We recently posted the transcript for our “The Secret of My Success: Best Practices for Management Succession Planning” webcast, featuring Derek Chien of Synopsys, Richard Fields of Russell Reynolds Associates, Tracey Heaton of Heidrick & Struggles, J.T. Ho of Cleary Gottlieb and Jennifer Kraft, formerly of Foot Locker, who addressed a wide range of succession planning topics, including:
– Long-term succession planning
– Emergency succession planning
– The role of the board and management in succession planning
– When an executive chair role may be appropriate
– Shareholder perspectives and communications
– Executive compensation considerations
– Disclosure considerations and requirements
Members of the TheCorporateCounsel.net can access the transcript of this program. If you are not a member, email info@ccrcorp.com to sign up today and get access to the full transcript – or call us at 800.737.1271.
Yesterday, the PCAOB announced that that Demetrios (Jim) Logothetis was sworn in as Chairman of the Board, and Dr. Mark Calabria and Steven Laughton were sworn in as Board Members. The swearing-in ceremony took place at the SEC. Meredith highlighted the appointment of the new PCAOB Chairman and Board Members (along with their backgrounds) last week. The PCAOB’s announcement of the swearing-in ceremony states:
“I am deeply honored to have been appointed to lead the PCAOB, and I am grateful to SEC Chairman Atkins and to Commissioners Peirce and Uyeda for their faith in me to serve in this important role,” said Chairman Logothetis. “Independent oversight of auditors is a critical pillar of the investor confidence that powers the U.S. capital markets, and I look forward to partnering with the SEC, my fellow Board Members, and the PCAOB’s dedicated staff to fulfill our organization’s statutory responsibilities efficiently and effectively.”
Chairman Logothetis was appointed to a term that expires on October 24, 2030. Board Member Calabria’s term expires on October 24, 2027, and Board Member Laughton’s term expires on October 24, 2026.
The SEC has also appointed Kyle Hauptman to the PCAOB, and announced that George R. Botic (former acting Chairman of the PCAOB) will continue his service as a Board Member for a term that expires on October 24, 2028.
As John recently noted, these gentlemen will find their positions to be significantly less lucrative than in the past, with the SEC slashing the compensation of the PCAOB’s Chairman and its other Board Members by 52% and 42%, respectively, in the 2026 PCAOB budget. For more on the potential impact of that decision, be sure to check out Dan Goelzer’s analysis in The Audit Blog.
It is hard to believe that nearly nine years ago, the PCAOB adopted a new auditing standard that requires public company audit reports to contain a discussion of critical audit matters (CAMs) that arose during the audit. If your were practicing back then, you might recall that there was a great deal of attention focused on this significant change to the audit reporting model, and we spent a lot of time trying to understand what CAMs the auditors might report on, and how that reporting interacted with the disclosure provided in the company’s SEC filing. But then, as with so many things, with the passage of time the attention to CAMs seems to have waned, and overall the number of CAMs reported by auditors has decreased.
Dan Goelzer highlighted in his most recent Audit Committee and Auditor Oversight Update a new report from PCAOB’s Investor Advisory Group with the catchy title “The Second Annual Investor Advisory Group Most Decision-Useful Critical or Key Audit Matters For 2024.” The report provides a history of CAMs, reviews the Investor Advisory Group’s activities related to CAMs, discusses the findings of the Investor Advisory Group’s CAM evaluation process, and provides suggestions for improving CAMs. Dan notes that for audit committees, the report provides insight into how investors view CAM reporting and how they would like it to be enhanced. Dan highlights the following suggestions for improving CAMs included in the report:
The IAG report concludes with three recommendations for improving CAM reporting:
– CAMs should include what the auditors found. “To facilitate communication, auditors should present their findings by including a detailed conclusion.” The IAG recommends that the PCAOB amend the CAM standard to require the auditor to describe its conclusions. Currently, the PCAOB standard merely states that the auditor “may describe” such matters as the outcome of the audit procedures performed and key observations with respect to the CAM.
– CAMs should explore non-routine topics that are more likely to provide decision-useful information. The report states: “Perhaps fearing that unique CAMs will reveal information that the management would prefer not to be disclosed, many auditors use the same topics for their CAMs every year. However, repeating CAM topics may offer little additional information to investors.” The IAG encourages auditors to use CAMs “as an opportunity to actively explore more unique, lesser-understood topics, such as tax provisions, to communicate with investors.”
– The number of CAMs reported should increase. The number of CAMs has decreased over time. See Most Audit Reports Contain a CAM, But Only One, November-December 2025 Update. The IAG report recommends that auditors consider increasing the number of CAMs in their reports.
In addition to these steps to improve CAM reporting, the IAG members also suggest adding quantitative information to CAM disclosures, providing more description of the audit procedures performed, using more bullet points, and increasing coverage of CAMs on investment research platforms.
Dan suggests that audit committees may want to discuss these ideas from the Investor Advisory Group’s report with their auditor and seek to understand the reasons for the auditor’s approach to CAM reporting, while potentially seeking input from investors on improvements to CAM reporting.
– The current state of the digital asset ecosystem, including regulatory developments;
– How auditors are well-positioned to provide attestation services to enhance trust in the digital asset ecosystem; and
– Considerations and questions for boards, regulators, and policymakers as the digital asset ecosystem continues to evolve.
The report notes that auditors looking for information related to auditing digital asset transactions can refer to the AICPA practice aid, Accounting for and Auditing of Digital Assets, which provides nonauthoritative guidance on how to account for and audit digital assets.
We have noted the trend that the Corp Fin Staff is answering more no-action and interpretive requests on a variety of topics these days, as well as putting out new and revised Compliance and Disclosure Interpretations at a steady pace over the course of the past year. Consistent with this recent trend, the Staff of the Office of Mergers and Acquisitions recently issued an interpretive letter addressing whether the parties to an over-the-counter derivatives contracts referencing equity or other securities would be deemed a “group” for the purposes of Section 13(d)(1) or Section 13(g)(1) of the Exchange Act. The interpretive request was submitted by O’Melveny on behalf of Bank of America and affiliates. As this O’Melveny alert notes:
On January 23, 2026, the staff (the “Staff”) of the Office of Mergers and Acquisitions in the U.S. Securities and Exchange Commission’s (the “SEC”) Division of Corporation Finance issued an interpretive letter to Bank of America, N.A. and its affiliates (collectively, “BofA”) clarifying that the entry by BofA and a sophisticated counterparty into over-the-counter (“OTC”) derivative contracts in the ordinary course of business, without more, is not a sufficient legal basis to deem the parties a reporting “group” (i.e., single person for purposes of calculating beneficial ownership) pursuant to Section 13(d)(1) or Section 13(g)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”).
* * * * *
Prior to the BofA Letter, there existed substantial uncertainty as to whether parties to a derivative contract would be considered to be “acting as” a “group” for purposes of Section 13(d)(1) or Section 13(g)(1) of the Exchange Act as a result of entering into the contract. If the parties were deemed to be a reporting group, such group would beneficially own all of the shares of the class of securities underlying the derivative contract owned by each of the group members, thereby causing each of the parties: (i) if the group owned more than 5% of the outstanding class of securities, to become subject to reporting under Sections 13(d) or 13(g) of the Exchange Act, and (ii) if the group owned more than 10% of the outstanding class of securities, to be individually subject to Section 16 of the Exchange Act.
The Staff indicated in its response that it would not object to any determination by a financial institution that it does not “act as” a “group” with any counterparty to an OTC derivative and that, therefore, the institution together would not be required to aggregate ownership as a single “person,” solely as a consequence of entering into an OTC derivative contract, based on the representations provided by Bank of America in the request, which are generally applicable to ordinary course OTC derivative transactions.
The O’Melveny alert notes that this the interpretive letter is the sixth example of Staff interpretive guidance obtained by O’Melveny and BofA in the context of OTC derivatives since 2011. Shoutout to my former Corp Fin colleague Rob Plesnarski for all of his great work in this area!
Over five years ago, the SEC adopted amendments to Regulation S-K that require more detailed disclosure concerning a public company’s human capital. The amendments proved to be controversial, because they relied on a principles-based approach the gave companies leeway to determine what was material from a human capital perspective, and for the ensuing four years we expected further amendments to the item requirement that would be more prescriptive in approach. Those changes never materialized, but in 2025 companies encountered a distinct shift in government and shareholder approaches to diversity, equity and inclusion, which had been one topic that many companies addressed in their human capital disclosure.
