The title of this blog includes multiple question marks because the SEC continues to keep us in the dark when Edgar has problems. I’m not talking about the cyber breach that was recently announced. I’ve been harping for some time that the SEC needs a blog – or some type of other vehicle – to inform the public when Edgar is experiencing problems (and when those problems are resolved). Go back to my March blog entitled “Edgar is Down? (Crickets)” – or this one from a year back from that: “EDGAR is Down”: A Familiar Refrain?”
This is not just my pet peeve. Here’s a note that I received yesterday from a member:
We’ve had problems over the last few days with a couple of Edgar filings that were hung up apparently due to fee processing problems. A quick search for S-1 filings today shows the first five S-1 filings all being time-stamped within a fifteen minute period starting around 3:12 pm today, which strongly suggests a systems problem. I’ve talked to several financial printers and gotten confirmation that other law firms were seeing the same filing problems with fee-required filings yesterday and today. I wonder if this is related to the hack – or just outdated systems. Can you blog about this so you can gather feedback from others.
As of this morning, Edgar is still having trouble accepting filings – the third day in a row. Apparently, this is affecting every deal that’s trying to price & launch. It’s a bit sad that I’m being asked to gather information from the community so that we can figure out what is happening with Edgar. It happens a lot. And the SEC could easily solve this problem by communicating with us as I’ve blogged about many times…
Pay Ratio: Glass Lewis’ Approach
In this note, Glass Lewis has joined the many who have written about the SEC’s new guidance on pay ratio (we’re posting memos about that in our “Pay Ratio” Practice Area). In addition to summarizing the SEC’s guidance, Glass Lewis indicates what approach it will take for pay ratio in this excerpt:
Glass Lewis intends to display the pay ratio as a data point in our Proxy Paper in 2018. At this time, however, we do not intend to incorporate the pay ratio into our assessment and analysis of Say-on-Pay proposals. We recognize that this data point might provide valuable additional information to shareholders on a company’s pay practices; however, we do not believe that this information is material for our analyses of the structures by which, and the disclosures of how, companies pay their NEOs.
By the way, for those registered for our “Pay Ratio & Proxy Disclosure Conference,” the video archives for Wednesday’s panels are now posted…
ISS Survey: Director Comp & Gender Pay Gap
Yesterday, ISS released this 23-page summary from its 2017-2018 policy survey. This year, survey topics were split into two parts, with an initial, high-level survey covering a small number of fundamental and high-profile topics. Here’s two of the pay-related findings for the US:
– Director Pay – Survey respondents were asked which factors should be considered in determining whether a director pay program presents a governance concern with respect to high pay magnitude. Tops for investors was measuring director pay relative to a four-digit GICS peer group, followed by stock market index peers, and, third, measuring a director pay program relative to all companies. Corporate respondents, meanwhile, deemed the measurement of pay relative to a stock market index most appropriate, followed next by pay measurements relative to a four-digit GICS industry peer group. When asked which factors should be considered in determining whether a pay program presents a governance concern with respect to problematic pay structure, both groups agreed that excessive perquisites was most problematic.
– Gender Pay Gap – Over the past two years, shareholders have filed proposals asking for a report on gender pay equity at numerous U.S. companies. ISS’ survey asked whether companies should be disclosing their gender pay gap information, with 60 percent of investor respondents answering affirmatively, compared with 17 percent for corporates. Of the just over one-quarter (27 percent) of investor respondents suggesting the need for such disclosures would “depend” on certain considerations, most indicated they would deem it favorable if the practice became an industry norm and/or the company was lagging its peers.
Recently, the PCAOB issued this Staff audit alert to assist independent auditors in applying PCAOB standards when they audit their client’s implementation of FASB’s new revenue recognition standard. Topics covered include:
– Transition disclosures & adjustments
– Internal control over financial reporting
– Fraud risks
– Revenue recognition
– Disclosures
Here’s an excerpt from the alert’s discussion of key factors for auditors to consider when assessing the internal control implications of the new standard:
PCAOB standards require the auditor to obtain a sufficient understanding of each component of internal control over financial reporting to (a) identify the types of potential misstatements, (b) assess the factors that affect the risks of material misstatement, and (c) design further audit procedures.
Changes to company processes for the implementation of the new revenue standard can affect one or more components of internal control. For example, the auditor is required to obtain an understanding of the company’s control environment, including the policies and actions of management, the board of directors, and the audit committee concerning the company’s control environment.
Check out this recent blog from Steve Quinlivan for more on the PCAOB’s alert. And we’re posting numerous memos on transition issue – and the new revenue recognition standard more specifically – in our “Revenue Recognition” Practice Area.
Revenue Recognition: SEC Comments for Early Adopters
This “SEC Institute” blog reviews Corp Fin’s comments on filings by two early adopters of FASB’s new revenue recognition standard. The Staff’s comments – which are set forth in full in the blog – focus on MD&A and financial statements. And their emphasis is on the adequacy of disclosure and seeking to understand how the company made judgments in applying the new principles-based standard.
While the two companies that received comments were able to resolve them quickly, the blog also includes a reminder that not all comments on new accounting standards have happy endings:
New accounting standards always draw attention from the SEC. Way back in the 1990s, SFAS 133 (now of course ASC 815) was issued to create dramatically different new guidance for derivative and hedge accounting. Louis Dreyfus Natural Gas early adopted the new standard. After certain issues were raised in an SEC review, Louis Dreyfus Natural Gas was forced to restate its initial application of the new derivative accounting model.
“Black Monday”: 30 Years Ago Today!
It’s hard to believe, but “Black Monday” – the great stock market crash of 1987 – happened 30 years ago today, October 19, 1987. This Bloomberg article recounts memories of that day from a cross-section of Wall Street players. So much that was once unthinkable has happened to the markets & the world since that day that I’m sure some of our younger readers are asking themselves, “what’s the big deal?”
Well, the greatest single one day drop in Wall Street’s history didn’t occur in 1929 or 2008 – it happened on Black Monday in 1987. The market lost nearly 23% of its value in a single day. This quote from a trader will give you some sense of how many people felt that day:
I was so scared that I got $10,000 out of the bank, took it home, and stored it in the rafters.
Personally, I remember that day vividly. I was in a drafting session for a public offering, and the bankers kept nervously calling their office to find out how the market was doing. By the time the market closed, it was very apparent to everyone that our deal was stone dead.
– How to Attend by Video Webcast: If you are registered to attend online, just go to the home page of TheCorporateCounsel.net or CompensationStandards.com to watch it live or by archive (note that it will take about a day to post the video archives after it’s shown live). A prominent link called “Enter Wednesday’s Pay Ratio Conference Here” – on the home pages of those sites – will take you directly to today’s Conference (and on the top of that Conference page, you will select a link matching the video player on your computer: HTML5, Windows Media or Flash Player). Here are the “Course Materials,” filled with 182 pages of annotated model pay ratio disclosures, 156 pay ratio nuggets, talking points, etc.
Remember to use the ID and password that you received for the Conferences (which may not be your normal ID/password for TheCorporateCounsel.net or CompensationStandards.com). If you are experiencing technical problems, follow these webcast troubleshooting tips. Here is today’s conference agenda; times are Eastern.
– How to Earn CLE Online: Please read these “FAQs about Earning CLE” carefully to see if that is possible for you to earn CLE for watching online – and if so, how to accomplish that. Remember you will first need to input your bar number(s) and that you will need to click on the periodic “prompts” all throughout each Conference to earn credit. Both Conferences will be available for CLE credit in all states except for a few – but hours for each state vary; see this “List: CLE Credit By State.”
Say-on-Pay: Despite Few “Failures,” 12-14% Run Into Problems
Here’s the intro from this interesting blog by Davis Polk’s Ning Chiu:
Although the failure rate for 2017 say-on pay results achieved an all-time low of just 1.3%, the number belies the fact that more than 2,000 say-on pay proposals have either received negative recommendations from ISS or less than 70% support, or both, since say-on-pay resolutions started in 2011.
Approximately 12% to 14% of companies run into problems every year. As companies have become more proactive with shareholder engagement, the number of companies that received “against” recommendations from ISS and still achieved more than 70% support has increased in the last three years, while the number of companies with those negative recommendations that received less than 70% favorable votes have fallen.
What may be most surprising to companies, however, is that about 10 to 15 companies each year received positive endorsement from ISS and still obtained less than 70% support.
More on “The Mentor Blog”
We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here’s a sampling of entries:
– 87% of S&P 500 Disclose Political Spending Policy
– Few Can Fill the CEO’s Job, Directors Say
– Conflict Minerals: What to Consider for Next Year
– What is the “Long-Term Stock Exchange”?
– UK: Guidance in Response to “Green Paper”
– SCOTUS: Big Term for Securities Law Cases
Today is the “Pay Ratio & Proxy Disclosure Conference”; tomorrow is the “Say-on-Pay Workshop: 14th Annual Executive Compensation Conference.” Note you can still register to watch online by using your credit card and getting an ID/pw kicked out automatically to you without having to interface with our staff. Both Conferences are paired together; two Conferences for the price of one.
– How to Attend by Video Webcast: If you are registered to attend online, just go to the home page of TheCorporateCounsel.net or CompensationStandards.com to watch it live or by archive (note that it will take about a day to post the video archives after it’s shown live). A prominent link called “Enter Pay Ratio Conference Here” – on the home pages of those sites – will take you directly to today’s Conference (and on the top of that Conference page, you will select a link matching the video player on your computer: HTML5, Windows Media or Flash Player). Here are the “Course Materials,” filled with 182 pages of annotated model pay ratio disclosures, 156 pay ratio nuggets, talking points, etc.
Remember to use the ID and password that you received for the Conferences (which may not be your normal ID/password for TheCorporateCounsel.net or CompensationStandards.com). If you are experiencing technical problems, follow these webcast troubleshooting tips. Here is today’s conference agenda; times are Eastern.
– How to Earn CLE Online: Please read these “FAQs about Earning CLE” carefully to see if that is possible for you to earn CLE for watching online – and if so, how to accomplish that. Remember you will first need to input your bar number(s) and that you will need to click on the periodic “prompts” all throughout each Conference to earn credit. Both Conferences will be available for CLE credit in all states except for a few – but hours for each state vary; see this “List: CLE Credit By State.”
SEC Comments: What’s the New “SWAT” Process?
Recently, a member posted this question in our “Q&A Forum” (#9233): “Back on September 18th, Broc blogged about Corp Fin having a new SEC comment letter process. Is the whole “Swat” thing something that is a big difference in how Corp Fin is processing comment letters?” This was my answer:
SWAT is a workflow system that will better document the Staff’s comment letter process, make everything available to everyone on the Staff more easily, provide reports and reminders, etc. It’s all internal and won’t have any impact on what companies see. So it’s just a workflow system. No real impact on what is commented upon…
Corp Fin’s “Climate Change” Comments: The Coming GAO Report
By the way, the announcement about SWAT was buried in the SEC’s Inspector General report about Corp Fin’s comment letter process. That report was pretty innocuous and not of any great moment.
I forgot to note why the IG prepared that report. In July of last year, some members of Congress sent a letter to the IG (and to GAO) asking that they review the SEC’s efforts to implement the climate change guidance of 2010 and assess Corp Fin’s comment letter process. These members of Congress were of the view that Corp Fin should be issuing more comments and they wanted to understand why that was not the case.
This IG report says that the GAO will report separately on its observations related to the SEC’s climate change-related policies & procedures. Now that should be interesting…
One of the things that I’ve blogged about more than I would like is how the Reg Flex Agenda is merely aspirational – and people should pay little mind to it (here’s one of my more recent entries). History certainly has borne out the truth – I imagine the SEC has missed it’s predicted timetables for rulemakings listed in the Reg Flex Agenda many more times than not. And not that there’s anything wrong with that, it’s always been viewed as a meaningless regulatory exercise for those “in the know.”
But now – probably due to all the Congressional & media attention being paid to it – SEC Chair Clayton recently told the Senate Banking Committee that he intends to make the Reg Flex Agenda more realistic, including streamlining it (see this Cooley blog).
Kudos if the SEC can pull it off. But I worry that by promising to make deadlines, the SEC is placing a bullseye upon itself. In recent years, the Staff has smartly avoided mentioning any “hard” time frames for conducting rulemaking. That’s because it’s nearly impossible to predict when a rulemaking will come out, even when you’re the one actually writing the rules! It’s difficult to even predict which season of the year it will happen.
There’s a myriad of review layers within the SEC, including:
1. Your superiors within your Division (and there might be quite a few of those)
2. The folks within the SEC’s Office of General Counsel
3. That ever-growing newish Division of Economic & Risk Analysis (DERA)
4. Each Commissioner (and their counsels)
5. Possibly other Divisions or Offices within the SEC, depending on the nature of the rulemaking
6. Possibly members of Congress (or their staff) if it’s a politically-sensitive topic
You think its tough getting your proxy through an internal review? That’s nothing. A proposing/adopting release can easily go through 20 drafts. Anyway, I draw your attention to the transcript of one of my favorite webcasts if you want to learn more: “How the SEC Really Works“…
Recently, I blogged how the SEC’s Edgar is critical to a transparent financial market – and how the recent hack of Edgar is serious business. This Reuters article notes that Edgar could be at risk from “denial of service” attacks. Even worse news comes from this excerpt:
The memo shows that even an unintentional error by a company, and not just hackers with malicious intentions, could bring the system down. Even the submission of a large “invalid” form could overwhelm the system’s memory.
Hopefully, Congress will do the reasonable thing and give the SEC more resources (they need it in all sorts of areas – including to investigate when it is hacked, as noted in this article). Edgar arguably is held together with duct tape and no one should act surprised that it was hacked. The NSA can’t even avoid getting hacked.
By the way, this new bill that would subject credit bureaus – like Equifax – to federal cybersecurity reviews cracks me up. As if the federal government will be using its best cyber resources to review the security of outside entities – it can’t even protect its own systems…
Your Sensitive Information Was Accessed in a Government Hack? No Remedy?
This Davis Polk blog notes that those who have their personal information stolen during a hack of a government database are unlikely to have a remedy. And this Davis Polk blog wonders whether the hack of Edgar will result in a delay of the Consolidated Audit Trail (which will consist of a central repository for SROs and broker-dealers to submit extensive information in standardized formats regarding securities trading activity)…
The SEC’s New “Cyber” Unit: Getting the Band Back Together!
Last week, I blogged about the challenges that the SEC will face hiring cybersecurity experts given the extreme shortage of that resource. On a lighter note, it is interesting that the SEC’s Division of Enforcement disbanded its “Office of Internet Enforcement” in 2009, recognizing that the entire Division really should have expertise in that area. Now with the SEC creating a similar “Cyber” unit, John Reed Stark shared this great pic of his former office on LinkedIn:
Perhaps you thought the FAST Act was way behind us – but remember the SEC still hasn’t adopted some rules required by Dodd-Frank. Yesterday, the SEC proposed a variety of rules and form changes as required by the FAST Act. Here’s the 253-page proposing release; we’ll be posting memos in our “Disclosure Effectiveness” Practice Area. In this blog, Cydney Posner highlights some of the proposals, including:
1. Limit the period-to-period comparison required in MD&A to only the two most recent fiscal years presented in the financials, so long as the earlier period discussion is no longer material to understanding the financials and it has been included in the previous 10-K.
2. Allow companies to omit or redact confidential information from material contract exhibits that is not material and would cause competitive harm if publicly disclosed, without having to submit an unredacted copy and prior formal request to the Corp Fin Staff, as is currently required. This is intended to change process only & will not be intended to change the substantive requirements.
3. Limit the two-year “look back” requirement for exhibits to apply only to newly reporting companies.
4. Clarify that disclosure regarding properties is required only to the extent that the property is material.
5. Require inline XBRL tagging for all cover page information – and require the cover page to include the (tagged) ticker symbol for each class of securities registered under the Exchange Act.
6. Require disclosure of legal entity identifiers (“LEIs”) for the company & any significant subsidiaries identified on Exhibit 21.
7. Require links to information incorporated by reference from previously filed documents.
In this blog, Ning Chiu does a great job of listing the seven ways that periodic reporting could change…
Pay Ratio: How to Handle PR & Employee Fallout
For those coming to next week’s “Pay Ratio & Proxy Disclosure Conference,” you’ll hear tidbits about the hot “employee reaction” topic all day long – but particularly during the panel entitled “Pay Ratio: How to Handle PR & Employee Fallout.” Recently, as noted in this press release, Willis Towers Watson found that this was the topic of largest concern when it surveyed companies. Here’s an excerpt:
Indeed, roughly half of the respondents polled (49%) cited forecasting how their employees will react to the ratio disclosure as their number one challenge, but that other challenges still loom. About four in 10 (39%) said determining the consistently applied compensation measure (CACM) is their great challenge followed by getting accurate pay data (38%), deciding how to craft their required disclosure (37%) and determining where their pay ratio stands compared with that of their peers, their industry and the market (35%).
We continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– More on “Showing Off Your Directors Via Video”
– Shareholder Proposal Reform: Keith Higgins Wades In…
– Showing Off Your Directors Via Video
– Proxy Season: Steps to Take Now to Prepare
– Online Disclosure & Mobile IR Websites: S&P 500 Study
This is one of 4 reports coming out of Treasury dealing with various types of reform. In this Treasury Report, there’s a bunch of recommendations that impact our area of law – and most of them can be accomplished at the agency level, not needing action by Congress. We’re posting memos in our “Regulatory Reform” Practice Area.
As noted in Steve’s blog, the list includes (but is certainly not limited to):
1. Repeal of Section 1502 (conflict minerals), Section 1503 (mine safety), Section 1504 (resource extraction), and Section 953(b) (pay ratio) of Dodd-Frank. In the absence of legislative action, the SEC should consider exempting smaller reporting companies (SRCs) and emerging growth companies from these requirements.
2. The SEC should move forward to remove SEC disclosure requirements that duplicate financial disclosures required under GAAP by the FASB.
3. Companies other than EGCs be allowed to “test the waters” with potential investors who are QIBs or institutional accredited investors.
4. $2,000 holding requirement for shareholder proposals should be substantially revised.
5. Resubmission thresholds for repeat proposals be substantially revised from the current thresholds of 3%, 6%, and 10%.
6. SEC should continue its efforts, when reviewing company offering documents, to comment on whether the documents provide adequate disclosure of dual class stock and its effects on shareholder voting.
7. Modify rules that would broaden eligibility for status as an SRC and as a non-accelerated filer to include entities with up to $250 million in public float as compared to the current $75 million.
8. Extend the length of time a company may be considered an EGC to up to 10 years, subject to a revenue and/or public float threshold.
9. Expand Regulation A eligibility to include Exchange Act reporting companies.
10. Tier 2 offering limit should be increased to $75 million.
11. The SEC, FINRA and the states propose a new regulatory structure for finders and other intermediaries in capital-forming transactions.
12. Accredited investor definition should be amended with the objective of expanding the eligible pool of sophisticated investors.
13. Review of provisions under the Securities Act and the Investment Company Act that restrict unaccredited investors from investing in a private fund containing Rule 506 offerings.
Here’s a “Fact Sheet” for the Report. Also see Appendix B of the Treasury Report (pg. 203) for a tabular breakdown of the recommendations by topic…
Today’s Webcast: “Evolution of the SEC’s OMA”
Tune in today for the DealLawyers.com webcast – “Evolution of the SEC’s OMA” – to hear Michele Andersen, Associate Director of the SEC’s Division of Corporation Finance & Ted Yu, Chief of the Corp Fin’s Office of Mergers & Acquisitions, Skadden’s Brian Breheny, Weil Gotshal’s Cathy Dixon, Alston & Bird’s Dennis Garris and Morgan Lewis’ David Sirignano in a discussion of how the Corp Fin’s Office of Mergers & Acquisitions has evolved over the years…
Mandatory Arbitration: Bad for Defendants?
In July, John blogged about SEC Commissioner Piwowar’s apparent support for mandatory arbitration clauses – which historically have been considered contrary to public policy & potentially inconsistent with Securities Act anti-waiver provisions.
This blog from Lane Powell’s Doug Greene explains why a shift to mandatory arbitration wouldn’t be the panacea that companies are looking for – in fact, they might be a lot worse off. Here’s a teaser:
These arbitrations would be unmanageable. Each plaintiffs’ firm would recruit multiple plaintiffs to initiate one or more arbitrations—resulting in potentially dozens of arbitrations over a disclosure problem. Large firms would initiate arbitrations on behalf of the institutional investors with whom they’ve forged relationships, as the Reform Act envisioned. Smaller plaintiffs’ firms would initiate arbitrations on behalf of groups of retail investors, which have made a comeback in recent years.
We often object to lead-plaintiff groups because of the difficulty of dealing with a group of plaintiffs instead of just one. In a world without securities class actions, the adversary would be far, far worse—a collection of plaintiffs and plaintiffs’ firms with no set of rules for getting along. Securities-disclosure arbitrations would cost multiple times more to defend and resolve.
All this to say – if a policy shift does come to fruition – we’re not sure it’ll be quickly embraced.
Tune in today for the webcast – “E&S Disclosures: The In-House Perspective” – to hear National Vision’s Jared Brandman, Davis Polk’s Ning Chiu, Bristol-Myers Squibb’s Kate Kelly, Apple’s Jung-Kyu McCann and Clorox’s Stephanie Tang discuss environmental & social disclosure issues – in both SEC filings & other types of filings.
SASB Proposes ESG Disclosure Standards
As Ning notes in her blog, the Sustainability Accounting Standards Board (SASB) released draft standards for Environmental, Social and Governance (ESG) disclosure last week, launching a 90-day public comment period which ends on December 31st. Four years in the making, these standards set forth ESG topics covering 11 different sectors and 79 industries for public companies to disclose annually.
Ning has a link to where the exposure draft resides. I decided not to do so – because I’m dismayed that one can only receive a copy if you fill out a form. Studies show that downloads of documents dramatically go down if you force people into providing their personal information – even if the document is free. I dislike this practice – particularly for something like this that has a regulatory feel…
Heads Up! Legal Entity Identifier (LEI)/MiFID II Deadline
A member recently asked in our “Q&A Forum” (#9237): “It appears that several EU firms are reaching out to U.S. public companies to obtain a Legal Entity Identifier (LEI) in advance of the new EU financial markets regulation (MiFID II and MiFIR) becoming effective (or risk that company shares cannot be traded in Europe after January 3, 2018). Are public companies applying for LEI’s, and if so, how? It looks like Bloomberg is an accredited issuer of LEIs as a Local Operating Unit (LOU), but I’m just trying to get a handle on how other public companies are responding any why.”
I asked a few in-house friends about this – and they were unaware of this requirement. We posited some potential thoughts on this topic in response to the query in the “Q&A Forum” – and now the first law firm memo is out about it. Send more!
Some of you might know that I’m rolling into “Week 38” of my second pregnancy…the “home stretch.” For all the parents out there – especially moms – you know that balancing your pregnancy & profession can present some unique issues. Here are 4 things I’ve experienced:
1. To-Do Lists: At this point, these are growing faster than the baby. There’s the work list, the mom/baby healthcare & benefits lists, the nursery list, etc. It can be overwhelming, especially since all the tasks have the same imminent – but unknowable – deadline.
With our firstborn, I managed to wrap up my work projects (and report for jury duty!) just before the baby’s early arrival. But, we were “those people” who didn’t have a name picked out & installed the car seat in the hospital parking lot. This time, I’d love to have 10 minutes of downtime to mentally prepare for the new person who’s joining our family. I’m not there yet – but there’s still hope.
2. Transition Mechanics: I’ve benefitted from good parental leave policies, but there’s an art to making this work. Good colleagues & relationships are key, since it’s scary to entrust your work and clients to someone else. You want to know they’ll do a great job but also that your position is secure and your clients will still want to work with you when you return. You’re also well-aware that you’re asking big favors. Co-workers are taking on extra work – with limited background and without an obvious long-term incentive. Clients are dealing with someone they don’t know, who might not have the entire backstory for on-the-fly questions.
It’s best for everyone if you’re extremely organized going into leave (more to-do lists, plus contact lists). Discuss expectations with clients & colleagues – separately & during intro calls. I also continued to monitor e-mail and was available for questions during leave. People are pretty respectful, but they like knowing you won’t hang them out to dry. Small thank-you gifts also never hurt.
