October is here, and that means our Proxy Disclosure & 22nd Annual Executive Compensation Conferences are just around the corner. We hope to see you in person in Las Vegas on October 21st and 22nd or to have you join us virtually if travel isn’t an option. Not sure about attending? Here’s a taste of what you’ll miss out on if you don’t:
– Two “SEC All-Stars” panels featuring insights from former senior SEC staff members on today’s most pressing proxy disclosure, governance and executive compensation issues.
– Our “Year of the Clawback” panel will share insights from leading practitioners about the lessons learned from the restatements announced and clawbacks instituted in 2025 — plus ongoing considerations for your own clawback policy.
– Our “Navigating ISS & Glass Lewis” panel will offer insights from representatives of both proxy advisors to help you prepare for the 2026 proxy season, including key policy changes, disclosure dos and don’ts, tips for engaging with proxy advisors and more.
– Our “Delaware Hot Topics” panel featuring insights from leading lawyers within and outside of Delaware to help get you up to speed on the latest developments in Delaware law and share practical tips for Delaware corporations.
Of course, this just scratches the surface of what our world-class speakers will cover during our two full days of timely & topical panels at our PDEC Conferences – so sign up today! You can register online or reach out to our team by emailing info@ccrcorp.com or calling 1.800.737.1271.
If you’re attending in person, please join us on Monday, October 20th from 4:00 to 7:00 pm for a casual reception celebrating CCRcorp’s 50th anniversary and offering you an opportunity to network with your fellow attendees, sponsors, exhibitors and our CCRcorp team!
The SEC’s decision to change its policy on mandatory arbitration bylaws has received favorable reviews from public companies and their advisors, but this Mintz memo cautions companies considering such a bylaw that there are some advantages to litigating securities cases in federal court that they need to keep in mind. This excerpt discusses the PSLRA’s automatic stay provisions, which don’t apply to arbitration:
Congress designed the PSLRA in part to deny serial securities plaintiffs the opportunity to leverage strike suits and frivolous class claims to extract sometimes-handsome nuisance settlements from companies. One strategy a plaintiff may use to gain leverage in such negotiations is to exploit the significant time and expense that defendants must bear in responding to plaintiff’s discovery requests for documents, testimony and information at the outset of most lawsuits.
To correct that imbalance, the PSLRA, where applicable, imposes an automatic stay of discovery in all cases where defendants have filed a motion to dismiss, which ensures that cases that are not well-pled (i.e., that are likely frivolous) are thrown out before they cost the parties substantial sums. Arbitration, however, has no stated rule or mechanism for staying discovery. Defendants therefore may be required to pay to meet discovery obligations even when moving to dismiss a frivolous arbitration claim.
Other benefits of a federal forum noted in the memo include the PSLRA’s heightened pleading standards, the finality offered by the resolution of a class action lawsuit, the right to appeal an adverse ruling, and the possibility that in some cases, arbitration may prove to be a more expensive process than litigation.
With the possibility of eliminating mandatory quarterly reporting moving to the top of the SEC’s agenda, this Debevoise memo discusses some of the potential pros and cons of moving to a semi-annual reporting regime.
On the positive side, the memo cites the possibility of a greater long-term focus for public companies, lower regulatory compliance costs, and potential alignment with non-US jurisdictions and with the obligations of foreign private issuers. On the negative side, the memo cites the possibility of decreased transparency and lower information quality, and the absence of uniform standards for more frequent reporting.
This excerpt raises the possibility that public companies may, ironically, find themselves with more frequent public reporting obligations if quarterly reports were eliminated:
Quarterly information released by companies serves to prevent fraud and market manipulation. A broad range of investors rely on quarterly reporting to cleanse material nonpublic information in connection with their asset-management and trading. Less frequent reporting could lengthen trading blackouts and reduce trading activity generally unless companies disseminate regular, voluntary financial and other updates.