With all of these developments, it is helpful to take a look back on human capital disclosures over the past five years, and Gibson Dunn recently provided us with this perspective in its alert “Five Years of Evolving Form 10-K Human Capital Disclosures.” The alert notes:
Human capital resource disclosures by public companies have continued to be a focus since the U.S. Securities and Exchange Commission (the “Commission”) adopted the new rules in 2020, not only for companies making the disclosures, but employees, investors, and other stakeholders reading them. This alert updates the alert we issued in December 2024, “Four Years of Evolving Form 10-K Human Capital Disclosures,” available here, and reviews disclosure trends among S&P 100 companies categorized into 28 topic areas. Each of these companies has now included human capital disclosure in their past five annual reports on Form 10-K. This alert also provides practical considerations for companies as we head into 2026.
Overall, our findings indicate that companies are reframing their disclosures related to diversity, equity, and inclusion (“DEI”) in response to the current legal, regulatory, and political environment, with the acronyms “DEI” and “DE&I” being completely removed from all human capital disclosures of S&P 100 companies in 2025. This year, companies generally continued to shorten their human capital-related disclosures, decrease the number of topics covered, and include less quantitative information in some areas, often as a result of decreased diversity-related disclosures.
Among the findings reported, Gibson Dunn notes the following with regard to the content of human capital disclosure:
Most common topics covered. This year, the most commonly discussed topics remained consistent with the previous three years, with the top five most frequently discussed topics being talent development, talent attraction and retention, employee compensation and benefits, diversity and inclusion, and monitoring culture. The topics least discussed this most recent year, however, changed slightly from those of the previous year as quantitative pay gap and diversity in promotion disclosures were tied as the fifth least frequently covered topics (joining physical security, diversity targets or goals, quantitative new hire diversity, and supplier diversity), replacing full-time and part-time employee split.
I think that we can certainly expect to see more evolution in the approach taken to this disclosure requirement during the course of the 2026 annual reporting and proxy season.
We offer 500 Practice Areas that cover in detail the topics that are of most interest to you in your practice. The real advantage of these Practice Areas is that they often provide the history and context for the topic you are researching, so you can understand the issues with the complete context. I often hear from members who note how useful these Practice Areas are to their day-to-day practice. If you are not a member of TheCorporateCounsel.net with access to these Practice Areas, I encourage you to reach out to the CCRcorp team today by email to info@ccrcorp.com or by calling 1.800.737.1271 to subscribe to this essential resource.
The Committee Majority Staff’s memorandum to the House Committee on Financial Services notes that this will be the first appearance of Chairman Atkins before the Committee. There is certainly quite a bit for these Committees to address with Chairman Atkins, given his articulated focus on, among other things, “Making IPOs Great Again,” addressing crypto asset regulation, and expanding investment opportunities for retail investors.
On this last point, the Senate Committee on Banking, Housing and Urban Affairs is currently considering the Incentivizing New Ventures and Economic Strength Through Capital Formation Act of 2025 (INVEST Act), which was passed by the House back in December 2025. As this Carlton Fields memo notes, Title II of the INVEST Act focuses on expanding investment opportunities for investors, including expanding the ability of investors to qualify as “accredited investors” and therefore invest in the private markets.
If you have been reading this blog for a while, then you know that I am never going to be angling to be the president of the XBRL fan club. Now, things are about to get real with XBRL filing fee information, with the SEC announcing last week that “starting on March 16, 2026, EDGAR generally will suspend filings rather than issue warnings for incorrect or incomplete structured filing fee-related information for all filers. EDGAR will continue to issue warnings in some instances.”
This has a been a rough winter in the mid-Atlantic, as we have gotten a taste of what it is like to live in those Northern regions of the country where the snow falls, turns to ice, and doesn’t go away until late Spring. As I navigated yet another frustrating weekend of snow removal, equipment failure and brutal cold, I tried to go to my happy place and think about how nice it will be here in just a few months when the flowers are blooming, or even just a few months after that when the leaves are starting to turn and there is a hint of Fall in the air. I suspect I am not alone in pursuing this type of coping mechanism during these bleak February days.
If you too are thinking of a Fall happy place, consider signing up for our 2026 Proxy Disclosure & 23rd Annual Executive Compensation Conferences in Orlando, Florida on October 12-13. From now until April 3, you can take advantage of our Super Early Bird rate. I must say, Orlando in mid-October sounds pretty good to me right now! So please check out the latest information about the Conferences available at our 2026 PDEC page.
