposes “until it establishes a sufficient history of making timely filings”
Jeff Riedler is retiring next week as Assistant Director of AD1’s Office of Health Care and Insurance.
October Conference Hotel Nearly Sold Out; Yesterday’s “Pay Ratio Workshop” Archive Available!
As it typically does a few months ahead of the event, our conference hotel in San Diego – the Manchester Grand Hyatt – is nearly sold out. We have procured an overflow hotel next door – the San Diego Marriott Marquis – for which you can obtain comparable room rates if you reserve online thru this page. But you’ll want to try the Manchester Grand Hyatt first – obtain a discounted rate there by following these instructions. This hotel relates to our popular conferences – “Proxy Disclosure Conference” & “Say-on-Pay Workshop” – to be held October 27-28th in San Diego and via Live Nationwide Video Webcast.
Those conferences are paired with the audio archives that are up from yesterday’s “Pay Ratio Workshop.” You can register at anytime to gain immediate access to these archives and also gain access to our October pair of conferences. Register Now! Here’s a list of the archived 9 panels for the “Pay Ratio Workshop”:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
The Course Materials alone are worth the price of admission. But this 4-hour audio-only event is paired with our much lengthier “Proxy Disclosure Conference” & “Say-on-Pay Workshop” that are being held in October. Register Now! Here’s a list of the 9 panels for the “Pay Ratio Workshop” (& the agendas for all three events):
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
In the wake of the pay ratio rules being adopted, get a handle on what you need to do now during tomorrow’s “Pay Ratio Workshop.” The Course Materials for tomorrow include 22-pages of annotated model pay ratio disclosures (in Word to facilitate your starting point!) – and 128-pages of detailed analysis of executive pay disclosures made during the 2015 proxy season. The Course Materials alone are worth the price of admission.
But there’s more! This 4-hour audio-only event is paired with our much lengthier “Proxy Disclosure Conference” & “Say-on-Pay Workshop” that are being held in October. Register Now! Here’s a list of the 9 panels for the “Pay Ratio Workshop”:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
In the wake of the pay ratio rules being adopted, this is one of the topic du jours. And it’s one that will be tackled during our “Pay Ratio Workshop” next Tuesday, August 25th during the panel entitled “How to Handle PR & Employee Fallout.” Register Now! This is an audio-only event (whose archive will be up immediately if you can’t attend live).
Here’s a list of the nine panels that will span over four hours of practical instruction on Tuesday:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
ESG: 75% of Investors Consider
Recently, the CFA Institute released these survey results showing that nearly 75% of respondents said that they take ESG issues into consideration in the investment process. In addition, 64% of respondents consider governance issues, 50% consider environmental issues and 49% consider social issues. Only 27% don’t consider ESG issues…
Corp Fin: Shelly Luisi Promoted to Associate Director
Congrats to Shelly Luisi for her promotion to Associate Director in Corp Fin! As noted in this press release, Shelly previously served as a Senior Associate Chief Accountant in the SEC’s Office of the Chief Accountant. I believe this is the first time that someone from OCA was promoted into a Front Office gig within Corp Fin…
Yesterday, the DC Circuit Court of Appeals finally issued its opinion on rehearing in NAM v. SEC and, by a 2-1 vote, reaffirmed its earlier decision that the SEC’s conflict minerals rules violate the First Amendment to the extent they require companies to describe their products as not being “conflict free.” The DC Circuit first issued its ruling in April 2014, but parts of the opinion were called into question by a subsequent DC Circuit opinion in American Meat Institute v. Department of Agriculture. Yesterday’s opinion reconsidered the earlier holding in light of American Meat.
The Corp Fin Staff has been rumored to be waiting for this ruling before it issues any further interpretive guidance on the conflict mineral rules. One area where guidance would be helpful concerns the interplay between the DC Circuit opinions and the rule’s two-year transition provisions, which – but for the DC Circuit’s ruling – would otherwise cease to apply to Forms SD filed in 2016. A recent Wall Street Journal article posited that issuers would have to begin obtaining third party audits over their conflict minerals reports in 2016, but the court’s holding calls this conclusion into question because the audit requirement is premised on the same constitutionally infirm language the court struck down. Corp Fin Director Keith Higgins issued a statement in April 2014 indicating that an independent private sector audit “will not be required unless a company voluntarily elects to describe a product as ‘DRC conflict free’ in its Conflict Minerals Report.”