To prevent this, lenders and the markets in general could push for a greater transparency and frequency of cleansing disclosures than Form 8-K—which is generally filed only when specifically triggered—presently affords them. For example, investors and lenders may advocate for an immediate reporting regime, similar to the Market Abuse Regulation in other jurisdictions, pursuant to which issuers would have to monitor continuously and proactively for inside information and be ready to disclose such information via a regulatory news service without delay.
If this sounds familiar, it may be because Dave raised this possibility when he blogged about the potential move to a semi-annual reporting system last month. Also, be sure to check out Liz’s recent blog on what this all may mean for securities lawyers.
Ideagen Audit Analytics recently published its annual report on audit fee trends. The report covers the period from 2005 – 2024 and includes data from more than 6,600 registrants. Here are some of the highlights:
– Average audit fees reached a record high of $3.26 million in 2024, representing a 9% increase from the previous year
– The Big Four firms control 69% of the audit market, with PwC leading at 21% market share and $5.5 million average fees
– Finance industry companies pay the highest average audit fees at $4.1 million, while life sciences companies pay the most relative to revenue
– Foreign private issuers consistently pay higher audit fees as a proportion of revenue compared to domestic filers
The report notes that public company audit fees have increased steadily over the past 20 years, reflecting the increasing complexity of audits and heightened regulatory oversight. The report suggests that industry consolidation and the ability of private equity funds to invest in accounting firms are likely to impact audit fee trends over the coming years.
Yom Kippur begins this evening, and we’d like to extend our best wishes for an easy and meaningful fast to all our friends who are observing the holiday.
With a potential government shutdown less than 24 hours away, Corp Fin hasn’t provided any updates to the most recent version of the government shutdown guidance that it posted in March 2025. That’s probably still the best place to look for information on what a shutdown will mean for public companies, but you may also want to check out this Ropes & Gray memo on the implications of a shutdowns for SEC filers. This excerpt offers some advice on actions companies should take before and during a shutdown:
Before a shutdown (non-WKSIs without effective registration statements only)
– Consider putting a shelf registration statement in place and submitting an acceleration request as soon as your filing is substantially complete and statutory requirements are met.
– Line up any necessary EDGAR access codes and passwords given constrained staffing during a shutdown.
During a shutdown
– Continue timely Exchange Act filings via EDGAR.
– Companies with effective shelf registration statements may proceed with offerings via prospectus supplements (and, for WKSIs, via post-effective amendments, if needed).
– Non-WKSIs that must update an effective registration statement should consider whether they can proceed without a post-effective amendment that will need to be declared effective.
– For offerings relying on Rule 430A that missed the 15-day pricing window, consider Rule 462(c) post-effective amendments to restart the 15-day period.
– If the shutdown is protracted, non-WKSIs may want to evaluate whether to use the 20-day automatic effectiveness path, if available, after carefully weighing risks (eligibility, review status, unresolved comments), including the antifraud and liability provisions of the federal securities laws, which apply equally to registration statements that go effective by operation of law.
On another shutdown related topic, although the Trump administration is threatening mass firings of government employees in the event of a shutdown, Reuters is reporting that the head of the SEC’s union has told members that there’s no reason to believe that this shutdown will be different than prior ones, or that it will result in additional staff reductions.
Update: Thanks to reader Jeffrey Rubin for giving us a heads up that the SEC adopted this updated version of its Government Shutdown Operations Plan in August 2025.
A couple of recent posts on the Business Law Prof Blog combine to make the point that in the race to dethrone Delaware, Nevada just seems to be a lot more serious and thoughtful than Texas. Here’s an excerpt from Prof. Ben Edwards’ post discussing a new Nevada Comission created to study the state’s business courts:
Yesterday, the Nevada Supreme Court officially created a Commission to Study the Adjudication of Business Law Cases. I previously covered the Supreme Court’s proposal here and submitted a letter in support of the proposal. The order creating the Commission contemplates a continuing public process. It provides that the Commission “shall conduct all hearings in public and post all meeting minutes and documents considered by the Commission on the Supreme Court’s website.”
