Author Archives: John Jenkins

Gunster’s Bob Lamm recently blogged about an issue that he’s reluctantly concluded needs to be on the board’s agenda – human trafficking.  Here’s his reasoning:

There is a strong case to be made why businesses need to work on [human trafficking’s] elimination, but we need to make that case. One of the key components of that case should be apparent to us all; can you say “supply chain”? As boards increasingly take deep dives into how their companies address supply chain challenges, they should ask questions about the components of their supply chains: Where are goods coming from? Are they the products of forced labor? Child labor? If that doesn’t move a board, how about reputation? How would the company’s investors, employees, customers, and others react if they learned that its products are produced by women who are virtually enslaved, making far less than what we euphemistically call “subsistence wages”? How would that play out in the media?

Just how serious an issue human trafficking is was brought home to me when Cleveland hosted the 2016 Republican National Convention. A friend of mine was working for one of our economic development groups and attended a presentation that the FBI gave to downtown hotel operators about the potential human trafficking issues that surround any large destination event. The presentation was, in his words, “sobering.” Directors have a lot on their plates, but Bob makes a good case that this is another issue that like needs board-level attention.

– John Jenkins

Today is the second day of our “2022 Proxy Disclosure Conference” – tomorrow is our “19th Annual Executive Compensation Conference.” Here’s more info:

– How to Attend: We have emailed a direct access link for the Conference to all registered attendees, from info@ccrcorp.com. Use that link to go to the Conference platform. Once you log in to the Conference Platform, follow the “Proxy Disclosure/Exec Comp” tab to see the agendas for each day, enter sessions, and add them to your calendar. All sessions are shown in Eastern Time – so you will need to adjust accordingly if you’re in a different time zone. Here’s today’s agenda.

If you are experiencing a technical issue on our conference platform and need assistance, please email Evan Blake (eblake@markeys.com) with our Event Manager Victoria Newton (vnewton@ccrcorp.com) on copy, and they will reply to you asap. If you have any other questions about accessing the conference, please email our Event Manager, Victoria Newton (vnewton@ccrcorp.com).

– How to View Archives & Transcripts: Members of TheCorporateCounsel.net or CompensationStandards.com who register for the Conferences will be able to access the conference archives on these sites using their existing login credentials beginning about a week after the event, and unedited transcripts will be available to these members on TheCorporateCounsel.net and CompensationStandards.com beginning about 2-3 weeks after the event. If you’ve registered for the conferences through CCRcorp but are not a member, we will send login information to access the conference footage and transcripts on TheCorporateCounsel.net or CompensationStandards.com.

If you registered for the conferences through NASPP, you will receive access to the video archives from NASPP.

– How to Earn CLE Online: We are applying for up to 15 hours of CLE credit for the Proxy Disclosure & Executive Compensation Conferences in applicable states – approvals of actual credit vary based on each state. Please read these “CLE FAQs” carefully to confirm that your jurisdiction allows CLE credit for online programs. You will need to respond to periodic prompts every 15-20 minutes during the conference to attest that you are present. After the conference, you will receive an email with a link. Please complete the link with your state license information. Our CLE provider will process CLE credits to your state bar and also send a CLE certificate to your attention within 30 days of the conference.

– Thanks To Our Sponsors! Our sponsors have helped make this event possible, and we are proud and grateful to have their support. Our Platinum Sponsor for the Proxy Disclosure & 19th Annual Executive Compensation Conference is Morrison Foerster, and our Silver Sponsor is Argyle, who also sponsored our 1st Annual Practical ESG Conference this week. Please visit their pages!

It is not too late to register for our Conferences today! You can sign up for today’s “2022 Proxy Disclosure Conference” and tomorrow’s “19th Annual Executive Compensation Disclosure Conference” by emailing sales@ccrcorp.com or by calling 1-800-737-1271, Option 1. If you have missed any of the Conference, archives and transcripts will be available on-demand afterwards!

– John Jenkins

In a recent Directors & Boards article, GW Law School prof. emeritus Lawrence Cunningham challenged the idea that there is a single set of corporate governance “best practices” that companies should follow.  Anyone who has been in a board room during the past couple of decades has heard governance consultants repeatedly explain how the company needs to implement specific actions that may make zero sense for that particular business or else risk be viewed as a governance pariah. How did we get this way?  Cunningham points the finger at the rise of what he refers to as the “generalists”:

A dominant reason is the expanding power of generalists offering only a macro-perspective. A generalist viewpoint is understandably held by all passive asset managers and proxy advisors, most policy makers and many empirical researchers who favor working with large general datasets. All have incentives to identify and promote universal practices for all boards.

In contrast, specialists take a micro-perspective on particular companies, including stock-picking shareholders, the directors who serve them, and analysts and researchers prepared to immerse themselves in the details of particular companies. Such cohorts would undoubtedly endorse universal practices that work, but they have an interest in resisting overgeneralized prescriptions.

