On Saturday, at the end of the 5-hour Q&A preceding Berkshire Hathaway’s formal annual meeting of shareholders, Warren Buffett announced that he would recommend that the company’s board of directors consider appointing his replacement, Vice Chair Greg Abel, effective as of year-end. The announcement came as a surprise to shareholders, most of the board, and even Greg Abel. From the transcript:
Tomorrow we’re having a board meeting of Berkshire and we have 11 directors. Two of the directors who are my children, Howie and Susie, know of what I’m going to talk about. The rest of them – this will come as news to them.
I think the time has arrived where Greg should become the chief executive officer of the company at year-end. I want to spring that on the directors effectively and then give that as my recommendation. Let them have the time to think about what questions or what structures or anything that they want, and then the meeting following that, which will come in a few months, we’ll take action on whatever the view is of the 11 directors. I think they’ll be unanimously in favor of it.
That would mean that at year-end Greg would be the chief executive officer of Berkshire. I would still hang around and could conceivably be useful in a few cases. But the final word would be what Greg said, in operations, in capital deployment, whatever it might be.
I could be helpful, I believe, in certain respects if we ran into periods of great opportunity or anything. I think that Berkshire has a special reputation that when there are times of trouble for the government, we are an asset and not a liability, which is very hard to have because usually the public and government get very negative on business if there’s a time like that.
But Greg would have the tickets. Whether it’s acquisitions – I think the board would be more welcome to giving him more authority on large acquisitions probably if they knew I was around. But Greg would be the chief executive, period.
The plan is – and Greg doesn’t know anything about this until what he’s hearing right now – that the board will be able to ask me questions tomorrow about more of the specifics of what they should be thinking about. They’ll digest it, and then at the next board meeting after that, if they act, then obviously we have something to announce to the world as a material change and we’ll go forward with that operation.
Although Berkshire’s meeting was only available to in-person attendees in years’ past, these days it’s broadcast on CNBC. Moreover, news outlets immediately publish writeups that cover everything about the meeting – ranging from the swag, to Buffett’s witty nuggets, to – in this case – business-related announcements. So, there’s probably no need to worry about Regulation FD issues. But what if a CEO makes a surprise announcement of potentially “material” news at an annual meeting that isn’t widely followed enough to be known as the “Woodstock of Capitalism”? I know I’m always sweating it out during Q&As for even the most perfunctory of AGMs. Our Reg FD Handbook gives thoughts on how to handle unplanned MNPI disclosures:
Question: If an executive responding to shareholder questions at a virtual shareholder meeting discloses material non-public information, is the company required to make a replay of that meeting publicly available for a certain period of time? I see that in the footnote to Reg FD adopting release, the SEC encouraged companies to make such replay available (and to indicate how long it will be available), but is it required?
Answer: The first question to consider is whether your virtual annual meeting is compliant with Regulation FD’s requirements. If the virtual meeting isn’t made available to the public and advance notice of how the public may access the meeting is not provided, then it won’t satisfy Regulation FD’s requirements (just as most traditional annual meetings don’t). See Reg FD CDI 102.05. So, if your meeting isn’t Regulation FD compliant and an executive inadvertently spills the beans on MNPI during the meeting, you will have to promptly disclose the information in a Regulation FD compliant manner (press release, Form 8-K, etc.)
Assuming that the virtual annual meeting is Regulation FD compliant, there’s no specific requirement for a transcript to be posted, but it is clearly a best practice when it comes to earnings calls and other management presentations. Most annual meetings have not been structured to comply with Regulation FD in the past, and the universe of virtual annual meetings isn’t very extensive. That means there isn’t a lot of precedent when it comes to posting transcripts. Since that’s the case, we recommend companies post a transcript and keep it up for as long as they customarily keep earnings releases posted.
What about Item 5.02 of Form 8-K, which requires disclosure within 4 business days of certain executives’ decision to retire or resign? Well, according to CDI 117.01, no disclosure is required solely by reason of discussions or consideration of retirement – and whether communications represent discussion or consideration vs. notice of a decision to retire is a facts & circumstances determination. Buffett seemed careful to frame this as something that is being considered and possibly determined at a later date, but that’s not legal advice! The people with all the facts will have to make the call. Our Form 8-K Handbook can help with these types of questions if you ever find yourself in a similar situation…
Speaking of CEO turnover, formal succession planning is becoming more common, according to a recent report from Russell Reynolds. Although this can be a sensitive topic to raise with CEOs, the report points out that normalizing the process not only benefits the company – it also helps the CEOs leave on better terms. Here’s an excerpt:
Last year told a hugely positive story around succession planning, with 22% of all CEO departures occurring because of a planned succession process—a 13% increase year-on-year, and the highest level ever recorded. This growing emphasis on succession planning contributed to fewer CEO removals, with the figure dropping to 14%, a significant decrease from 27% in 2023 and the lowest level since records began in 2018.