Is Director Higgins’s statement still valid? Should issuers make any other changes to conflict minerals reporting in the future? The Staff may now feel empowered to answer these questions. The next Form SD is due May 31, 2016.
Pay Ratio Rules Published in the Federal Register
Yesterday, the SEC’s pay ratio rules were published in the Federal Register – so they have an effective date of October 19, 2015. That’s not the compliance date however…
In the wake of the pay ratio rules being adopted, you need to get a handle on what to do now – as there are tasks you should be accomplishing way ahead of your disclosure obligation. Tune into our “Pay Ratio Workshop” next Tuesday, August 25th – an audio-only event (whose archive will be up immediately if you can’t attend live). Register Now!
Here’s a list of the nine panels that will span over four hours of practical instruction on Tuesday:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
Why the SEC’s Pre-Existing Relationship Test is the Mirror Image of California’s
Here’s a blog by Keith Bishop comparing one of the new CDIs to California’s limited offering exemption…
Check out this Bloomberg article entitled “SEC Allows Tweets for Startups Raising Money”…
Who said the Ukraine is weak? (Kramer did.) Yesterday, the SEC announced fraud charges against 32 defendants for taking part in a global scheme that involved hacking into news wires to obtain nonpublic information from 150,000 earnings announcements over 5 years (but they only traded on 800 of those 150k). Those charged include two Ukrainian men – Ivan Turchynov and Oleksandr Ieremenko (hope they keep those names for the movie) – who allegedly did the hacking & 30 others who then traded on it, generating more than $100 million in profits. 150,000! 5 years! $100 mil!
This quote from this Washington Post article gives a sense of the brazenness of this scheme:
The hackers, who called the early-accessed filings “fresh stuff,” masked their movements through proxy servers and stolen employee identities, and recruited traders with videos showcasing how swiftly they could steal corporate data before its release. Traders kept “shopping lists” of the releases they wanted from select public companies, many of whom were large Fortune 500 conglomerates with heavy interest in market trading.
For each press release, there is a window of time between when the issuer provides a draft press release to the Newswire Service and when the Newswire Service publishes the release (the “window”). This window varied between a number of minutes and a number of days.
Are companies really giving their earnings releases to the wires days in advance? Obviously, not a good idea! Keep your confidential information under your control for as long as you can!
As an aside, here’s my 1st blog about this type of problem from 2010 – but these initial incidents didn’t appear to involve hacking, just premature “hidden” posting of earnings releases by companies. In these initial cases, companies were posting their releases early – but the URLs weren’t fully hidden. They weren’t linked to from anywhere on the corporate site yet – but they were posted early and bots were able to sleuth them out.
Particularly because – in some cases – the URLs for these releases followed a corporate convention so that even a human could have sleuthed it out by just typing in a specific URL (eg. URL for last earnings release ended in “3rdQ” – so next release would be “4thQ”). I don’t believe there’s been this type of incident recently – the Twitter snafu back in May didn’t seem to involve a URL sniffing bot per this blog…
Transcript: “Cybersecurity – Governance Steps You Need to Take Now”
We have posted the transcript for our recent webcast: “Cybersecurity: Governance Steps You Need to Take Now.”
7th Circuit Opens Door to Data Breach Class Actions
On July 20, 2015, the U.S. Court of Appeals for the 7th Circuit issued an opinion that could dramatically change the class action landscape for companies that are victims of hackers. In Remijas v. Neiman Marcus Gp., the 7th Circuit reversed the district court, ruling that Neiman Marcus (NM) customers whose credit card information was compromised had standing to bring a class action suit against the retailer.
1. Effective Date is Not Imminent (But You Still Need to Gear Up Now): We can look forward to new “Top 10” Lists in a couple years. Highest and lowest pay ratios. Although the rules aren’t effective until the 2018 proxy statements for calendar end companies, you still need to start gearing up, considering the optics of your ultimate disclosures. The rules don’t require companies to make pay ratio disclosures until fiscal years beginning after January 1, 2017.