In recent years, generalists have wielded far more power than specialists in corporate governance, and their worldview now dominates. As a result, gold standards and best practices are everywhere in governance, even if they are not good for particular companies. A catalog of good governance reigns, including refreshment imperatives, such as director age limits and term limits, and control-related rules, like majority voting in director elections and negative views of dual-class capital structures.

The article goes on to point out that the empirical studies purporting to identify governance best practices were based on astonishingly bad data, which, once corrected, calls into question many of the received truths about the link between “good governance” & investment returns.

This isn’t the first time that I’ve blogged about this topic, and I admit that articles like this are like catnip to me. That’s because I absolutely agree that a one-size fits all approach to corporate governance is one of the dumbest ideas that companies and investors have ever bought into, particularly since nobody really seems to have the vaguest idea about what “good governance” really is.

– John Jenkins

Here’s something I posted last week on the DealLawyers.com Blog:

Michael Levin recently shared via Twitter an example of universal proxy cards used by participants in what’s apparently the first contested election to be conducted under the new rules. Here are the preliminary proxy materials filed by Apartment Investment and Management Company, and here are the materials filed by the dissident group.  Michael’s tweet includes a link to his TAI newsletter discussing the filings, which provides some interesting insights into the contest & the filings themselves.  Here’s an excerpt:

First, the proxy cards recommend how shareholders vote, in addition to properly distinguishing between the AIM and L&B nominees. The SEC rule was largely silent as to how the proxy card (not the proxy materials) should set forth specific voting instructions. We expect to see more companies and activists to test the boundaries of what the SEC will allow them to put on a proxy card.

Second, both of the AIM and L&B proxy statements include a curious statement. AIM’s appears in the Q&A section (p. 5), with a similar idea in the letter to shareholders:

If I want to vote for one or more of Land & Buildings’ nominees can I use the WHITE universal proxy card?

Yes, if you would like to elect some or all of Land & Buildings’ nominees, we strongly recommend you use the Company’s WHITE proxy card to do so.

L&B states (p. 17):

Any stockholder who wishes to vote for one of the Company’s nominees in addition to the Land & Buildings Nominees may do so on Land & Buildings’ BLUE universal proxy card. There is no need to use the Company’s white proxy card or voting instruction form, regardless of how you wish to vote.

[emphasis theirs in each excerpt]

Why would each acknowledge that shareholders might vote for the other’s nominees, and suggest they could do so using their own proxy card? We’d think they would do everything it could to discourage this. It appears each wants to receive as many proxy cards as it can. They can thus track which shareholders have already voted. If AIM receives proxy cards with votes for L&B nominees, and L&B for AIM nominees, then each can easily contact those shareholders, and attempt to persuade them to change their votes. Clever…

– John Jenkins

Today and tomorrow is our “2022 Proxy Disclosure Conference” – Friday is our “19th Annual Executive Compensation Conference.” Here are the agendas: 18 substantive panels over 3 days – including an interview with Renee Jones, the Director of the SEC’s Division of Corporation Finance. Here’s more info:

– How to Attend: We have emailed a direct access link for the Conference to all registered attendees, from info@ccrcorp.com. Use that link to go to the Conference platform. Once you log in to the Conference Platform, follow the “Proxy Disclosure/Exec Comp” tab to see the agendas for each day, enter sessions, and add them to your calendar. All sessions are shown in Eastern Time – so you will need to adjust accordingly if you’re in a different time zone.

If you are experiencing a technical issue on our conference platform and need assistance, please email Evan Blake (eblake@markeys.com) with our Event Manager Victoria Newton (vnewton@ccrcorp.com) on copy, and they will reply to you asap. If you have any other questions about accessing the conference, please email our Event Manager, Victoria Newton (vnewton@ccrcorp.com).

– How to View Archives & Transcripts: Members of TheCorporateCounsel.net or CompensationStandards.com who register for the Conferences will be able to access the conference archives on these sites using their existing login credentials beginning about a week after the event, and unedited transcripts will be available to these members on TheCorporateCounsel.net and CompensationStandards.com beginning about 2-3 weeks after the event. If you’ve registered for the conferences through CCRcorp but are not a member, we will send login information to access the conference footage and transcripts on TheCorporateCounsel.net or CompensationStandards.com.

If you registered for the conferences through NASPP, you will receive access to the video archives from NASPP.

– How to Earn CLE Online: We are applying for up to 15 hours of CLE credit for the Proxy Disclosure & Executive Compensation Conferences in applicable states – approvals of actual credit vary based on each state. Please read these “CLE FAQs” carefully to confirm that your jurisdiction allows CLE credit for online programs. You will need to respond to periodic prompts every 15-20 minutes during the conference to attest that you are present. After the conference, you will receive an email with a link. Please complete the link with your state license information. Our CLE provider will process CLE credits to your state bar and also send a CLE certificate to your attention within 30 days of the conference.