The focus on succession planning also led to a record number of internal promotions in 2024 – with 73% of incoming CEOs being promoted from within the organization. This reflects well on the Board because it shows that directors are mindful of developing an internal talent pipeline.
Meaghan also shared Recently on the Mentor Blog that more GC roles are being filled by internal candidates – so succession planning improvements may be going beyond the CEO.
For more real-time data on CEO turnover, check out Russell Reynolds’ “Global CEO Turnover Index” – which shows that the number of CEO departures in 2024 was well above average. Visit our “CEO Succession” Practice Area for checklists and resources for managing the process.
Like many people, I love a good Warren Buffett quote. Maybe because they remind me of my grandfather, who would’ve turned 105 last week – he had a never-ending stockpile of witticisms and also spent a lot of time in Nebraska. This list of 90 sayings from the “Oracle of Omaha” has a few of my favorites:
1. “The most important thing to do if you find yourself in a hole is to stop digging.”
2. “Don’t pass up something that’s attractive today because you think you will find something better tomorrow.”
3. “There’s never just one cockroach in the kitchen.”
4. “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
5. “You should never test the depth of the water with both feet.”
6. “Games are won by players who focus on the playing field –- not by those whose eyes are glued to the scoreboard.”
7. “I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”
8. “If you’re in the luckiest one per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”
9. “It’s only when the tide goes out that you learn who’s been swimming naked.”
10. “Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.”
I have a feeling we’re still in for a few more good ones…
A few weeks ago, I had the honor of participating as a panelist at the SEC’s 44th Annual Small Business Forum, which took place at the SEC’s Washington, DC headquarters. The SEC has posted recordings of the first half and the second half of the program, and my panel took place during the second half. The panel was moderated by Sebastian Gomez Abero, who is Acting Deputy Director, Legal and Regulatory Policy in Corp Fin, and I was joined on the panel by Dr. Yunhao Chen, who serves as CFO of Massimo Group.
We focused our panel discussion on going public and operating as a public company, addressing some of the key challenges that smaller companies face when seeking to access the public capital markets, as well as once they are operating as public company. During the course of our conversation, I shared the following observations:
– While we observed increased IPO volume in 2024 and the first quarter of 2025, the IPO market largely shut down amidst the market turmoil that followed the U.S. government’s shift in trade policy, which demonstrates how quickly the market dynamic can change, and how companies that are seeking to go public have very little control over their IPO timeline given how the IPO window can so rapidly close.
– One of the biggest challenges for smaller companies seeking to go public is a problem that cannot be readily addressed through regulatory policy or legislative action, and that is the lack of infrastructure for completing small IPOs, as we have lost the regional investment banks and regional stock exchanges that existed 30 years ago.
– I noted that this challenge leads us to the need to rethink what is an IPO, because the traditional underwritten, fully-marketed IPO that is trading on a stock exchange is very much reserved for companies that have valuations that can support raising a hundred and fifty million, two hundred million dollars in proceeds, and that is why there was excitement with things like Tier 2 of Regulation A and the JOBS Act IPO on-ramp.
– For smaller companies that have gone public, one of their biggest challenges as a public company is the complexity of the disclosure requirements on top of the general compliance costs and the need for controls and all those things that come with operating as a public company. In this regard, I pointed out the complexity of navigating the SEC’s filer status rules.
– I also noted the volume of the disclosure required of smaller companies, and how the gap has narrowed between what a smaller company must disclose and what a larger company must disclose. I offered up that perhaps we should go back to having a completely separate disclosure regime for smaller companies, as we did in the times before Regulation SB was integrated into Regulation S-K.
– For any companies still thinking about going public when facing all of these challenges, I offered that you should act like a public company before you become a public company, because for the executive team, the financial reporting team, the lawyers and everyone else that might be involved, you really have to build that muscle of being a public company over time. This involves focusing on your compliance program, focusing on your internal controls and disclosure controls, a really thinking about how you will interact with investors and how you will communicate the company’s story.