2. You Don’t Need to Identify a New Median Employee Every Year! – This is the BIG Kahuna in the rules! A big cost-saver as the rules permit companies to identify its median employee only once every three years (unless there’s a change in employee population or employee compensation arrangements). You still need to disclose a pay ratio every year – but you don’t have to go through the hassle of figuring out who your median employee is each year. During those two years when you rely on a particular median employee, your median employee’s – and CEO’s – pay are the variables.
3. Pick Your Employee Base Within 3 Months of FYE – The rules allow companies to select a date within the last three months of its last completed fiscal year to determine their employee population for purposes of identifying the median employee (so you don’t count folks not yet employed by that date – but you can annualize the total compensation for a permanent employee who did not work for the entire year, such as a new hire).
4. Independent Contractors Aren’t Employees – Duh. Except there are nuances – so unfortunately it’s not a “duh”!
5. Part-Time Employees Can’t Be Equivalized – The rules prohibit companies from full-time equivalent adjustments for part-time workers – or annualizing adjustments for temporary and seasonal workers – when calculating pay ratios.
6. Non-US Employees & The Whole 5% Thing – For some reason, the mass media is in love with this part of the rules. The rules allow companies to exclude non-U.S. employees from the determination of its median employee in two circumstances:
– Non-U.S. employees that are employed in a jurisdiction with data privacy laws that make the company unable to comply with the rule without violating those laws. The rules require a company to obtain a legal opinion on this issue – can you say “cottage industry”!
– Up to 5% of the company’s non-U.S. employees, including any non-U.S. employees excluded using the data privacy exemption, provided that, if a company excludes any non-U.S. employee in a particular jurisdiction, it must exclude all non-U.S. employees in that jurisdiction.
7. Don’t Count New Employees From Deals (This Year) – The rules allow companies to omit employees obtained in a business combination or acquisition for the fiscal year in which the transaction took place (so long as the deal is disclosed with approximate number of employees omitted.)
8. Total Comp Calculation for Employees Same as Summary Comp Table for CEO Pay – The rules state that companies must calculate the annual total compensation for its median employee using the same rules that apply to CEO compensation in the Summary Compensation Table (you may use reasonable estimates when calculating any elements of the annual total compensation for employees other than the CEO (with disclosure)).
9. Alternative Ratios & Supplemental Disclosure Permitted – Companies are permitted to supplement required disclosure with a narrative discussion or additional ratios (so long as they’re clearly identified, not misleading nor presented with greater prominence than the required ratio).
10. Register NOW for Our August 25th “Pay Ratio Workshop” – You need to register now because the discount ends at the end of this Friday, August 7th. Registration also includes access to our two October conferences “Proxy Disclosure/Say-on-Pay” (for those, it’s either in person in San Diego or by video webcast – for the “Pay Ratio Workshop,” it’s an audio-webcast only event). The Course Materials will include model disclosures and more. Here’s the agendas for all three conferences. Act by Friday, August 7th to save!
According to my poll yesterday, pay ratios remind the most folks of Pink Floyd’s “Another Brick in the Wall”…and see Mark Borges’ blog on the rules…
Whistleblowers: SEC Issues Interpretive Release on Retaliation
A few days ago, as noted in this blog by Steve Quinlivan, the SEC issued this interpretive release that appears to lay to rest some uncertainty raised by a 5th Circuit case in 2013. The SEC confirmed that an individual who reports internally and suffers employment retaliation will be no less protected as a whistleblower than an individual who comes immediately to the SEC. Here’s an excerpt from the release:
Since our adoption of the whistleblower rules, we have consistently understood Rule 21F-9(a) as a procedural rule that applies only to help determine an individual’s status as a whistleblower for purposes of Section 21F’s award and confidentiality provisions. Similarly, it has been our consistent view that Rule 21F-2(b)(1) alone controls the reporting methods that will qualify an individual as a whistleblower for the retaliation protections. Notwithstanding our view that Rule 21F-2(b)(1) alone controls in the context of determining the relevant reporting procedures for an individual to qualify as a whistleblower eligible for Section 21F’s employment retaliation protections, the Court of Appeals for the Fifth Circuit expressed some uncertainty about this reading in a recent decision. [Asadi v. G.E. Energy (U.S.A.), L.L.C., 720 F.3d 620, 630 (5th Cir. 2013).] Although we appreciate that if read in isolation Rule 21F-9(a) could be construed to require that an individual must report to the Commission before he or she will qualify as a whistleblower eligible for the employment retaliation protections provided by Section 21F, that construction is not consistent with Rule 21F-2 and would undermine our overall goals in implementing the whistleblower program. ………. [reasons]
For the foregoing reasons, we are issuing this interpretation to clarify that, for purposes of Section 21F’s employment retaliation protections, an individual’s status as a whistleblower does not depend on adherence to the reporting procedures specified in Rule 21F-9(a).