In a related LinkedIn post, Prof. Edwards points out that five of the attorneys on the 24-member Commission have collectively appeared in 242 Nevada Business Court Cases in the past decade.
Meanwhile, Prof. Ann Lipton provided her take on recent developments in The Lone Star State. She’s not impressed:
I keep explaining in various spaces so I may as well articulate it here too: It’s tough to make predictions, especially about the future, but I would be surprised if Texas wins the current chartering race, or at least, wins the race it’s currently running. The issue for Texas is that it keeps demonstrating that it is not interested in crafting a well-designed – even manager-friendly – corporate law; instead, it is interested in using corporate governance as another cudgel in the culture war.
Let’s look, for example, at two recent amendments to its corporate code: allowing corporations to limit shareholder proposals by those who hold either less than $1 million worth of stock or 3% of voting shares; and the proxy advisor law that puts a variety of restrictions on proxy advisor advice.
These laws explicitly take aim at liberal-coded measures; shareholder proposals, for example, have historically been oriented toward liberal causes (despite a recent upsurge in anti-ESG proposals), and the proxy advisor law is targeted at “ESG” advice.
The laws are also a model of poor drafting. The shareholder proposal law, for example, does not apply to corporations chartered in Texas, but does apply to corporations headquartered in Texas or listed on the (currently nonexistent) Texas Stock Exchange. The proxy advisor law, by contrast, applies to corporations chartered in Texas or headquartered in Texas, but not companies listed on the TSE. I don’t know why the inconsistency, and I’m guessing neither does the Texas legislature.
She also points out that while the Texas legislature scrambled to enact anti-woke corporate legislation, it still hasn’t given its corporations the ability to enter into the kind of shareholder agreements that Delaware amended its statute to permit following the Chancery Court’s Moelis decision. Despite corporations’ obvious desire for the flexibility to enter agreements of that kind, the legislature hasn’t tweaked its statute, and those agreements remain “somewhere between very difficult and impossible to adopt in Texas.”
Texas’ AG Ken Paxton’s announcement that he’s investigating ISS & Glass Lewis for “issuing voting recommendations that advance radical political agendas rather than sound financial principles” seems to be additional confirmation that the state’s banking on the culture war to turn it into a mecca for Delaware’s corporate diaspora.
Check out our latest “Timely Takes” Podcast featuring Cleary’s J.T. Ho & his monthly update on securities & governance developments. In this installment, J.T. reviews:
– SEC’s Spring 2025 Reg Flex Agenda/New Corp Fin Director
– Nasdaq Listing Standard Proposals
– SEC Comments on Segment Reporting
– Spencer Stuart Survey of Nominating & Governance Committee Chairs
– BlackRock’s Global Voting Report
Bonus topics this month include the first tariff-related securities lawsuit, retail investor activism and a House Financial Services Committee hearing on shareholder proposals.
As always, if you have insights on a securities law, capital markets or corporate governance issue, trend or development that you’d like to share in a podcast, we’d love to hear from you. You can email me and/or Meredith at john@thecorporatecounsel.net or mervine@ccrcorp.com.
Over on LinkedIn, ExxonMobil’s announcement of its retail voting program has prompted a sharp response from Prof. Sarah Haan, who describes it as providing for “perpetual blind proxies.” Here’s an excerpt from her critique:
The proxies are “blind” because shareholders sign up without knowing anything about how management will cast their votes. In fact, the votes are “cast” before the proxy statement is distributed to shareholders—meaning that shareholders have not yet been able to learn who’s running for election, what matters will be voted on, or the company’s position on any of these things. (As a point of fact, a shareholder could invalidate the blind proxy for that one election by executing a follow-on, fully-instructed proxy, but telling shareholders that their vote has already been “cast” is confusing and will discourage this.)
Obviously, the point of perpetual blind proxies is to shift voting power from retail voters to corporate managers, by making it exceedingly difficult for shareholders to navigate the complexities of voting their personal preferences. Perpetual blind proxies are presented as a pro-democracy innovation, but actually they demonstrate the vulnerability of proxy voting as a legal device. Incumbent boards have strong motives to use proxy voting to discourage shareholders from exercising independent choice. This is exactly what perpetual blind proxies do.