– In terms of suggestions for regulatory changes, I offered that we should really step back and figure out what do we really mean when we are trying to categorize smaller companies, particularly for the purpose of effectively right-sizing their disclosure obligations to align with their size and sophistication. I also noted that we should enhance and expand the improvements that came about with the JOBS Act, while revisiting shelf eligibility for companies that are already public.
The SEC’s Small Business Forum was a very thought-provoking program at a time when we are experiencing some legislative and regulatory focus on capital formation for smaller companies. I encourage you to go back and listen to the archive or review the transcript if you were not able to watch it live.
Earlier this week, the SEC announced that the Division of Economic and Risk Analysis (DERA) has published new data and analysis on the key market areas of public issuers, exempt offerings, commercial mortgage-backed securities, asset-backed securities, money market funds, and security-based swap dealers. The announcement notes:
“These reports reflect important information that is valuable to investors, other market participants, and academics,” said Robert Fisher, Acting Chief Economist and Director of the SEC’s Division of Economic and Risk Analysis. “Understanding these markets is critical because Americans rely on them to fund their retirements, educations, and other priorities.”
In the report about reporting issuers, it is noted that in 2023 there were 8,351 reporting issuers that filed a Form 10-K, Form 20-F or Form 40-F. There were 4,789 non-accelerated filers in that timeframe, as compared to 942 accelerated filers and 2,461 large accelerated filers. Of that group there were 2,381 WKSIs.
In the report about exempt offerings, it is clear that Regulation D remains the dominant exemption, far outstripping the number of offerings and dollar amounts raised in reliance on Regulation A and Regulation C. No surprises there!
Last week, Vanguard announced the results of a survey of 1,000 investors which demonstrated a strong interest among investors in having the ability to participate in the proxy voting process. Like many other institutional investors, Vanguard has been conducting its Investor Choice pilot program, which allows investors to make a single policy selection from a range of proxy voting policy options that determine how their proportionate fund ownership is voted at shareholder meetings. Key findings from the survey include:
– Most investors (83%) believe it is important that asset managers consider investors’ preference when casting votes for their funds, with more than half (57%) interested in participating in voting programs.
– Two-thirds (66%) of investors say they would participate in a proxy voting choice program offered through their employer retirement plan.
– Fifty-eight percent of investors would be more likely to invest in a fund if they could influence the fund’s proxy voting decisions, while a third (33%) would be willing to change firms if another firm offered them the ability to influence proxy voting.
– Less than half of investors (47%) are aware that fund managers cast proxy votes at shareholder meetings.
Vanguard notes that the survey results highlighted those governance topics that are most important to investors: “Respondents selected executive pay (44%), issuing dividends (41%), and who sits on the board of the company (30%) as the three most important topics they would want to weigh in on through the proxy voting process.”
– Do the financial statement disclosures reflect changing risk factors, such as changes in supply chains, pricing decisions, loss of significant customers, and disruptions to production?
– Do the financial statement disclosures reflect subsequent events that were known or knowable before issuing the financial statements that users of financial statements will find meaningful and reflective of industry-specific considerations?
– Are controls over financial reporting adequate to respond to the effects of tariffs or the resulting economic uncertainty, including the risk of fraud?
– Will financial statement deadlines be affected by changes to procedures performed by the entity, its specialists, or the auditors?
– Is the committee meeting often enough with management and the auditors to address challenges as they arise?
– Is the committee keeping the board apprised of significant matters with respect to risk and disclosure?
Be sure to check out all of our tariff-related resources in our new “Trump Administration Tariffs” Practice Area. If you are not a member, you can try a no-risk trial now. Sign up online or contact our sales team at Sales@CCRcorp.com or by phone at 800-737-1271. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.
Wachtell Lipton recently published an updated version of its longstanding Audit Committee Guide. The 2025 edition spans 202 pages and includes helpful models for everything from an audit committee charter to an audit committee self-evaluation checklist. This introductory note explains how the guide can be used:
This Guide provides an overview of the key rules applicable to audit committees of NYSE- and Nasdaq-listed U.S. companies and best practices that audit committees should consider. This Guide outlines audit committee members’ responsibilities, reviews the composition and procedures of audit committees and considers important legal standards and regulations that govern audit committees and audit committee members. Although generally geared toward public company audit committee members, this Guide is also relevant to private company audit committee members, especially if the private company may at some point consider accessing the public capital markets.
A well-run audit committee—i.e., an audit committee composed of financially knowledgeable, independent members who are focused on the right areas of inquiry and intent on asking tough questions of management, internal auditors and the independent auditor—can assist the company in its financial reporting, risk management and compliance obligations. To this end, this Guide proposes specific practices designed to promote effective audit committees.
Members can access this guide, along with other helpful resources, in our “Audit Committees” Practice Area. If you do not have access to our Practice Areas, sign up today!
Yesterday marked the first 100 days of the second Trump Administration, and I am going to jump on the bandwagon here and reflect back on the SEC’s actions during those first 100 days. The first 100 days of a presidency became a benchmark during the first term of Franklin D. Roosevelt, when he promised swift action during the first 100 days of his administration amidst the Great Depression.
There is no doubt that the SEC hit the ground running under the leadership of Acting Chairman Mark Uyeda, as the Commission and Staff addressed a number of areas relevant to our practice. In the areas of capital formation and capital access, the actions included:
– Corp Fin issued updated guidance that enhances the accommodations available to companies for nonpublic review of draft registration statements.
– The Staff updated its Securities Act Forms CDIs to allow all Form S-3 eligible issuers to have their Form S-3 registration statements become effective between the date of the Form 10-K filing and the filing of the proxy statement containing forward-incorporated Part III disclosure (previously, this was something that only WKSIs were permitted to do).
– The Staff issued an interpretive letter indicating that an issuer may satisfy the verification requirements of Rule 506(c) by relying on minimum investment amounts of at least $200,000 for natural persons and at least $1,000,000 for legal entities and also updated the Securities Act Rules CDIs to address this interpretation.
In remarks during the course of the first 100 days, Acting Chairman Uyeda noted the following potential areas for regulatory action in the context of capital formation:
– Expanding the relief from disclosure requirements provided to emerging growth companies under the JOBS Act;
– Revisiting the qualification thresholds for emerging growth company status and the duration of emerging growh company status;
– Reviewing the “accelerated filer” and “large accelerated filer” thresholds;
– Reviewing disclosure requirements to identify those that should apply only to the largest companies;
– Allowing unlisted companies with a public float of less than $75 million to use shelf registration statements for primary offerings;
– Exploring regulatory changes that enable greater retail investor participation in the private markets, whether through modifications to the accredited investor definition or otherwise; and
– Simplify some of the regulations governing exempt offerings.
The Staff also revisited interpretations relevant to shareholder engagement, including:
– The Staff issued Staff Legal Bulletin 14M, which clarifies the Staff’s views on the scope of the “economic relevance” and “ordinary business” bases for excluding shareholder proposals under Exchange Act Rule 14a-8.
– The Staff updated CDIs regarding beneficial ownership reporting to expand the nature and scope of activities viewed as “influencing control of the issuer” to include exerting pressure to adopt governance measures, particularly tied to ESG or political policy matters.
– The Staff updated CDIs addressing the interpretation of the rules relating to Notices of Exempt Solicitation, which have been used by shareholders to express their views on shareholder proposals.
In the realm of public disclosure, the SEC voted to end its defense of the climate disclosure requirements that the SEC adopted in March 2024. The Staff has updated CDIs regarding clawback disclosures, Rule 10b5-1 and tender offers. Public companies have dramatically altered the disclosure that they provide in annual reports and proxy statements regarding diversity, equity and inclusion based on Executive Orders targeting such practices that were issued by the Trump Administration. Public companies have also had to address the impact of tariffs on their business, the financial markets and the economy.
With respect to crypto, a variety of actions have been taken:
– Commissioner Peirce is leading the SEC Crypto Task Force with mission of providing regulatory clarity for crypto assets.
– The SEC has solicited feedback held several roundtables on crypto regulatory issues.
– Litigation has been dropped or stayed in various crypto-related cases.
On the SEC operations side of things, a significant portion of the SEC Staff has left or is in the process of leaving as a result of the DOGE “fork in the road” offer and the SEC’s early retirement program. Anecdotally, it appears that these staffing cuts have been disproportionately comprised of senior Staff members with significant experience and institutional knowledge.
It is wild to think that all of this activity occurred before Chairman Paul Atkins was sworn in last week. Now that the SEC has a Chairman in place, I think that we can only expect this pace of change to continue.
For more coverage of the first 100 days of the Trump Administration, check out Goodwin’s New Directions Audio Series.