– Thanks To Our Sponsors! Our sponsors have helped make this event possible, and we are proud and grateful to have their support. Our Platinum Sponsor for the Proxy Disclosure & 19th Annual Executive Compensation Conference is Morrison Foerster, and our Silver Sponsor is Argyle, who also sponsored our 1st Annual Practical ESG Conference this week. Please visit their pages!

It is not too late to register for our Conferences today! You can sign up for today’s “2022 Proxy Disclosure Conference” by emailing sales@ccrcorp.com or by calling 1-800-737-1271, Option 1. If you have missed any of the Conference, archives and transcripts will be available on-demand afterwards!

– John Jenkins

Remember Vinco Ventures, the company that was the subject of a hostile takeover attempt by means of allegedly swiped EDGAR codes?  Well, believe it or not, things have gotten even stranger there.  When last we visited with Vinco, a Nevada court had granted a temporary restraining order against Ted Farnsworth & certain of his associates prohibiting them from holding themselves out as being employed by Vinco or acting on its behalf and requiring them to turn over the company’s EDGAR codes.

That Nevada court has now inserted itself more deeply into the question of who should run the company, and ultimately decided that former Nevada Secretary of State Ross Miller should serve as one of its co-CEOs.  I suppose that might raise some eyebrows on its own, but what’s really amazing is how the appointment came to pass.  This excerpt from a recent post on Business Law Prof Blog explains:

How did Mr. Miller get picked for this role? A transcript of the relatively brief hearing reveals that the idea was pitched to the Court by one of Farnsworth’s attorneys. As the attorney explained it “my proposal is going to be that Mr. Colucci, Lisa King, and then, a third-party, who just happened to wander in the courtroom today, because he was a witness in the case next door, Mr. Ross Miller, be appointed as co-CEO.” The attorney then revealed that he had “vetted Mr. Miller. He said he’ll do it. He used to be the Secretary of State of Nevada. If you remember, his father was the governor for 10 years not even 8, but 10 years. And he does do corporate law. And he says he’s interested in it. So we’re going to propose him as the co-CEO.”

Yes, you read that correctly – a politician randomly walked into a Nevada courtroom & ended up co-CEO of a public company. But that’s not the end of the story. Apparently, Vinco settled the litigation with the Farnsworth Group last week.  According to this Form 8-K filing, that settlement resulted in a board and management shakeup, and when the dust settled, Mr. Miller found himself the sole CEO of Vinco Ventures. I’ll grant you that this isn’t your run of the mill executive search process, but there doesn’t appear to be much about Vinco that’s run of the mill.

– John Jenkins

The September-October issue of “The Corporate Counsel” newsletter is in the mail (email sales@ccrcorp.com to subscribe to this essential resource). It’s also available now online to members of TheCorporateCounsel.net who subscribe to the electronic format – an option many people are taking advantage of in this “remote work” environment. The issue includes articles on:

– When and How to Update Your Shelf Registration Statement
– Officer Exculpation: Q&As on Delaware’s Recent Amendment

Dave & I also have been doing a series of “Deep Dive with Dave” podcasts addressing the topics we’ve covered in recent issues. We’ll be posting one for this issue soon. Be sure to check it out on our “Podcasts” page!

– John Jenkins

On Friday, the SEC announced that a “technological error” dating back to as early as June 2021 has prompted it to reopen the comment period on 11 rulemaking proposals and one request for comment.  Here’s an excerpt from the SEC’s announcement listing the affected releases:

1. Reporting of Securities Loans, Release No. 34-93613 (Dec. 8, 2021)

2. Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions, Release No. 34-93784 (Feb. 4, 2022)

3. Money Market Fund Reforms, Release No. IC-34441 (Feb. 8, 2022)

4. Share Repurchase Disclosure Modernization, Release Nos. 34-93783, IC-34440 (Feb. 15, 2022)

5. Short Position and Short Activity Reporting by Institutional Investment Managers, Release No. 34-94313 (Mar. 16, 2022); see also Notice of the Text of the Proposed Amendments to the National Market System Plan Governing the Consolidated Audit Trail for Purposes of Short Sale-Related Data Collection, Release No. 34-94314 (Mar. 16, 2022)

6. Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, Release Nos. 33-11038, 34-94382, IC-34529 (Mar. 23, 2022)

7. Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews, Release No. IA-5955 (Mar. 24, 2022)

8. The Enhancement and Standardization of Climate-Related Disclosures for Investors Release Nos. 33-11042, 34-94478 (Apr. 11, 2022)

9. Special Purpose Acquisition Companies, Shell Companies, and Projections, Release Nos. 33-11048, 34-94546, IC-34549 (May 13, 2022)

