Boards are certainly not lacking on “data” these days. In fact, one of the most challenging aspects of working with boards right now is sorting through all the possible information & data points in order to pinpoint what is actually helpful and decision useful. Despite all the blood, sweat & tears that go into preparing board materials, I recently heard one director share that he felt he was “wading through mud.” So, it sounds like there’s still room for improvement.
This report from Board Intelligence and NACD shares practical ideas for striking the right balance between context & information overload, and between reviewing the last quarter’s corporate performance & considering what’s ahead. Here are the top 3 “board pack critical thinking gaps,” according to directors:
1. Too operational at the expense of strategy
2. Too internally focused, with little insight into the wider market
3. Light on the implications of the information presented
To close those gaps, the report recommends asking these questions about the board materials before they go out:
– Does each report address the key questions that are on directors’ minds?
– Do reports provide a balanced analysis, giving a forward-looking view as well as looking backward, and considering the internal and external context?
– Does management offer actionable insights by answering two key questions in their reports: “What are the implications?” and “What will we stop, start, or do differently as a result?”
– If management is using slides to share information, are those slides sufficiently detailed or accompanied by a memo so they can be easily understood without a voice-over?
– