On the heels of the recent widely reported, fabricated Avon bidthat revealed flaws in the Edgar system, the Business Roundtable, CAQ, FEI and Chamber of Commerce recently filed this joint Edgar-focused comment letter in connection with the SEC’s Disclosure Effectiveness initiative.
The letter suggests a number of near-term Edgar improvements pending implementation of longer-term enhancements and SEC rulemaking. The recommendations focus on consolidating and updating current Edgar search features by improving their visibility and organization, and additional enhancements – including improvements to the company search page, filings detail screen and output functionality. Recommendations are detailed and well-illustrated in the letter’s “Appendix A” via mock-ups of existing web pages accompanied by additional commentary.
The business coalition’s suggestions dovetail nicely with Corp Fin Director Keith Higgins’ remarks at last month’s SEC Advisory Committee on Small & Emerging Companies meeting, wherein he reportedly characterized full Edgar Modernization as a 10-year process, but noted that there are things the Commission can do in the interim to make information more easily available to investors.
See also this recent letter, where Senate Judiciary Committee Chair Charles Grassley sought responses from SEC Chair White to multiple questions concerning Edgar processes and vulnerabilities, and this Compliance Week article.
Edgar Gets an Upgrade – No Longer Supports 2013 GAAP
As noted in this Accounting Today article, the SEC’s recently upgraded Edgar will no longer support 2013 GAAP or XBRL:
The Securities and Exchange Commission has upgraded its EDGAR online system for financial filings and will no longer support an older version of the U.S. GAAP financial reporting taxonomy. The SEC said Tuesday that it upgraded EDGAR on Monday to Release 15.2 and it no longer supports the 2013 U.S. GAAP financial reporting taxonomy and the 2013 EXCH taxonomy for XBRL, or Extensible Business Reporting Language. The SEC staff is strongly encouraging companies to use the most recent version of taxonomy releases for their XBRL exhibits to take advantage of the most up-to-date tags related to new accounting standards and other improvements.
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 are some of the latest entries:
– Delaware Chancery Addresses the New Delaware Ratification Law
– Study: Boards Increasing in Size to Add Women Directors
– Insider Trading Policy/Program Considerations
– SASB Standards Cheat Sheet: Interactive Materialty Map
– Managing Political Spending Disclosure Pressures
The Third Circuit filed its long-awaited opinion this week in the Trinity v. Wal-Mart case following its mid-April order reversing the District Court and allowing Wal-Mart to exclude Trinity’s proposal from its proxy under Rule 14a-8’s ordinary business exclusion. Although the Court makes clear that the disposition of each case is fact-specific, the opinion sets forth a logical framework and analysis for applicability of the exclusion.
This great opening set the stage for what I found to be a very engaging and insightful opinion:
“[T]he secret of successful retailing is to give your customers what they want.” Sam Walton, SAM WALTON: MADE IN AMERICA 173 (1993). This case involves one shareholder’s attempt to affect how Wal-Mart goes about doing that.
Notably, among other things, the Court: (i) prompted in large part by Trinity’s arguments and the District Court’s analysis, devoted substantial discussion to distinguishing a proposal’s form versus its substance (emphasizing that the latter must govern); and (ii) rejected the notion that a proposal’s call for board (as opposed to management) action magically obviates the availability of the exclusion.
Having served in-house with a retailer for almost 12 years, I also appreciated the Court’s analysis and observations about the aspects of retailing that were particularly relevant in this case. Among other insights, the Court observed that management weighs numerous factors – consumer safety, reputational, financial, competitive, etc.- in deciding what products to sell and that, although shareholders may provide valuable input, that should be the extent of their influence in this area: “Although shareholders perform a valuable service by creating awareness of social issues, they are not well-positioned to opine on basic business choices made by management.”
And finally, in a “save the best for last” conclusion, the Court expressed empathy for the many of us who deal with these issues on a regular basis, and suggested that the SEC update its proposal guidance:
Although a core business of courts is to interpret statutes and rules, our job is made difficult where agencies, after notice and comment, have hard-to-define exclusions to their rules and exceptions to those exclusions. For those who labor with the ordinary business exclusion and a social-policy exception that requires not only significance but “transcendence,” we empathize. Despite the substantial uptick in proposals attempting to raise social policy issues that bat down the business operations bar, the SEC’s last word on the subject came in the 1990s, and we have no hint that any change from it or Congress is forthcoming . . . We thus suggest that [the SEC] consider revising its regulation of proxy contests and issue fresh interpretive guidance.
Proxy Season: Uptick in Shareholder Activism Tempered by Strong Director Support
The latest Broadridge/PwC ProxyPulse and EY report both reveal a 2015 proxy season characterized by various forms of increased activism coupled with indicators that, for the most part, reflect widespread support for company practices.
Particularly noteworthy are the strong shareholder support for directors (the highest level in seven years) and say-on-pay, and EY’s S&P 500 data reflecting increasing engagement. Approximately 50% of S&P 500 companies disclose engagement with investors – up from 6% five years ago, and 18% of those disclose board involvement.
As a result of engagement:
– 46% disclose changes in practices or disclosure
– 82% disclose changes related to executive pay
– 33% disclose changes related to governance
– 12% disclose changes related to environmental or social practices
– 7% disclose changes related to general proxy disclosures/format
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 are some of the latest entries:
This recent, first FTC enforcement actionagainst a crowdfunding project creator is instructive. The defendant, who raised money from (and promised rewards to) individuals on Kickstarter to produce a board game, allegedly instead used the more than $122,000 obtained from 1,246 backers for personal expenses including rent, relocation, personal equipment and licenses for a different project.
Under the settlement order, the defendant is prohibited from making misrepresentations about any crowdfunding campaign and failing to honor stated refund policies, and barred from misuse of customers’ personal information. The order imposes an approximately $112,000 judgment that was suspended due to the defendant’s inability to pay, but will be due immediately if he is found to have misrepresented his financial condition.
In addition to signaling a warning to other crowdfunding project creators who may be thinking that their misdeeds are below any regulatory radar screen (which, fortunately, is not the case), the action serves as a reminder to consumers to be mindful of the risks associated with crowdfunding of this nature. See also this Securities Edgepost and WSJ blog, and this Crowdfund Insider post comparing and contrasting reward-based and equity-based crowdfunding.
I realized Crowdfunding had become mainstream when I saw this “how to” guide in my recent LA Times weekend Parade magazine.
Startup Funding Sources: Crowdfunding an Increasingly Significant Player
According to this recent policy brieffrom the Kauffman Foundation, over 20% of startups applying for loans in the first half of 2014 did so through an online loan platform, i.e., crowdfunding.
Other noteworthy stats include:
– Banks (particularly small banks) are the primary source of startup capital.
– 40% of initial startup capital is in the form of bank debt.
– Equity, primarily sourced from angel investors and venture capitalists (3% and 1%, respectively), is much rarer, but reportedly more impactful due, in part, to intangible contributions from these types of investors such as expertise and guidance.
– Venture-backed companies purportedly tend to professionalize sooner, have an increased likelihood of an IPO, and have greater post-IPO survival rates.
The brief includes a reader-friendly chart noting the primary advantages and disadvantages of each of the main funding sources.
In related news, intrastate crowdfunding was among the principle topics discussed at the SEC Advisory Committee on Small and Emerging Companies meeting last month. Among other things, committee members urged the Commission to review Rule 147 of the ’33 Act, which is deemed to be impeding the use of state crowdfunding. See this Crowdfund Insider blog.
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 are some of the latest entries:
– Cybersecurity: Board Guidance – A Different Approach
– Revenue Recognition Standard: Early Adoption & Deferral
– 2015 Audit Committee Agenda
– Blackholes in the Boardroom
– Stand-Alone Conflicts of Interest Policy Considerations
It’s time to vote! Thanks to the many who submitted nominations – it was hard to pare those down (& apologies to those that didn’t get their candidates onto our final slate). I tried to limit the number of nominees to three for each category – but sometimes that was challenging because we had so many candidates submitted for certain categories. Folks are proud of their executive summaries!
In this blog, Steve Quinlivan points to a CrowdCheck blog that claims that 5 of the 6 initial Form 1-As have been “withdrawn.” As Steve notes, Corp Fin is gonna have it’s hands full with defective filings since the form is so new – and many of these forms are filed by do-it-yourseflers.
As to what “withdrawn” means, I haven’t a clue. A quick scan of the table of contents of the SEC’s EDGAR Filer Manual doesn’t address this topic. And I know it’s pretty hard to get the SEC to remove things from EDGAR. My guess is that perhaps they weren’t really deleted from EDGAR – but I doubt there was a “withdrawn” notation of some sort either. Any ideas?
My favorite Form 1-A so far was filed by Weed Real Estate, which proposes to lease property to companies engaged in the marijuana business. In a few months, we’ll be conducting a webcast on emerging Reg A practices…
The SEC’s Investor Advocate’s Latest Objectives
Here’s a new 52-page report of the SEC’s Office of Investor Advocate’s objectives for ’16. Pages 29-35 summarize the activity of the Investor Advisory Committee…
As expected (see my earlier blog), the SEC issued a concept release last week on audit committee disclosure, fairly concurrently with the PCAOB’s release of its Supplemental Request for Comment on disclosure of the audit engagement partner.
The SEC’s concept release, which focuses on independent auditor oversight, acknowledges that some companies already exceed the minimum audit committee-related disclosure requirements. In fact, presumably prompted in part by the Audit Committee Collaboration’s 2013 Call to Action, as discussed in my previous blog and the CAQ’s Transparency Barometer, many companies already disclose more than the minimum across a broad spectrum of potential disclosures.
The SEC’s concept release seeks comment on whether disclosure of the audit engagement partner and additional members of the engagement team should be made by the audit committee and included in the proxy statement. In contrast, the PCAOB’s proposal would require that audit firms publicly disclose the name of the audit engagement partner and information about certain other audit participants in a new form filed with the PCAOB. The PCAOB’s proposal purportedly seeks to be responsive to concerns raised by auditors and others specifically regarding the risks of liability and litigation associated with disclosure of such information in the auditor’s report, as had been previously proposed; however, concerns expressed about the implications of identifying the engagement partner were not limited to risks of liability/litigation.
Here is an excerpt from Ning Chiu’s blog on the areas of potential additional disclosure included in the SEC’s release:
Audit committee’s oversight of the auditor:
1. Additional information regarding communications between the audit committee and the auditor, which could include all communications required under the PCAOB rules, the nature of the committee’s communication with the auditor related to the auditor’s overall audit strategy, timing, significant risks, nature and extent of specialized skill used in the audit, planned use of other firms or persons, planned use of internal audit, the basis for determining that the auditor can serve as principal auditor, the results of the audit, and how the audit committee considered these items in its oversight of the auditor
2. How often the audit committee met with the auditor
3. The audit committee review of and discussion about the auditor’s internal quality review and most recent PCAOB inspection report
4. Whether and how the audit committee assesses, promotes and reinforces the auditor’s objectivity and professional skepticism. It is unclear what the SEC is expecting in this regard and in fact, the SEC itself questions what type of disclosures would satisfy this possible requirement.
The audit committee’s process for appointing or retaining the auditor:
1. Whether and how it assesses the auditor and its rationale for retaining the auditor
2. The process for selecting the auditor through any requests for proposals (RFPs)
3. The board’s policy, if any, for a shareholder vote on auditor ratification and the consideration of the vote in selecting the auditor
Qualifications of the audit firm and members of the engagement team:
1. Disclosure of the name of the engagement partner and key members of the engagement team and their experience
2. The audit committee’s input in selecting the engagement partner
3. The number of years that the auditor has audited the company
4. Other firms involved in the audit
Both the SEC & PCAOB releases are tagged with 60-day comment periods.
SEC Charges Deloitte with Auditor Independence Violations
Coincidentally (presumably), on the same date that the SEC issued the audit committee concept release, it charged Deloitte with violating auditor independence rules when its consulting affiliate maintained a business relationship with a trustee serving on the boards and audit committees of three funds it audited. Deloitte agreed to pay more than $1 million to settle the charges. The SEC also charged the trustee with causing related reporting violations by the funds, and charged the funds’ administrator with causing related compliance violations. SEC Division of Enforcement Associate Director Stephen Cohen noted:
“The investing public depends on independent auditors like Deloitte to test the reliability of publicly-reported financial statements, and they have front-line responsibility for ensuring their own independence. But they are not alone in safeguarding the audit process, and the other fiduciaries charged in this case failed to fulfill their roles and preserve investor confidence.”
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 are some of the latest entries:
– Audit Committee Survey: Workload at Tipping Point?
– 2015 Cyber Risk Agenda
– Navigating Corporate Governance Hot Topics
– Study: Data Breach Preparedness
– Survey: Current (& Future) State of Compliance
Yesterday, the SEC voted to approve – by the now-norm 3-2 vote – this 198-page proposing release to direct the stock exchanges to adopt clawback listing standards, as required by Section 954 of Dodd-Frank. Comments are due 60 days from publication in the Federal Register – so the beginning of September. We’re posting memos in our “Clawbacks” Practice Area (see this Gibson Dunn blog). All five SEC Commissioners issued a written statement.
Given that the rumor that the SEC would propose these clawback rules on July 1st held true – the rumor of the SEC adopting pay ratio rules on August 5th might also prove worthy…
Pay Ratio: SEC Posts More Economic Analysis
With the comment letter deadline for the SEC’s recent release of additional economic analysis looming – this Monday, July 6th – the SEC’s Division of Economic and Risk Analysis posted another memo on Tuesday about the potential effects on the accuracy of the proposed pay ratio rule calculation of excluding different percentages of certain categories of employees.
It sure looks like the rumor of August 5th being an adoption date might come true as the SEC seems to be getting its ducks in a row to minimize the risk of losing a court battle if rules do indeed become final…
It’s Huge! Our Big Week of “Executive Pay Conferences”
The SEC’s new clawback, pay-for-performance & hedging proposals – not to mention the coming pay ratio rules – are causing a stir – and you should prepare now. These rules will be among many topics that Corp Fin Director Keith Higgins & other experts will be talking about at our popular Conferences — “Tackling Your 2016 Compensation Disclosures” — to be held October 27-28th in San Diego and via Live Nationwide Video Webcast on TheCorporateCounsel.net. Act by August 7th for the phased-in rate to get 10% off.
You should make a hotel reservation now as our conference hotel always sells out – and registrations for this conference are running at an all-time high!
The full agendas for the Conferences are posted — and include the following panels:
– Keith Higgins Speaks: The Latest from the SEC
– The SEC’s Pay-for-Performance Proposal: What to Do Now
– Creating Effective Clawbacks (& Disclosures)
– Pledging & Hedging Disclosures
– Pay Ratio: What Now
– Proxy Access: Tackling the Challenges
– Disclosure Effectiveness: What Investors Really Want to See
– Peer Group Disclosures: The In-House Perspective
– The Executive Summary
– The Art of Communication
– Dave & Marty: Smashmouth
– Dealing with the Complexities of Perks
– The Big Kahuna: Your Burning Questions Answered
– The SEC All-Stars: The Bleeding Edge
– The Investors Speak
– Navigating ISS & Glass Lewis
– Hot Topics: 50 Practical Nuggets in 75 Minutes
Yesterday, the PCAOB issued a concept release about the content and possible uses of audit quality indicators, measures that may provide new insights into audit quality. Here’s the press release – and fact sheet.
Today, the SEC will be proposing its clawback rules finally. For those in law firms, get ready to rumble with your memo writing skills…
PCAOB: Re-Re-Proposal to Seek Engagement Partner Name in a New Form (Not the Audit Report)
Yesterday, the PCAOB also issued a supplemental request for comment on whether to require auditors to file a new PCAOB Form AP to identify the name of an audit engagement partner – a different approach than the original 2011 proposal (that was re-proposed in ’13) that would require name disclosure in the audit report itself. Comments are due by August 31st. Technically, I believe this is not a “re-re” proposal – rather, it’s a supplemental request to the re-proposal. Here’s the comments submitted to date…
Our July Eminders is Posted!
We have posted the July issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!
Sights of the Society of Corporate Secretaries Conference
Saw many old friends & made some new ones at last week’s annual conference for the Society of Corporate Secretaries:
Norfolk Southern’s Ginny Fogg, Mondelēz’ Carol Ward & DuPont’s Erik Hoover
CT Corp’s Tim Rooney, Sarah Brunet & Lisa Mann
Awesome Georgeson/Computershare booth staffed by Donna Ackerly, Erik Schwendeman & Kerry Anderson
Here’s a blog from Adam Kanzer of Domini Social Investments based on his recent comment letter sent to the SEC:
According to a series of letters submitted on behalf of the issuer community, including a joint letter submitted by five prominent law firms, the original intent of Rule 14a-8(i)(9) and its successor formulations was to prohibit a very specific abuse of process by shareholders – the use of 14a-8 to solicit votes in opposition to management proposals (“counter proposals”). This would amount to a circumvention of the SEC’s solicitation rules. It is therefore clear that the exemption was based on the sequencing of proposals, and was intended to be used infrequently. The rule, however, is now applied where such abuses have not even been alleged. The issuer community is seeking an extremely broad and unreasonable reading of the subsection.
The law firms’ assertion that the sequencing of the proposals “is not a consideration encompassed by the text of the rule” ignores their own assertions about the history of the rule. The rule is grounded in a prohibition on counter proposals offered by shareholders, and a counter proposal must come second.
In addition to sequencing, public notice is also critical. Unless management has publicly announced its intention to submit a particular proposal to a vote before the proposal filing deadline—including the terms of that proposal—a shareholder proposal cannot be considered a solicitation “opposing a proposal supported by management.” This is largely a hypothetical abuse of process that is generally not available to shareholders, except, perhaps, on rare occasions (Northern States Power Company (July 25, 1995)(Shareholder proposal requesting that the board of directors require management to negotiate a more equitable merger agreement excludable as ‘counter to a proposal to be submitted by management.’) This subsection was presumably crafted to deal with those rare occasions. So rare, in fact, that they were deemed to be an “abuse” of process.
In reality, the shareholder proposal either accidentally coincides with a management proposal on the same topic, or management responds to the shareholder proposal with a proposal of its own. Neither situation can be considered an “abuse” by shareholders, as suggested by the 1982 Release.
Issuers are asking Staff to interpret (i)(9), a rule designed to address counter proposals by shareholders, to permit the exclusion of shareholder proposals any time a counter proposal has been offered by management. Not only does this reverse the intent of the subsection, as explained by the law firm letter, it eliminates the concept of a ‘direct conflict’ from the rule and converts what was intended to be a narrow exemption to deal with a rare abuse of process into a trump card to be used at management’s discretion.
Establishing a clear, bright line approach to 14a-8(i)(9), consistent with the wording of the rule, would dramatically reduce the opportunity for gamesmanship and avoid the need for SEC Staff to delve into those perilous waters. Our recommended approach, first suggested by the Council of Institutional Investors and endorsed by CalPERS and CalSTRS – non-binding proposals cannot “conflict” with management proposals – would satisfy issuers’ and proponents’ need for clarity and would eliminate any meaningful legal conflicts that “conflicting” proposals may create. Our proposal to permit conflicting binding proposals to be re-characterized as non-binding proposals would eliminate the need for any investigation into issuer or shareholder motives, while preserving both shareholder democracy and management’s right to submit alternative proposals to a vote.
Proxy Access Proposals: The Latest Stats
This Skadden memo is the first memo – of what likely will be many – with comprehensive coverage of the voting results for proxy access shareholder proposals this proxy season. We’ll be posting all of them in our “Proxy Access” Practice Area. Check it out!
Delaware Bans “Loser Pays” Bylaws & Authorizes Exclusive Forum Bylaws
The Delaware Governor has signed the latest Delaware amendments into law, taking effect on August 1st. On DealLawyers.com, we’re posting memos in our “Exclusive Forum Bylaws” Practice Area (also see this blog about whether the new law impacts federal class actions). And here’s the intro from this Cooley blog:
On June 24, 2015, the Governor of Delaware signed into law amendments to the Delaware General Corporation Law proposed by the Delaware Bar’s Corporation Law Council and overwhelmingly passed by the Legislature regarding fee-shifting and forum selection provisions in Delaware governing documents. (See this post and this post.) More specifically, the amendments invalidate, in Delaware charters and bylaws, fee-shifting provisions in connection with internal corporate claims. “Internal corporate claims” are claims, including derivative claims, that are based on a violation of a duty by a current or former director or officer or stockholder or as to which the corporation law confers jurisdiction on the Court of Chancery. These claims include claims arising under the DGCL and claims of breach of fiduciary duty by current or former directors or officers or controlling stockholders of the corporation, or persons who aid and abet those breaches. However, as discussed in this post, federal securities class actions are not included. In addition, the new provision is not intended to prevent these types of provisions in a stockholders agreement or other writing signed by the stockholder against whom the provision is to be enforced.
The amendments also expressly authorize the adoption of exclusive forum provisions for internal corporate claims, as long as the exclusive forum is in Delaware. Although the amendment does not address the validity of a provision that selects, as an additional forum, a forum other than Delaware, the synopsis indicates that it “invalidates such a provision selecting the courts in a different State, or an arbitral forum, if it would preclude litigating such claims in the Delaware courts.” A different result is possible where there is a provision in a stockholders’ agreement or other writing signed by the stockholder against whom the provision is to be enforced. In addition, an exclusive forum may not be “enforceable if the Delaware courts lack jurisdiction over indispensable parties or core elements of the subject matter of the litigation,” and the amendment in not intended to preclude evaluation of whether the terms or manner of adoption of the exclusive forum provisions “comport with any relevant fiduciary obligation or operate reasonably in the circumstances presented.” Deputy Secretary of State Richard J. Geisenberger said 99.6% of companies that have a forum-selection bylaw choose Delaware as the preferred venue. And, no surprise, Delaware wants cases involving Delaware corporations to be tried in Delaware.
We’ve had false start rumors before about when the SEC will adopt pay ratio rules – but this time it feels different given the heightened political attacks against the SEC. The latest is this Bloomberg article indicating the rules will be adopted by August 5th, which the article notes was not confirmed by the SEC. It’s according to “two people familiar with the matter who asked not to be named.”
That’s right before our August 7th deadline for our last discounted rate for our big “Executive Pay Conference” in San Diego and by video webcast. Act now!
Clawbacks: SEC to Propose Rules on Wednesday!
Last Thursday, the SEC posted this Sunshine Act notice to announce that it will propose the clawback rules required by Dodd-Frank on Wednesday, July 1st!
Delaware Changes Law to Allow Restricted Stock Grants By Non-Directors!
Last week, Delaware enacted amendments to its corporation law – effective August 1st – that will permit grants of restricted stock to be made by a corporate officer who has been delegated that authority by the board (within parameters). Prior to this change, the granting of options could be delegated to officers pursuant to DGCL Section 157(c), but not so for stock. Under the old law, some companies worked around this limitation by creating a board committee of one person (typically, the CEO-director). The law change presents the opportunity for delegation without using a “committee of one,” allowing the CEO (in a non-director capacity) or other delegated officers to make grants of stock. Of course, accurate and timely records must be kept and plans also would need to permit such administration.
