Yesterday, the SEC posted this 31-page “request for comment” about earnings releases & quarterly reports – and deleted consideration of this topic from the meeting agenda for today’s open Commission meeting. The SEC released its request for comments – and adopted the hedging rules – ahead of schedule to provide more time for the other rulemakings still on the agenda, which remains very full. We’re posting memos in our “Earnings Releases” Practice Area.

Here’s some analysis from John:

The number – and depth – of the questions the SEC raises about the relationship between Form 10-Q and earnings releases (29 out of 46) in comparison to those addressing reporting frequency suggests to me that the SEC may be more interested in tinkering with quarterly reporting requirements rather than seriously considering a move to semi-annual reporting.

Also, the SEC’s questions surrounding how a change to semi-annual reporting under the Exchange Act would impact Securities Act registration requirements suggest that even if they went to semi-annual reporting, the requirements for Securities Act filings are likely to remain unchanged. There are lots of good reasons why the SEC might do that – but if so, then changing the frequency of 10-Qs would be practically meaningless to any company that wants to preserve its ability to access the capital markets quickly.

SEC Adopts Hedging Rules

Yesterday, the SEC adopted the hedging rules required under Section 955 of Dodd-Frank. The SEC adopted the rules a day before they were supposed to be considered at today’s open Commission meeting – and deleted consideration of this topic from the meeting agenda. Except for “smaller reporting companies” and “EGCs” – which get a one-year pass to mid-2020 – the new hedging rules apply to proxies filed during fiscal years beginning after July 1, 2019.

Here’s the SEC’s press release (the adopting release isn’t available yet) – and we’ll be posting memos in our “Hedging” Practice Area on CompensationStandards.com.

ISS Issues “Final” Comp FAQs

Last week, ISS released its “final” compensation FAQs – the “preliminary” set was issued last month. Here’s a blog from FW Cook’s Samantha Nussbaum about the final FAQs…

– Broc Romanek

Here comes another salvo in the battle over mandatory arbitration. Recently, John blogged about possible problems with “compelling shareholders to arbitrate” bylaws under Delaware law (here’s an article on that topic). Now comes news about the use of shareholder proposals to have companies adopt mandatory arbitration. Here’s the intro from this WSJ article by Dave Michaels:

Johnson & Johnson is being drawn into a battle over how much freedom shareholders have to sue companies, in a bid by lawsuit opponents to force regulators to pick sides over investors’ access to the courts. Hal Scott, a Harvard University professor who represents a trust that owns J&J shares, filed a shareholder proposal with the company that would push shareholder disputes into private arbitration hearings, instead of federal court. J&J doesn’t want to bring the proposal up for a shareholder vote, and this week the health-care products company asked the Securities and Exchange Commission for permission to reject it.

Supporters of mandatory arbitration say it would save companies money and time, arguing arbitration would be faster and less expensive than grinding out federal lawsuits involving thousands of investors. Proponents argue that class-action access to the courts is vital for holding corporations and executives accountable to shareholders. “This is an important issue for the capital markets,” Mr. Scott said in an interview. “It affects whether private companies want to go public, and whether foreign companies want to list [here].”

About 8.5% of all U.S. exchange-listed companies are projected to be targets of class-action lawsuits in 2018, according to Cornerstone Research, a litigation and economic consulting firm. That is well above the 20-year average of 2.9%, Cornerstone said. Securities class-action lawsuits typically focus on claims that public companies either misled investors about important facts or events, or failed to disclose important information that would have altered shareholders’ investment decisions.

Much of the expense is born by existing shareholders, with other shareholders sometimes benefiting from a settlement or judgment. Research into whether such judgments deter future wrongdoing has been inconclusive, said Donald Langevoort, a securities-law expert at Georgetown University. Mr. Scott is seeking to list his proposal for a bylaw change that would require mandatory arbitration on J&J’s 2019 proxy statement. J&J shareholders would vote on the measure next year.

J&J wrote the SEC this week asking permission to exclude the proposal from its ballot. Forcing investors into arbitration would violate parts of federal law that forbid asking investors to waive their legal rights, J&J’s attorneys wrote. The SEC rules every year on whether companies can omit different shareholder proposals. While public companies could benefit from arbitration, some fear it would offend investors if they were to push too aggressively for it. A J&J spokesman declined comment beyond the company’s letter.

SEC Chairman Jay Clayton has said he wants to avoid a brawl over mandatory arbitration that would pit business groups against investors and likely splinter the five-member commission along party lines. Some Republican commissioners say arbitration should be given a shot if stockholders agree with it.

SEC & PCAOB Revive Chinese Auditor Scare

This MarketWatch article by Francine McKenna says it all about this recent joint SEC/PCAOB statement about the lack of regulator access to audits of Chinese companies that are listed in the US. As the MarketWatch article notes, the SEC & PCAOB haven’t told us why they released this joint statement. Was it in reaction to something they know (that we should know)? Francine ponders whether there is some big China auditor fraud brewing and the US regulators will point to this statement as “we have a “disclosure regime” style here and well, we warned you, our hands are tied here.”

Also see this podcast with Tom Fox & Matt Kelly…

How PCAOB Inspections Might Impact You…

As noted in this article, the PCAOB recently published this “outlook” about it’s intended areas of inspection for next year – some of which impact areas that audit committees are responsible for…

By the way, we’re posting memos that summarize the recent AICPA conference in our “Conference Notes” Practice Area…

– Broc Romanek

Due to popular demand, we have posted the transcript for last week’s webcast – “Shareholder Proposals: Corp Fin Speaks” – featuring Corp Fin’s Matt McNair in record time…

Pay Ratio: Letter from Investor Group to Fortune 500

Here’s news from this ’Willis Towers Watson’ blog:

Companies preparing for Year 2 CEO pay ratio disclosures now have more questions to consider. Recently, Fortune 500 company compensation committees began receiving a letter from a group of 48 institutional investors requesting them to disclose more information on workforce compensation practices.

The letter posits that since “disclosure of the median employee’s pay provides a reference point for understanding the company’s workforce,” companies should move “to help investors put this pay information into the context of your company’s overall approach to human capital management” with more expansive disclosure.

IRS Issues Section 83(i) Guidance

A few days ago, over on CompensationStandards.com, I blogged about new Section 83(i) of the Internal Revenue Code – it allows private company employees to defer taxes for up to five years from the exercise of a stock option or settlement of a RSU. Recently, the Treasury Department & IRS issued this notice about this new provision. This memo from Davis Polk outlines the key takeaways (we’re posting memos in our “Restricted Stock” Practice Area on CompensationStandards.com):

– The measurement period to determine whether the employer satisfied the eligibility requirement that 80% of U.S. employees received grants is measured on a single calendar year basis and does not take into account grants made in prior years

– Employers must withhold taxes at the maximum individual rate in effect at the time the stock with respect to which a Section 83(i) election has been made (deferral stock) is treated as received in income and will be treated as a noncash fringe benefit, which will provide employers additional time to collect amounts required to be withheld from employees

– The employee and employer must agree to place deferral stock in escrow to ensure that applicable withholding taxes are deducted

– An employer may opt out of Section 83(i) by not establishing an escrow arrangement

– Broc Romanek

Tune in tomorrow for the webcast – “Shareholder Proposals: Corp Fin Speaks” – with Corp Fin’s Matt McNair, who has headed the Division’s “Shareholder Proposal Task Force” for the past five years. Tune in to learn the experiences with implementing Staff Legal Bulletin 14I from this past proxy season – and learn the intricacies of new SLB 14J.

SEC Enforcement: Number of Actions Tripled in Last Six Months

Last month, John blogged about the Enforcement Division’s annual report on its activities – and how the SEC disputed calculations that showed a significant decline in actions over the last couple of years. This annual study from Cornerstone Research & NYU, which was released yesterday and breaks out the numbers for public companies, seems to support the SEC’s view – it shows that SEC enforcement actions more than tripled in the second half of the fiscal year, reversing the decline that began in 2017. In announcing the results of their study, the researchers highlighted these findings (also see this “D&O Diary” blog):

– The last quarter of FY 2018 saw the highest number of public company and subsidiary actions that also named individuals as defendants in a single quarter tracked by the Securities Enforcement Empirical Database (SEED).

– The SEC continued to bring the substantial majority (85 percent) of actions against public companies and subsidiaries as administrative proceedings in FY 2018. In contrast, the majority (55 percent) of actions without public companies or subsidiaries were filed as civil actions in FY 2018.

– Almost half (45 percent) of public company and subsidiary actions involved Broker Dealer or Investment Advisor/Investment Company allegations. This is consistent with the SEC’s focus on retail investors and the launch of its Retail Strategy Task Force at the end of FY 2017.

– More than half (61 percent) of public company and subsidiary defendants cooperated with the SEC during the fiscal year. This marked the fourth fiscal year in a row in which more than half of public company and subsidiary settlements noted some form of cooperation.

– The SEC imposed monetary penalties in nearly all (89 percent) of its FY 2018 settlements with public companies and subsidiaries. This percentage is consistent with the FY 2010–FY 2017 average of 84 percent.

More on “Comment Trends: Corp Fin’s ‘Top 10′”

Not too long ago, I blogged about trends in Corp Fin comment letters. We’ve since posted a few additional resources in our “Comment Letters” Practice Area – including this interactive summary from PwC and this 191-page roadmap from Deloitte.

This Audit Analytics blog reiterates that the overall number of comment letters has been declining for nearly a decade – but companies should stay attuned to perennial favorites (MD&A, non-GAAP) & trending topics (revenue recognition). The blog is particularly helpful because it includes sample comments – like these, which deal with revenue recognition:

– We note your disclosure regarding three performance obligations under your franchise agreements. It appears that you have concluded that these items are not distinct and therefore are not separate performance obligations given your conclusion that they are highly interrelated. Please revise your disclosure to clarify your conclusions. Reference 606-10-25-22.

– Please revise your disclosure to provide your accounting policy on revenue recognition as a result of your implementation of FASB ASC 606. Please refer to the guidance in FASB ASC 606-10-50 and Article 10 of Regulation S-X.

– Please revise your disclosure to provide your conclusion on the effectiveness or ineffectiveness of your Disclosure Controls and Procedures. In addition, please provide a detailed discussion on how the non-disclosure of your revenue recognition policy in the Form 10-Q affected your conclusion.

– Liz Dunshee

Last week, SEC Chair Jay Clayton delivered this speech, where he outlined where the SEC stands on its rulemaking agenda – as well as the priorities for 2019. See Exhibits A & B of the speech for handy charts (and this blog from Davis Polk’s Ning Chiu and WSJ article). Key initiatives include:

– Reviewing ownership & resubmission thresholds for shareholder proposals – including whether there are factors in addition to the amount of money invested and length of holding period that would reasonably demonstrate the shareholders’ interests are aligned with those of long-term investors

– Proxy advisor reforms – including transparency, conflicts, whether certain matters should be analyzed on a company-specific basis (rather than market-wide), and investor access to issuer responses to reports

– Proxy plumbing – focusing on improvements to the current system, rather than a major overhaul

– Cybersecurity – including disclosure controls & procedures, insider trading policies, risk factor disclosures, and the SEC’s own cyber-risk profile

– Brexit & LIBOR disclosures – SEC is monitoring these risks and whether their impact is adequately disclosed

– ICOs – continuing 2018 efforts to protect investors

– Quarterly reporting & guidance – studying the current regime to determine whether it can be improved

– Capital formation & access to investment opportunities (Jobs Act 3.0) – expanding testing-the-waters and making Regulation A available to public companies

Senate Banking Committee’s Hearing on Proxy Voting Process

Last week, the Senate Banking Committee held a hearing on the proxy voting process. Here’s a video of the hearing – and this Wachtell Lipton memo summarizes the proceedings. Don’t forget to tune in this Thursday to our webcast with Corp Fin’s Matt McNair: “Shareholder Proposals: Corp Fin Speaks.”

SCOTUS Oral Argument: Anti-Fraud Liability – Is Janus Dead-Letter Law?

Back in 2011, the Supreme Court rejected the idea that distribution of allegedly false statements by a broker-dealer was enough to create anti-fraud liability under Rule 10b-5(b) – explaining that because they didn’t have “ultimate responsibility” over the statement, they weren’t the “maker” described in the rule. Broc blogged about the case – Janus Capital Group v. First Derivative Traders – at the time. But he also later blogged that the SEC wasn’t giving up its expansive view of Rule 10b-5 – arguing that a different test applied to subsections (a) and (c).

Now, that theory has also made its way to the Supreme Court – which held its oral argument last week. In Lorenzo v. SEC, the SEC is pursuing a former broker who says that at the request of his boss, he copied & pasted a message and distributed it to potential investors – and come to find out, that message contained misleading information about a troubled company.

This Simpson Thacher memo provides notes about SCOTUS’ oral argument, as well as explains the circuit split – and its potential impact on SEC enforcement & private litigation. Here’s their prediction about what could happen:

The justices appear split on the issues of this case, with Justices Ginsberg, Breyer, Sotomayor and Kagan (the original dissenters in Janus) appearing sympathetic to the government and Chief Justice Roberts and Justices Thomas, Alito and Gorsuch seemingly skeptical of expanding SEC enforcement abilities. With Justice Kavanaugh recused, this could leave open the possibility of a split decision, which, while affirming the D.C. Circuit’s decision below as to Lorenzo, would fail to resolve the circuit split, potentially encouraging forum shopping by private plaintiffs.

If the Court does reach a majority in favor of the government’s position, however, this case stands to have broad implications for private securities litigants. If Rule 10b-5(a) and (c) can be used to circumvent the “maker” requirement of Rule 10b-5(b) under Janus, private plaintiffs could potentially bring securities fraud actions against individuals who are otherwise only minimally connected to the misstatement.

– Liz Dunshee

Yesterday, the SEC posted this Sunshine Act notice of an open Commission meeting next Wednesday – December 5th – to consider a “request for comment” on the nature & content of quarterly reports and earnings releases. As we’ve blogged several times, the request is bound to seek comment on the reduction (and even elimination) of quarterly reporting – as tweeted by President Trump. Here’s an excerpt from this WSJ article that John is quoted in:

One question the SEC may ask in its release, up for a vote next Wednesday, is whether quarterly guidance about expected earnings from companies unnecessarily drives expectations for investors, and whether that guidance could be pared back. Earnings guidance is voluntary and isn’t required by the government. Among possible changes, the SEC could also reduce the number of disclosures required in quarterly reports, which some companies view as excessive in an age when company information is readily available to the public.

“Do we really need the ’thou shalts’ from the SEC in an age when we have so much more information at our fingertips?” said John Jenkins, partner at Calfee, Halter & Griswold LLP and an editor of TheCorporateCounsel.net.

Federal securities rules have required quarterly reporting since 1970, when the SEC required it as part of a formalization of stock-exchange practices that preceded the agency’s creation in 1934. The SEC’s planned meeting isn’t the start of a formal rule-making process and is intended to solicit feedback on how the quarterly reporting system is functioning and what improvements could be made, a step that could in the future lead to regulatory changes.