Transcript: “Selling the Public Company – Methods, Structures, Process, Negotiating, Terms & Director Duties”
We have posted the transcript for our recent DealLawyers.com webcast: “Selling the Public Company: Methods, Structures, Process, Negotiating, Terms & Director Duties.”
With the SEC Commissioners gathering for an open Commission meeting at 10 am this morning to consider adopting final pay ratio rules, you may ask yourself: “Might the Commissioners actually not vote in favor of adoption?” Based on historical evidence, the answer is simply “no.”
Over three decades of observing the SEC, I can’t recall a rule not being adopted when brought to a vote at an open Commission meeting. Any SEC Chair worth her salt would save herself the embarrassment of not getting a desired rule over the finish line by not bringing it up for a vote at a public meeting. Bear in mind that there are plenty of proposed rules that never get adopted – but none of those were brought up for a final vote at an open Commission meeting.
And even proposals don’t get shot down at open Commission meetings. At least not since the ’80s. Former SEC Secretary Jack Katz notes a few instances way back when proposals were shot down in a public forum. One was when the SEC’s Chief Accountant proposed new accounting treatment for oil production that was rejected unanimously by all the Commissioners in the early ’80s. And another one followed the ’87 market break, when Market Reg proposed a series of legislative changes to be forwarded Congress – some of which were blessed by the Commissioners and some were not.
Note that there are rules that die during the seriatim process – not because they got explicitly rejected, but because a Commissioner’s office “sits” on it (often for years) and refuses to advance the seriatim to the next Commissioner’s office. The Chair then has to decide whether it’s worth it to take the languishing rule to an open meeting – and typically will not do so for fear of a public rejection. So the seriatim just withers on the vine. So we don’t even know that a final rule has essentially been rejected because all of this plays out behind closed doors (see this blog about whether an open Commission meeting is necessary). Thanks to Hunton & Williams’ Scott Kimpel for his help!
Also note that enforcement matters get voted down at closed Commission meetings periodically…
Pay Ratio Workshop: Discounted Rates End at End of This Friday, August 7th! – We want to help you get prepared – so I have put together a “Pay Ratio Workshop” that will be held on Tuesday, August 25th, which will be held online via audio webcast. Here’s the “Pay Ratio Workshop” agenda.
This “Pay Ratio Workshop” is part of a registration to the “Proxy Disclosure Conference” & “Say-on-Pay Workshop” that will be held on October 27th-28th in San Diego and by video webcast. In other words, this new audio-webcast only event is paired with our prior pair of executive pay conferences. So it’s three conferences for the price of one! Register now – discounted rate available only through August 7th!
– For those registered to attend in San Diego in person or by video, you also gain access to the August 25th “Pay Ratio Workshop” that is available only by audio webcast
– You will receive an ID/pw to access the August 25th “Pay Ratio Workshop” by the middle of August (although it will just be your existing ID/pw to our sites if you already have a membership)
– There is no CLE available for the “Pay Ratio Workshop” (but there will be CLE for the “Proxy Disclosure/Say-on-Pay” Conferences in October in most states)
– An audio archive of the “Pay Ratio Workshop” will be available starting on August 25th in case you can’t catch that event live
ISS Seeks Input: Annual Policy Survey
ISS has opened its annual survey ahead of updating its policies. The survey closes on September 4th – and then the results are released a few weeks later. Then there’s an open 30-day comment period in October – with the final policy updates arriving sometime in November typically. The entire policy process is described on ISS’ website. ISS has also posted its preliminary ’15 proxy season review…
Poll: Pay Ratio Reminds You of Which Song?
Take a moment to participate in this anonymous poll:
