Recently, Broadridge reported an increase in virtual meetings in 2016 – see this list of who’s holding them. Of 187 virtual meetings, 80% were “virtual-only” – compared to 67% in 2015. And of the 44 companies that held a hybrid meeting in 2015, 12 of them switched to virtual-only in 2016. Just one company switched from virtual-only to hybrid.
We’ve blogged before about opposition to virtual-only meetings – from New York’s Comptroller and from CII – but we’ve also heard from companies that have escaped criticism by proactively discussing the costs & benefits with shareholders.
In response to widespread adoption of proxy access – and the possibility that some companies may be including provisions that impair proxy access utility – CII has updated its “best practices” for implementing these bylaws (originally issued in 2015).
The 8-page chart weighs in on newly-identified provisions, recognizes where CII’s preferences deviate from prevailing market practices, and explains why CII opposes the following provisions:
– Requirements for nominators to hold stock after the annual meeting
– Restrictions on re-nominations
– Limitations on nominees’ third-party compensation arrangements
– Automatic suspension of proxy access for all shareholders in the event of a proxy contest
– Unlimited indemnification requirements on nominating shareholders
Here’s CII’s member-approved policy:
Companies should provide access to management proxy materials for a long term investor or group of long-term investors owning in aggregate at least three percent of a company’s voting stock, to nominate less than a majority of the directors. Eligible investors must have owned the stock for at least two years. Company proxy materials and related mailings should provide equal space and equal treatment of nominations by qualifying investors.
To allow for informed voting decisions, it is essential that investors have full and accurate information about access mechanism users and their director nominees. Therefore, shareowners nominating director candidates under an access mechanism should adhere to the same SEC rules governing disclosure requirements and prohibitions on false and misleading statements that currently apply to proxy contests for board seats.
Transcript: “12 Strange Things in the Securities Laws”
We’ve posted the transcript for our popular webcast: “12 Strange Things in Securities Laws.” Here’s what we covered:
1. The Section 4(a)(3) Dealer’s Exemption
2. Sometimes Rules Don’t Mean What They Say
3. Transactional Registration & Control Securities
4. How Small Non-Executive Officer Shareholders Can Be Section 16 Reporting Persons
5. The Trust Indenture Act – What Is It?
6. The Need to Know Some GAAP
7. “Legal” Insider Trading
8. Tender Offers for Minority Stakes in Private Companies
9. Statutory Underwriters” and “Public Offerings”
10. A Lot of What Goes Into SEC Filings Isn’t Dictated by Rules or Staff Guidance
11. The Case of the Missing Fourth Quarter
12. Federal and State Filing Notice “Requirements”
If we didn’t get to your favorite “strange thing” – drop us a line!
Proxy access “fix-it” proposals – which ask companies with mainstream proxy access bylaws to make them more shareholder-friendly – were prevalent during this proxy season. We don’t expect the trend to go away anytime soon – we’ve already seen two versions of the proposals & a third is now on the map!
Companies have been seeking no-action relief to exclude the proposals as “substantially implemented” – but Corp Fin denied many requests. Now a new “fix-it” proposal has emerged, and was also required to be included in the company proxy statement. Here’s a teaser from Ning Chiu’s blog:
Like the later season proposals, this type also asks that a company amend the restrictions on the size of the nominating group, but this time from 20 shareholders to an unlimited number of shareholders, and without any other proposed revisions.
The SEC staff recently rejected a company’s request for no-action relief on the basis of substantial implementation, after extensive correspondence between the parties involving 5 letters from the issuer and what must be an unprecedented 21 letters from the proponent. The volume of correspondence likely led to the staff’s taking more than three months from receipt of the initial no-action letter to publish a decision.
In other proxy access news, a different company changed its aggregation limit to 50 to negotiate a withdrawal on a similar proposal.
So although the proposals that went to a vote have been averaging less than 30% support among shareholders, they aren’t without risk…
Comments are due this month. If approved by the SEC, parts of the new standard will be effective in 2018.
Name Change: “NYSE MKT” Is Now “NYSE American”
To the delight of “MKT” haters, the NYSE’s previously-announced rebranding to “NYSE American” is now effective, with most of the website now revamped.
The name change was accompanied by other updates designed to facilitate trading in small & mid-cap companies, including expanded trading hours and assignment of an “electronic designated market maker) – with quoting obligations – to each listed security. Hat tip to Goodwin Procter’s John Newell for alerting us to this development!
We’ve blogged many times about the debate over dual-class share structures. Investors have been voicing concern since Snap’s IPO in March.
Last week, FTSE Russell was the first index to announce that it will exclude Snap & other “dual-class” companies that afford minimal voting rights to shareholders – including existing constituents who don’t conform to the new requirements within 5 years. Yesterday, S&P Dow Jones followed suit with an even more sweeping announcement – however, existing constituents are grandfathered in and not affected.
Here’s the nitty-gritty on Russell’s new policy:
– To be listed on FTSE Russell indexes, more than 5% of a company’s voting rights must be held by unrestricted shareholders (as defined by FTSE Russell).
– For potential new constituents, including IPOs, the rule will apply starting with their September semi-annual and quarterly reviews.
– For existing companies, the rule will apply starting September 2022, thus affording a five-year grandfathering period. About 35 companies would need to increase public voting rights to avoid exclusion.
– The rate at which the hurdle is set, along with its definition, will be reviewed in the light of subsequent developments on an annual basis.
– Companies like Facebook & Alphabet – which have multi-class structures but afford more than 5% of voting rights to shareholders – can still be included.
And for S&P’s policy:
– Effective immediately, the S&P Composite 1500 and its component indices – S&P 500, S&P MidCap 400 and S&P SmallCap 600 – will no longer add companies with multiple share class structures.
– Existing index constituents are grandfathered in and are not affected by this change.
– The methodologies of other S&P and Dow Jones branded indices – including S&P Global BMI, S&P Total Market and indices for particular market segments – remain unchanged at this time.
Both indices conducted surveys on this topic a few months ago. Russell’s survey results showed that 68% of responding investors wanted the index to require some minimum threshold for the percentage of voting rights in public hands. Their final rule will be published at the end of this month – and may incorporate additional feedback that Russell receives following its announcement. As noted in this blog, MSCI has made a similar proposal.
If a company is excluded from the indexes, it’s harder – or impossible – for some fund managers to buy its stock. But it appears that many institutional investors favor exclusion – as it aligns with their policies to support “one share, one vote” proposals.
SEC Commissioners: Will Robert Jackson Be Nominated?
John blogged a few weeks back about Hester Peirce being (re-)nominated as a SEC Commissioner. Now it’s rumored that Columbia Professor Robert Jackson would be nominated to fill the open Democrat slot on the SEC’s Commission. I would stress that this is merely a rumor.
Here’s an excerpt from this WSJ article by Andrew Ackerman:
If Mr. Jackson is nominated, Senate lawmakers would likely seek to speed up his confirmation by pairing him with Hester Peirce, a Republican tapped earlier this month to fill another SEC vacancy. Both would join an SEC down to just three members: Democrat Kara Stein, Republican Michael Piwowar, and Jay Clayton, the chairman, who is an independent.
Mr. Jackson has written on securities topics such as executive compensation and corporate governance. In 2014, he helped uncover a flaw with the SEC’s corporate-filing system that allowed hedge funds and other rapid-fire investors to gain access to certain market-moving documents ahead of other users of the system. The SEC pledged to correct the flaw.
A 2015 research paper he co-wrote suggests corporate insiders might trade on material, nonpublic information before their companies are required to publicly report the information. He is also among a group of 10 academics to petition the SEC in 2011 to require public companies to disclose their political-spending activities.
Our August Eminders is Posted!
We’ve posted the August issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!
Twitter is so 2016. At our recent “Women’s 100 Conference,” one forward-thinking company said their IR team prefers live Q&A via “Sli.do” – an audience interaction platform that lets you crowd-source & filter questions in real time. Some companies are also considering holding live meetings on Facebook & Periscope – if they can get comfortable with Reg FD. Learn more about social media & Reg FD in our newly updated “Regulation FD Handbook“…
Risk Oversight: Social Media & Your Brand
One challenge of a social media crisis is that everyone – customers, shareholders, employees, directors – sees & reacts to it simultaneously. This Deloitte memo outlines how boards can be more nimble by preparing in advance for this risk. Here’s an excerpt:
Board members who understand the brand and reputational risks posed by social media and make an effort to understand how brands are positioning themselves can better help their organizations prepare and respond to brand-threatening incidents. Board members can ask questions like these to help senior executives clarify brand positioning and mitigate potential damage on social media:
1. Is our messaging on social media platforms consistent with our core values?
2. Do we have the data and analytics to show that our actions on social media live up to our brand promise?
3. Which tools are we using to monitor our social media channels and conversations about the brand? How are we using the insights to inform our strategy and mitigate risk?
4. Is there a crisis management plan or playbook for a social media incident?
5. Have we developed and communicated the appropriate social media policies to our employees and if so, how are they monitored and reinforced?
SCOTUS: Whistleblower Case Is a “Go”!
Yesterday, the US Supreme Court agreed to review a Ninth Circuit opinion – Somers v. Digital Realty Trust – to consider whether employees who report misconduct internally within their companies (and not to the SEC) are entitled to anti-retaliation protections as “whistleblowers.” Here’s the news from this WSJ article by Andrew Ackerman:
The announcement is welcome news for corporate defendants that have lamented the broad way in which the SEC and some federal courts have interpreted the 2010 Dodd-Frank financial-overhaul law, which is ambiguous about whether employees who make only internal corporate reports of securities fraud are protected under federal law.
The Dodd-Frank law included a number of provisions aimed at encouraging people to speak out about alleged wrongdoing at their employers. Those included new incentives, such as giving tipsters a portion of the penalties imposed on firms if they report misconduct to the SEC. It also included new penalties for employers seen as discouraging the reporting of misconduct—so-called anti-retaliation provisions.
Monday’s case narrowly focuses on whether such anti-retaliation provisions apply to people who report misconduct to their employers, but not to the SEC. The high court will consider the matter in the fall of 2017 when it meets for its next term, giving the justices a platform to potentially narrow the scope of protection in this area.
Two circuit courts have held internal reporting is protected under the Dodd-Frank Act, and one circuit court has found the protections apply only when misconduct is reported to the SEC.
The SCOTUS decision is expected by the end of next June.
We’ve blogged a few times about Vanguard’s updated proxy voting guidelines and the impact they might be having on recent climate change proposals. We shouldn’t overlook that Fidelity’s also joined the party. Here’s an excerpt from its updated “Proxy Voting Guidelines,” which were previously silent on environmental & social issues:
FMR generally will vote in a manner consistent with management’s recommendation on shareholder proposals concerning environmental or social issues, as it generally believes that management and the board are in the best position to determine how to address these matters. In certain cases, however, Fidelity may support shareholder proposals that request additional disclosures from companies regarding environmental or social issues, where it believes that the proposed disclosures could provide meaningful information to the investment management process without unduly burdening the company.
For example, Fidelity may support shareholder proposals calling for reports on sustainability, renewable energy, and environmental impact issues. Fidelity also may support proposals on issues such as equal employment, and board and workforce diversity
I blogged a few weeks ago about the historic climate change proposal at ExxonMobil – it passed with 62% support. BlackRock voted in favor of the proposal, and this vote bulletin explains why. Here’s a teaser:
The BlackRock Investment Stewardship team has identified climate risk disclosure, in line with the Task Force on Climate-related Financial Disclosures (TCFD), as one of our five engagement priorities for 2017-18.
In the past year, we’ve engaged more directly on Exxon’s reporting of climate-related risks. We have also engaged with the shareholder proponents to better understand their views. We believe it is in long-term shareholders’ best economic interests for Exxon to enhance its disclosures. We therefore voted in favor of the shareholder proposal focused on the 2-degree Celsius warming target (the “2-degree scenario”) as outlined in the Paris Agreement under the United Nations Framework Convention on Climate Change.
In addition, we have repeatedly requested to meet with independent board directors over the past two years to better understand the board’s oversight of the company’s long-term strategy and capital allocation priorities amidst major strategic challenges and regulatory inquiry (including but not be limited to oversight of climate risk). The company declined to make directors available, citing a non-engagement policy between independent board members and shareholders.
So a couple takeaways here are – first, to understand your shareholders’ priorities – and second, if a key shareholder asks to meet with directors…make it happen. Last week’s blog has some tips on both of these topics.
Sustainability Reports: Published by 82% of the S&P 500
This recent Governance & Accountability Institute study found that 82% of the S&P 500 are publishing a sustainability or corporate responsibility report. Up from 20% just 5 years ago! Here’s a chart that shows the declining number of non-reporters by industry:
At our “Women’s 100” Conferences, we heard from some institutional investors who look at sustainability as a risk issue – and not one that applies just to extractive industries. They want to understand what the company’s doing to stay competitive for years to come. You can share this info in your proxy statement in the absence of a full-blown sustainability report, but still check out Clorox’s “Integrated Report” – it’s a cool example & shows what types of topics to cover. We have even more resources in our “ESG” Practice Area. And tune in for our October 10 webcast – “E&S Disclosures: The In-House Perspective” – featuring experts from the Coca-Cola Company, Bristol-Myers Squibb, Apple & Clorox.
Last week, John blogged about evolving MD&A disclosures under the new revenue recognition standard. Check out this SEC Institute blog for more examples of early adopters – Alphabet, Ford, Raytheon & others. Here’s an excerpt from First Solar’s Form 10-Q:
We adopted ASU 2014-09 in the first quarter of 2017 using the full retrospective method. This adoption primarily affected our systems business sales arrangements previously accounted for under ASC 360-20, which had required us to evaluate whether such arrangements had any forms of continuing involvement that may have affected the revenue or profit recognition of the transactions, including arrangements with prohibited forms of continuing involvement. When such forms of continuing involvement were present, we reduced the potential profit on the applicable project sale by our maximum exposure to loss.
With 6 months till the new revenue recognition standard is required, only about 20 companies in the Russell 3000 have adopted it. This blog from Audit Analytics shows as-reported progress towards adoption & provides industry-specific examples of revenue streams that are likely to be materially affected. It also cautions that the SEC is commenting on transition disclosure that’s too generic. Here’s an excerpt from a recent letter:
You state that you are in the process of evaluating the impact that the amended revenue recognition guidance in Topic 606 will have on your consolidated financial statements. Please revise to provide qualitative financial statement disclosures of the potential impact that this standard will have on your financial statements when adopted. In this regard in your next filing, include a description of the effects of the accounting policies that you expect to apply, if determined, and a comparison to your current revenue recognition policies. Describe the status of your process to implement the new standard and the significant implementation matters yet to be addressed. In addition, to the extent that you determine the quantitative impact that adoption of Topic 606 is expected to have on your financial statements, please also disclose such amounts. Please refer to ASC 250-10-S99-6 and SAB Topic 11.M.
Canada Tries for Single-Regulator Framework: Now Doomed?
This Blakes memo notes that the Quebec Court of Appeal ruled against Canada’s proposed nationwide framework for securities regulation – finding part of it unconstitutional because it infringes on provincial sovereignty. This ruling might delay implementation, which was planned for next June. Here’s some thoughts on next steps:
One option is to push ahead with implementing the Cooperative System in a form modified to address the Council’s powers that the Court of Appeal identified as incompatible with parliamentary sovereignty and the division of powers between the federal and provincial governments.
Another, and more likely, option is for the federal government to seek the Supreme Court of Canada’s (SCC) opinion on the Cooperative System. If it chooses this option, the federal government could either appeal the Quebec Court of Appeal’s decision to the SCC or direct a separate reference to the SCC. The SCC’s decision would take precedence over that of the Quebec Court of Appeal.
At the risk of depressing our resident “Annual Meeting Fanboy” – this Joe Nocera article is notable just because the mainstream media doesn’t report much on the state of annual meetings. Joe attended four meetings – in a single day! – as background for his piece.
He suggests annual shareholder meetings aren’t what they used to be (and perhaps they never really did have much value). No more free coffee! No more swag! Here’s an excerpt:
Look, I get why good-governance types want to prevent companies from holding online-only meetings. As my old friend Nell Minow, a long-time corporate governance expert, put it in an email, “I think the threat of looking unhappy investors in the eye and having to answer questions in person still makes a difference.” My Bloomberg View colleagues made a similar argument, among others, in an April 12 editorial.
But from what I can see, this reasoning, though sensible in theory, doesn’t reflect reality. None of the shareholders I’ve seen are likely to strike fear in a chief executive or board member. And shareholders who do have the clout to shake up a company, like Carl Icahn, hardly wait around for the annual meeting. They own enough stock to command private meetings with management.
Virtual-Only Meetings: CII Weighs In
Recently, Broadridge reconvened its “Committee for Best Practices for Annual Shareholder Meetings” in an effort to update its guidelines for virtual annual meetings since they’re five years old. Earlier this month, CII sent this letter to the Committee to reaffirm its opposition to virtual-only meetings.
New Lease Accounting: Parsing an Example
Beginning in 2019, under the FASB’s ASU 2016-02, companies will need to recognize assets & liabilities for operating leases (see these memos in our “Lease Accounting” Practice Area). This blog by Steve Quinlivan gives the following example:
Lessee enters into a 10-year lease of an asset, with an option to extend for an additional 5 years. Lease payments are $50,000 per year during the initial term and $55,000 per year during the optional period, all payable at the beginning of each year. Lessee incurs initial direct costs of $15,000.