Upcoming Webcast: “Shareholder Proposals – Corp Fin Speaks”

I just calendared a webcast – “Shareholder Proposals: Corp Fin Speaks” – with Corp Fin’s Matt McNair, who has headed the Division’s “Shareholder Proposal Task Force” for the past five years. Tune in to learn the experiences with implementing Staff Legal Bulletin 14I from this past proxy season – and learn the intricacies of new SLB 14J. Also see this blog by Cydney Posner about some no-action positions taken on “ordinary business” since SLB 14J came out last month…

Edgar: SEC Seeks Feedback

Recently, I blogged about how the SEC has started to post notices of Edgar outages – and that you’re encouraged to contact “Edgar Filer Support” to report a problem. Now, the SEC has posted an Edgar questionnaire, hoping to get feedback concerning the user-filing experience…

Blockchain & Audits

Recently, PCAOB Board Member Kathleen Hamm gave this speech about the intersection of blockchain & auditing…

Don’t forget to tune into our upcoming webcast: “Audit Committees in Action: The Latest Developments“…

– Broc Romanek

We’re in a strange business when it comes to insider trading. Over the years, I’ve had interesting – and sometimes humorous – brushes with it. Here are a few thoughts:

1. We Often Don’t Have As Much MNPI As Folks Think – Even if you’re a deal lawyer, you often won’t have material nonpublic information except in those narrow windows when a deal is being first negotiated. When I was young, I was with a friend at a reggae bar and he told some local that he worked for the SEC. This happened in San Diego (which isn’t relevant but felt I should share). The guy then proceeded to harass my friend, begging for some “inside information.” We quickly left. When you work in Corp Fin, you very rarely gain access to MNPI. Be wary of any stories that begin “we were at a reggae bar.”

2. Don’t Accept MNPI – You might have friends in this field that might be wearing their ‘ethics hat’ crooked. I once had an acquaintance – who was in-house – who unsolicited offered some MNPI. Out of the blue. I politely declined. There are many SEC enforcement actions against lawyers in our field who trade on MNPI. Tippee liability still exists.

3. The SEC Knows Who’s Trading Your Stock – When I first went in-house, I got a call from SEC Enforcement because my new employer had just announced a deal and there was suspicious trading right before the announcement. The call was just to confirm that the folks doing the suspect trading had no connection with our company (they didn’t).

It always amazes me that folks engaging in trading on MNPI don’t think they’ll get caught – but yet a quick glance at their phone records reveals a call with the original tipper, followed by a big trade – a trade far greater in size than they’ve ever made before. Circumstances that just can’t be explained away. Dummies. How do you explain why you’re texting using a Nigerian dialect to discuss a certain trade?

4. Maybe Insider Trading Shouldn’t Be Illegal? – Then again, I’ll admit that it just doesn’t feel right that insider trading is illegal (the ‘victimless crime’ angle). We are conditioned to know it’s illegal because of our occupation – but for those not in our community, all they know is that obtaining inside information is the only way to get ahead. A hot tip about a job opportunity. Buying a house that hasn’t come on the market yet. Goes on & on. Only in our field is insider trading something that isn’t tolerated. Insider trading in stocks isn’t illegal in some countries fyi.

Do All Pro Athletes Engage in Insider Trading?

With the SEC’s recent announcement that a former CEO tipped off a former pro baseball player – Doug DeCinces – it reminded me of the numerous other sports figures that have been caught by the SEC for insider trading over the years. Just a few months ago, a NFL player got nabbed. And there are many more instances.

So I ask the question – do pro athletes have more of a propensity to be involved in insider trading than our average citizen? Or is it that the SEC just likes to bring these high-profile cases as a deterrent? My guess is that it’s both. On the one hand, sports figures might have more people trying to kiss their behinds and nothing says “I really want you to like me” like the sharing of some material nonpublic information. And the SEC has never hid the fact that a high-profile case always trumps a low-profile one as they are juggling scarce resources.

I would be remiss not to mention that Doug Decinces is a former Rochester Red Wing. This is my way of kissing John’s behind since he hails from that god-forsaken cold place…

Poll: Your Views on Insider Trading?

Please participate in this anonymous poll about your feelings about trading on material nonpublic information:

– Broc Romanek

Hats off to Corp Fin for overhauling the “look” – meaning the layout & organization – of the landing page for its “Compliance & Disclosure Interpretations.” The new layout makes it more logical for newbies doing research.

But I have heard complaints that this new layout makes it difficult to determine what are the latest CDI changes. Here’s one of these complaints: “I get notified by text that they’ve issued new C&DIs, but the link just drops you in that landing page. I used to do a word search on the date, but that no longer works.”

Meanwhile, Corp Fin continues its project of overhauling the CDIs, doing so in waves (so far, the CDIs related to smaller-reporting companies, cross-border deals & the last of the telephone interps have been changed). Corp Fin is seeking input on the project – so if you see CDIs that you think need tweaking, let them know…

“Hidden” Right Wing Groups Called Out

We’ve blogged before about the “Main Street Investors Coalition” – a right-wing group with a big budget who entered our space this year. Some in the mass media have caught onto their strategy, like this LA Times article. This article also notes the activities of the American Council for Capital Formation (aka “ACCF) and the American Association of Senior Citizens, both of whom also are right-wing groups who issued “studies” ahead of the SEC’s recent “proxy process roundtable” about proxy advisors.

Not only is the mass media catching on, so are other folks. For example, see this article about Morningstar being upset about the “hidden” nature of these groups. And here is a note that I received from a member:

This strategy seems really dumb to me. Why do they put these astroturf organizations out front on this issue? Funny thing is, like a lot of people who work with public companies, I think proxy advisors could use some oversight, but this is so transparently manipulative & deceptive that it sours me on the whole effort.

Ain’t that the truth. And then you wind up with this type of article that ties large CEO pay packages to the whole effort and things really start to feel squishy. Companies need to remember: when you bash proxy advisors, you are also bashing their clients – your institutional investors – since they are the ones paying the proxy advisors. And many institutional investors are pretty vocal that they vote independently & thoughtfully. That’s literally the title of this note from Investment Company Institute. My hunch is that the SEC hasn’t been fooled by all this propaganda either…

Silicon Valley’s New “Stock Exchange” Stalled at the SEC

Here’s the intro from this WSJ article:

Silicon Valley’s plan to build a better stock exchange for the nation’s hottest startups hit a snag earlier this year when a member of the Securities and Exchange Commission opposed it, people familiar with the matter said. The Long-Term Stock Exchange—a proposed new market backed by venture capitalist Marc Andreessen, LinkedIn co-founder Reid Hoffman and other tech luminaries—was criticized by SEC Commissioner Robert Jackson Jr. He questioned whether the exchange’s model could entrench the power of founders and early investors in startup companies while hurting other shareholders, the people said.

The agency’s approval is needed to approve major changes to how exchanges work, and any member of the SEC can slow the process by calling for a full commission vote. Mr. Jackson’s move, which hasn’t been previously reported, overrode a decision by SEC staff to approve LTSE’s rules for listing companies, the people said.

The exchange that joined with LTSE to advance its listing rules, IEX Group, withdrew its proposal in August, after Mr. Jackson voiced his concerns but before the full commission could vote on it. LTSE had struck a partnership with IEX so it could launch its business more quickly and because it doesn’t yet have a license to run a stock exchange. An IEX spokesman said the firm withdrew the plan to give institutional investors more time to study LTSE’s tailored rules. “While we have decided to end our work together, IEX continues to support LTSE’s mission and focus on long-termism in the market,” spokesman Gerald Lam said.

– Broc Romanek

Last week, as noted in this Steve Quinlivan blog, ISS released five “preliminary” compensation FAQs, which includes a one-year deferral of its controversial policy over excessive director pay. There are no changes to the quantitative pay-for-performance screens nor changes to the passing scores for Equity Plan Scorecard (EPSC) evaluations of stock plan proposals (but there are new EPSC ‘overriding’ factors and a change to the change-in-control vesting factor). “Final” FAQs are expected in a few weeks…

Hats off to my pal – Bass Berry’s Jay Knight – for having his family featured on the season finale of “Property Brothers”! Jealous! Read Jay’s blog about it…

How Often Does the SEC Chair Have Meetings?