The 2015 legislation amends Section 152 of the DGCL to clarify that the board of directors may authorize stock to be issued in one or more transactions in such numbers and at such times as is determined by a person or body other than the board of directors or a committee of the board, so long as the resolution of the board or committee, as applicable, authorizing the issuance fixes the maximum number of shares that may be issued as well as the time frame during which such shares may be issued and establishes a minimum amount of consideration for which such shares may be issued.
The minimum amount of consideration cannot be less than the consideration required pursuant to Section 153 of the DGCL, which, as a general matter, means that shares with par value may not be issued for consideration having a value less than the par value of the shares. The legislation clarifies that a formula by which the consideration for stock is determined may include reference to or be made dependent upon the operation of extrinsic facts, thereby confirming that the consideration may be based on, among other things, market prices on one or more dates or averages of market prices on one or more dates.
Among other things, the legislation clarifies that the board (or duly empowered committee) may authorize stock to be issued pursuant to “at the market” programs without separately authorizing each individual stock issuance pursuant to the program. In addition, the legislation allows the board to delegate to officers the ability to issue restricted stock on the same basis that the board may delegate to officers the ability to issue rights or options under Section 157(c) of the DGCL.
Transcript: “Proxy Season Post-Mortem: The Latest Compensation Disclosures”
We have posted the transcript for our recent CompensationStandards.com webcast: “Proxy Season Post-Mortem: The Latest Compensation Disclosures.”
As reported by this WSJ article, SEC Chair White delivered this speech yesterday at the Society’s National Conference. In her speech – which focused on proxy-related matters – Chair White advised that she “asked the staff to bring appropriate rulemaking recommendations before the Commission on universal proxy ballots.” A universal proxy ballot provides security holders a means to vote for management & proponent nominees on a single ballot in an election contest. This allows a security holder to mix & match votes between nominees of the company & the proponent – without attending & voting in person at the meeting. Chair White also encouraged companies & proponents to voluntarily use “some form” of universal proxy ballot while the SEC Staff prepares its rulemaking recommendation. Here’s an excerpt from her speech:
All of the participants [of a roundtable held on ways to improve the proxy voting process] agreed that if the Commission were to revise the proxy rules to implement a universal proxy ballot, the “devil would be in the details.” Questions include when a universal ballot could be used, whether it would be optional or mandatory and under what circumstances, whether any eligibility requirements should be imposed on shareholders to use universal ballots, what the ballot would look like, and whether both sides must use identical universal ballots.
Chair White’s speech also covered the topics of preliminary voting results, “unelected” directors & shareholder proposals – which included comments on Rule 14a-8(i)(9) relating to proxy access proposals.
First to the Finish: CalSTRS Inaugural Sustainability Report Released
Check out the first Sustainability Report of CalSTRS, posted in our “Social Responsibility” Practice Area. As explained in this press release, the sustainability report meets the reporting guidelines of the Global Reporting Initiative and is the first sustainability report from a US public pension fund to do so. As noted in the press release, the report highlights:
– Retirement security: legislative approval of a CalSTRS full funding plan.
– Investment impact: 288-percent increase in green bond holdings over fiscal year 2012-13.
– Business transparency: public access to all of our proxy votes through the CalSTRS.com website.
– Environmental efforts: 22-percent decrease in water usage from the year 2013 at the LEED Platinum-certified CalSTRS Headquarters building.
More on our “Proxy Season Blog”
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:
– Shareholder Engagement: TIAA-CREF
– Delaware Weighs In: Plain Vanilla Advance Notice Bylaws
– Some Ways to Shorten 10-Ks & 10-Qs
– Shareholder Proposals: Doing Research Through Free Databases
– Chamber: Report on How to Deal With Proxy Advisor Conflicts