3. Awkward Networking: I don’t like being pregnant in a professional setting. Pretty much everyone stares at and/or comments on your body. This doesn’t bother me much if the other person is relating to me as a fellow parent – maybe it’s even a good icebreaker – but you still need a tactic for redirecting the conversation to any professional topics you wanted to cover. And always have a stock response ready for people who aren’t as smooth. Because the cruel irony is that you can’t just smile and take a big drink of wine…
4. Mixed Feelings: Don’t get me wrong, I love our two-year-old more than life and I’m grateful and excited for the opportunity to care for another little person. But parenthood isn’t always easy or fun, the world isn’t always kind, and experiencing all that love also requires a lot of vulnerability.
On top of that, there’s the postpartum identity crisis – during which you try to reconcile your ambitious, always-available, pre-baby self with the realities of limited time & sleep, as well as whatever you & society think a mother/parent should look like. There’s a tension between proving yourself all over again and setting boundaries that allow you to actually enjoy your family. Both are necessary and evolve over time. As a woman in an historically male-dominated profession, I’m also constantly thinking about how my attitude, day-to-day actions & career decisions might impact my kids’ ambitions and worldview.
But there’s upside: the transition is a chance to examine your goals – and decide how to maximize your potential. Plus, you might be more creative & efficient.
I know I’m not alone on this journey of balancing pregnancy, parenthood & lawyering – email me with any experiences & “lessons learned” that you want to share!
Corp Fin’s “Partial” Global Rule 13e-4 Relief
Here’s something that Broc blogged yesterday on the “DealLawyers.com Blog“: Whenever Corp Fin’s Office of Mergers & Acquisitions posts a new no-action response, I take a gander to see if it’s new or unusual. Typically, they aren’t – and this new response to CBS falls within that category. It’s basically one of the formula pricing variety (albeit in the Reverse Morris Trust exchange offer context).
The Staff’s relief allows for the bidder/issuer to offer a number of shares in exchange based on the dollar amount of securities tendered – and relies on “formula pricing” mechanisms going back to the old Lazard Frères no-action letter from the 1980’s while utilizing the “pricing goes hard at least two days prior to expiration.”
So nothing surprising here, except the last paragraph in the no-action letter which states the Staff will no longer be issuing no-action letters for parts of this area. The global relief is somewhat narrow – it covers only Day 18 VWAP pricing in a RMT. So issuers can go on their own if they fit within the letter’s facts. Be careful – the request doesn’t expressly give global relief for Day 20 VWAP pricing, which has a few more conditions under Staff precedents.
This is clearly a sign that Corp Fin is looking to get out of the business of issuing timing-consuming no-action letters in situations where there is a well-trodden path of letters…
Speaking of the Staff, don’t forget to tune in next Wednesday, October 11th for the DealLawyers.com webcast – “Evolution of the SEC’s OMA” – to hear current & former Chiefs of the SEC’s “Office of Mergers & Acquisitions” discuss what that job is all about. Join Corp Fin’s Michele Anderson and Ted Yu, as well as Skadden’s Brian Breheny, Weil Gotshal’s Cathy Dixon, Alston & Bird’s Dennis Garris and Morgan Lewis’ David Sirignano. This is a unique event!
Do EPS Incentives Discourage CapEx?
This Goldman Sachs video suggests we’re in a period of declining capex – for the first time since the early 90s. Some think that’s because shareholders prefer dividends and buybacks over long-term investments. This Dealbreaker article suggests there’s also a connection to incentive pay structures:
How executives are rewarded has a real impact on capital allocation. When a CEO’s bonus is tied to earnings per share – a metric that can be juiced by gobbling up shares – that company will likely to do more and bigger buybacks. And when companies appear to buy back shares in order to avoid a negative earnings surprise, capex spending tends to be diminished in the following year. Executives whose personal wealth moves in tandem with their company’s stock price show a particular preference for repurchases over capital expenditures. Larry Fink has a term for this.
If this criticism sounds familiar, it’s because the potential use of buybacks to support stock prices became a “hot topic” a couple years ago. Here’s one of Broc’s blogs discussing it.