10. Investment Company Names, Release Nos. 33-11067, 34-94981, IC-34593 (June 17, 2022)

11. Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices, Release Nos. 33-11068, 34-94985, IA-6034, IC-34594 (June 17, 2022)

12. Request for Comment on Certain Information Providers Acting as Investment Advisers, Release Nos. IA-6050, IC-34618 (June 22, 2022)

Wow, that’s quite a list! It looks like this glitch has thrown a bit of a monkey-wrench into most of the SEC’s regulatory agenda. Off the top of my head, it appears that the only major proposals that aren’t affected by this are the SEC’s clawbacks proposal and its Rule 10b5-1 proposal.  According to the SEC’s order, the comment periods reopened beginning on October 7, 2022, and will close 14 days after the date of publication of the order in the Federal Register.

The SEC says that if you submitted comments on one of these proposals through the internet comment form between June 2021 and August 2022, you should check the relevant comment file on the SEC’s website to determine whether your comment was received and posted. If it hasn’t been posted, you should resubmit it.

– John Jenkins

Today’s the start of a big week!  We’re hosting our “1st Annual Practical ESG Conference.” That’s followed on Wednesday & Thursday by our “2022 Proxy Disclosure Conference,” and we cap off the week on Friday with our “19th Annual Executive Compensation Conference.”  Here’s the agenda for today’s conference – we have 7 substantive panels, including a recently added panel on “SEC Climate Rules: How to Jumpstart Your Disclosures.” Here’s more info:

– How to Attend: We have emailed a direct access link for the Conference to all registered attendees, from info@ccrcorp.com. Use that link to go to the Conference platform. Once you log in to the Conference Platform, follow the “Practical ESG Agenda” tab to enter sessions and add them to your calendar. All sessions are shown in Eastern Time – so you will need to adjust accordingly if you’re in a different time zone.

If you are experiencing a technical issue on our conference platform and need assistance, please email Evan Blake (eblake@markeys.com) with our Event Manager Victoria Newton (vnewton@ccrcorp.com) on copy, and they will reply to you asap. If you have any other questions about accessing the conference, please email our Event Manager, Victoria Newton (vnewton@ccrcorp.com).

– How to View Archives & Transcripts: Conference attendees will be able to access the archives of the “1st Annual Practical ESG Conference” on PracticalESG.com via a special link that we will email to conference attendees about a week after the event. Unedited transcripts also will be available via that link, beginning about 2-3 weeks after the event.

– Thanks To Our Sponsors! Our sponsors have helped make this event possible, and we are proud and grateful to have their support. Our Platinum Sponsors for the 1st Annual Practical ESG Conference are Aon and Orrick. Our Silver Sponsors are Argyle, who is also sponsoring our Proxy Disclosure & Executive Compensation Conferences, and Ecolumix. Our Bronze Sponsor is Elm Consulting. Please check them all out!

It is not too late to register for our Conferences today. You can sign up for today’s “1st Annual Practical ESG Conference” by emailing sales@ccrcorp.com or by calling 1-800-737-1271, Option 1. You can still sign up online for our “2022 Proxy Disclosure Conference” & “19th Annual Executive Compensation Disclosure Conference” (with the “Conference” drop-down, and the “PDEC” options) – or you can register via email or phone. Remember, you can also still bundle the conferences together to get a discounted rate!

– John Jenkins

If you’re working on your Form 10-Q, be sure to check out this Goodwin blog with an updated 10-Q Form Check Table. In addition to providing a tabular check of required disclosures, the form check document also highlights some potential disclosure topics that companies should consider addressing in their next 10-Q filing. Here’s an excerpt:

In addition to topics that may be particularly relevant to a specific company, industry or market, the following topics (among others) may be generally relevant to many companies:

– Inflation and rising interest rates,
– Financial market volatility and declines in financial market prices of equity securities;
– Liquidity and/or capital resources changes and the impact of any changes or limitations, including, without limitation, ability to borrow funds and/or renew or roll over existing indebtedness;
– Ongoing or new supply chain and product distribution/logistics issues; and
– Ongoing impacts of the war in Ukraine and the Russian sanctions.

Less common topics may include:

– Expenses related to climate-related events and expenses related to preparation for expected climate risk disclosure;
– Material risks or uncertainties, or recent income statement impacts, related to health care developments; and
– European energy market issues that, in addition to inflation and rising interest rate impacts, may also affect some companies, especially those that have business operations or significant markets in Europe.

The blog notes that although the risk of a recession has received a lot of media attention, as of September 27, 2022, there aren’t a lot of SEC filings that contain risk factor disclosure that’s company specific. Instead, most risk factor disclosure on this topic is pretty generic. It cautions companies that changes in general domestic or international economic conditions or those that affect specific industries or companies could make more targeted disclosure appropriate.

– John Jenkins