Prof. Haan’s post has received many likes and favorable comments from shareholder democracy advocates. I think a big part of what these folks are concerned about is that Exxon’s program is likely to be very popular with retail investors, who are inclined to side with management if they vote at all. This program is designed to make it easier for them to vote, and so I’m 100% certain that Exxon management believes that it will enhance the level of support it receives for its agenda.
I’m also sure that many retail investors won’t think that’s a bad thing. Take me, for example. I dutifully fill out my proxies and return them every year- and I’ll let you in on a little secret, I follow management’s recommendations almost all of the time. Since that’s the case, I’d like to have an option to do that on a “set it and forget it” basis.
Do I understand what that means in terms of shifting power to management? You bet I do, and I think it’s condescending to assume that other retail investors won’t and paternalistic to suggest that they shouldn’t have the option to sign up for something like this. I’m not going to opt in to a program like Exxon’s if I have concerns about management, but in that case, I’m probably just going to sell my investment anyway. Shareholder democracy proponents will say that’s a cynical and apathetic choice. Perhaps it is, but I also think it’s not an irrational one for a retail investor.
So, where others see Exxon as creating a mechanism for “perpetual blind proxies,” I see it as facilitating “rational apathy” on the part of retail investors like me – and there are a lot of retail investors like me. Shareholder democracy advocates know that too, and I think that it shows in their response to Exxon’s program.
On Friday, SEC Chairman Paul Atkins reversed the agency’s existing policy of refusing to consider proposed settlements of enforcement proceedings and “bad actor” waiver requests simultaneously. The existing policy was adopted (see second blog) during the early stages of the Biden administration and reversed a policy adopted by former SEC Chairman Jay Clayton. Here’s an excerpt from Chairman Atkins’ statement:
In consultation with the Divisions of Enforcement, Corporation Finance, and Investment Management, I believe that it is appropriate to restore the Commission’s prior practice of permitting a settling entity to request that the Commission simultaneously consider an offer of settlement that addresses both an underlying Commission enforcement action and any related waiver request. This salutary practice promotes fairness and economy of Commission resources but unfortunately was changed by the prior Administration.
An offer of settlement in a Commission enforcement action that includes a contemporaneous waiver request will be presented to the Commission by the staff for simultaneous consideration. This approach will enable the Commission to consider both the proposed settlement and waiver request together, within the context of the relevant facts, conduct, and consequences, and with the benefit of the analysis and advice of the relevant Commission Divisions, to assess whether the proposed resolution of the matter in its entirety achieves the Commission’s three-part mission more generally. This approach will enhance efficiency and certainty in the settlement process and avoid a siloed internal consideration of the matter, which are critical factors in reaching comprehensive settlements that are in the best interests of investors.
This change in policy is good news for targets in enforcement proceedings. Under the policy adopted during Biden administration, targets settling with the SEC faced uncertainty because their settlement proposal and request for a waiver were not considered simultaneously. That left them in a position where they might find themselves bound by a settlement that they would not have entered into absent the belief that a waiver would be granted.
Earlier this month, Labrador announced the winners of its 2025 U.S. Transparency Awards. This excerpt from its press release discusses the winner of the award for best overall transparency:
Best Overall Transparency: Lowe’s Companies
This year, Lowe’s stands out as the champion of transparency. Lowe’s prioritized readers by implementing best practices across all documents. This includes using graphics and visuals to effectively illustrate company goals and performance. Notably, Lowe’s produced engaging executive summaries, especially in the proxy statement. The company is also proactively anticipating the requirements of CSRD by disclosing its value chain and aligning the sustainability report with the European Union’s European Sustainability Reporting Standards (ESRS).
Be sure to check out the Transparency Awards website for more details about the awards and the companies that received them. Here’s Broc’s 8-minute video with information about the selection process and this year’s winners.