I despise meetings. Probably the best part of my current job is that I have very few meetings. By “few,” I mean none. Lucky me! Many of the other jobs that I’ve had were full of meetings. Particularly working in-house. That had multiple meetings every single day. Ugh.

Anyway, how many meetings do you think the SEC Chair has each day? The answer is a lot. The weird thing is that the SEC publishes a regular list of these meetings. Apparently, that’s been going on for some time. No idea why – but the URL for the list has “FOIA” in it. So I imagine that someone made a request. Given my distaste for meetings, I would say that it looks like a tough job…

Tomorrow’s Webcast: “How Boards Should Handle Politics as a Governance Risk”

Tune in tomorrow for the webcast – “How Boards Should Handle Politics as a Governance Risk” – to hear CalPERS’ James Andrus, Downey Brand’s Bruce Dravis, Politicom Law’s Erin Lama and Richard Levick discuss the increasing risks caused by the entanglement of business & politics and how boards oversee the different dimensions of political speech.

– Broc Romanek

One of the top priorities for SEC Chair Jay Clayton – and Corp Fin Director Bill Hinman – has been the easing of the burdens of being a public company, with the ultimate goal of convincing more companies to go public. This theme has been mentioned many times over the past few years – including raising the threshold for the definition of “smaller reporting company” earlier this year.

So it’s no surprise that the SEC published a larger list than usual to be reviewed last week as part of the SEC’s annual exercise – as required under the Regulatory Flexibility Act – to review how the agency’s rules are faring for smaller reporting companies. This year’s list boasts 43 rules (compare that to 2004; only 7 rules). Like in prior years, the rules listed for review aren’t limited to rules that affect small companies. Notably, the list doesn’t include the elimination of quarterly reports entirely for smaller companies – which I do think will eventually be proposed based upon comments made by Bill at the ABA meeting a few weeks ago.

Although some of the listed rules don’t apply to public operating companies (ie. apply to mutual funds, etc. instead), some do apply to our community including:

1. Executive pay & related-party disclosures (this is the “biggie” on pages 5-6; rethinking the 2006 rule amendments)
2. Shareholder proposals regarding director nominations by shareholders
3. XBRL
4. E-delivery
5. E-proxy (aka “notice & access”)
6. E-forums
7. Proxy disclosure enhancements (ie. board leadership, comp consultants, board oversight of risk)
8. E-filing of Form D
9. S-3 eligibility

Although this list is open for public comment, the annual list typically results in only an average of one comment per year, as noted in this statement by then-Commissioner Piwowar in ’16…

The Latest “Director Views” Stats

We’ve added this directors survey from BDO to our comprehensive library of governance surveys. The highlights include:

– Total Tax Liability: Only 44% indicate a strong understanding of their organization’s total tax liability and how it impacts the company’s tax strategy.
– Non-GAAP Measures & KPIs: More than three-quarters (76%) of corporate board directors say they do not believe additional guidance from regulators on non-GAAP and other KPIs in their financial statements is necessary. However, when asked if auditor involvement would promote higher investor confidence in non-GAAP measures, a majority (54%) of public company directors say that it would.
– Diversity & Service Limits: When asked if their board was addressing the issue of board diversity, more than 8-in-10 (81%) directors said yes, an increase from 2017, when only 66 % of respondents said the same. Nearly one-fifth (19%) of directors believe their board has room to grow on this measure.
– Sustainability Reporting: While sustainability disclosures were a priority for public company board members in last year’s survey, data indicates the focus on sustainability has perhaps temporarily been put on the back-burner. 74% of public company board directors surveyed do not believe that disclosures regarding sustainability matters are important to understanding a company’s business and helping investors make informed investment and voting decisions.
– Tax Law: 61% of directors note a favorable impact from the Tax Cuts &Jobs Act of 2017, while 39% say this law change had no impact at all on their business.

– Broc Romanek