At the commencement date, Lessee concludes that it is not reasonably certain to exercise the option to extend the lease and, therefore, determines the lease term to be 10 years. Lessee also determines the lease is an operating lease.
The rate implicit in the lease is not readily determinable. Lessee’s incremental borrowing rate is 5.87 percent, which reflects the fixed rate at which Lessee could borrow a similar amount in the same currency, for the same term, and with similar collateral as in the lease at the commencement date.
At the commencement date, Lessee makes the lease payment for the first year, incurs initial direct costs, and measures the lease liability at the present value of the remaining 9 payments of $50,000, discounted at the rate of 5.87 percent, which is $342,017. Lessee also measures a right-of-use asset of $407,017 (the initial measurement of the lease liability plus the initial direct costs and the lease payment for the first year).
Lessee determines the cost of the lease to be $515,000 (sum of the lease payments for the lease term and initial direct costs incurred by Lessee). The annual lease expense to be recognized is therefore $51,500 ($515,000 ÷ 10 years).
At the end of the first year of the lease, the carrying amount of Lessee’s lease liability is $362,093 ($342,017 + $20,076; the $20,076 represents accrued interest on the lease liability), and the carrying amount of the right-of-use asset is $375,593 (the carrying amount of the lease liability plus the remaining initial direct costs, which equal $13,500).
As John blogged last week, Microsoft is voluntarily adopting the new lease standard on July 1st – you may be able to glean some pointers from their disclosure.
Yesterday, the SEC announced that Rob Evans will serve as a Deputy Director for Corp Fin – joining existing Deputy Director Shelley Parratt (Rob will head the “Legal & Regulatory Policy” side; Shelley will continue to lead “Disclosure Operations”). Rob comes to the SEC from Shearman & Sterling – he worked there with Corp Fin Director Bill Hinman before Bill moved to Simpson Thacher. Rob was also a colleague of former Corp Fin Director Linda Quinn.
SEC Commissioner Nominees: Hester Peirce Back in the Mix?
Broc blogged last year – and again a few months ago – about the nomination saga of Hester Peirce. Now – according to this Bloomberg article – her name’s reportedly returned to the top of the list for the open Republican seat at the SEC:
Hester Peirce, a former U.S. Securities and Exchange Commission counsel and Senate aide, is the Trump administration’s likely choice to fill the open Republican seat at the Wall Street regulator, according to people familiar with the matter.
Should President Donald Trump pick Peirce to be an SEC commissioner, her nomination will likely be paired with a candidate backed by Senate Democrats for another vacant seat at the agency, according to the people, who weren’t authorized to speak publicly about the process. Candidates that have been discussed for the Democratic spot include Robert Jackson, a Columbia University law professor, and Bharat Ramamurti, an aide to Senator Elizabeth Warren, the people said.
SEC’s Chief Accountant: Guidance for Audit Committees
A recent speech by SEC Chief Accountant Wes Bricker addressed how attention by audit committees to their core responsibilities can help promote the integrity of financial reporting & our capital markets. Here’s an excerpt from Ning Chiu’s blog:
– New Revenue Recognition Standard. Audit committees should understand management’s implementation plans and the status of the progress on the new revenue recognition standards, including any required updates to internal control over financial reporting. The audit committee should also communicate with auditors about any concerns the auditors may have regarding management’s application of the standard.
– Auditor Independence. Audit committees should “own” the selection of the audit firm, including making final decisions in the negotiation of audit fees. In its oversight of the audit relationship, audit committees must oversee auditor independence. The Office of the Chief Accountant (OCA) encourages audit committees and management to address independence questions with the SEC staff. If an auditor submits an independence matter to OCA, the SEC staff will sometimes reach out to the audit committee to understand its position.
The speech also touched on the PCAOB’s proposed changes to audit reports, which I blogged about earlier this month.
Recently, we held the 4th Annual “Women’s 100 Conferences” – in both Palo Alto & New York City. I’ve been attending these from the beginning & this year’s continued to live up to the hype! Here are 5 things I learned:
1. How To Know Your Shareholders: If you don’t have a centralized database to track notes from your shareholder engagement meetings (and your shareholders’ voting guidelines) – start one. Some companies have added this element to existing IR software – e.g. Ipreo. Others have a more basic approach. The bottom line is that institutional investors expect you to know where they stand on important issues. And they don’t want to rehash the same issues every year – you should just cover how their concerns have been considered or resolved. Your notes should also include your shareholders’ current contact procedures & preferences, which often change from year to year.
2. How To Know Your Potential Shareholders: We didn’t debate whether “the law of attraction” applies to shareholder engagement – but several people recommended thinking not only about your existing shareholders, but also the type of shareholders you’d like to get. This plays out in governance structures (e.g. single v. dual-class shares), environmental & social initiatives and your outreach efforts. Don’t overlook the communication value of your public disclosures for both existing & potential shareholders.
3. The Art of Using Directors in Off-Season Engagement: Shareholders might ask to meet with a director if there’s been a big strategic or executive pay change – or if there was low support for a company proposal at the annual meeting. They want to understand the board’s decision-making process & how it’s processing shareholder feedback. Directors can be really helpful, particularly if there are messages that are difficult to convey in a written proxy statement. But it’s extremely important to prep them on that shareholder’s policies & concerns – and how they relate to the company & its existing disclosures. Avoid cringe-worthy moments like “we just approved the pay package because the consultant recommended it.”
4. Icebreakers Work: Everyone introduced themselves at the beginning of both events – super helpful for anyone trying to connect with a particular person. On the West Coast, we all described our practice – but almost everyone’s was similar. On the East Coast, we had everyone say a “favorite” – book, movie, band, travel destination, etc. In addition to getting some good recommendations, I learned that this 10 minutes can really set the tone for the day. People were relaxed & jumped in with lots of questions during the panels.
5. We’re Building Community: I’ve always loved these conferences because the format encourages lots of interaction – you can meet heavy-hitters during speed-friending & connect over lunch with peers at the same career stage. So it was especially cool to talk with two women who are now close friends, after meeting at the conference a few years ago. We hope this becomes common!
Sights & Sounds: “Women’s 100 Conference ’17”
This 1-minute video captures the sights & sounds of the “Women’s 100” events that just wrapped up in Palo Alto & NYC:
The debate over voting rights (or lack thereof) wound up being the hottest issue of the proxy season. As Broc recently blogged, the debate over Snap’s dual-class structure continues. More recently, this Form S-1 filed by Blue Apron has created a stir. Here’s an excerpt that describes its triple-class voting rights:
We have two classes of voting common stock, Class A common stock and Class B common stock, and one class of non-voting stock, Class C capital stock. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes. Shares of Class C capital stock have no voting rights, except as otherwise required by law.
Holders of Class A common stock and Class B common stock vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law. Upon the completion of this offering, the holders of the outstanding shares of Class B common stock will collectively have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction.
We are issuing shares of Class A common stock in this offering. The outstanding shares of Class B common stock are held by our executive officers, employees, directors and their affiliates, and certain other stockholders who held our capital stock immediately prior to this offering. The Class C capital stock is available for use for, among other things, strategic initiatives, including financings and acquisitions, and the issuance of equity incentives to employees and other service providers.
As described in this blog from Cooley’s Cydney Posner, Professor Charles Elson predicts that Delaware courts will be reluctant to apply the business judgment rule when there are multi-class structures like this. See this blog by Manifest for a UK perspective on multiple classes.
Pay Ratio: Odds of a Delay?
Here’s an excerpt from this blog by Steve Seelig & Puneet Arora of Willis Towers Watson:
If the SEC follows the lead of the Department of Labor (DOL), which recently decided it will not further delay its controversial fiduciary rule, we may not get a delay of CEO pay ratio. In essence, the DOL determined that as a matter of regulatory procedure, it cannot move to delay a final rule without reopening the rulemaking process for additional comments.
Regarding pay ratio, we think Acting Chairman Michael S. Piwowar’s request for additional comments earlier this year may have been anticipating this regulatory hurdle, so it is possible the SEC would view those comments as supporting a delay.
Even if this was the thinking, the question would not be considered until the SEC has a sufficient number of Commissioners in place. As of today, Jay Clayton (R) is Chairman, with Kara M. Stein (D) and Mr. Piwowar (R) holding the other seats. SEC rules require three commissioners to constitute a quorum, and the thinking is that Commissioner Stein would not agree to attend a meeting where delay of the CEO pay ratio rule would be on the agenda.
– Special Considerations in California M&A Deals
– Alternatives to Traditional Working Capital True-Ups: The Locked Box Mechanism
– Chart: Delaware Standards of Review for Board Decisions
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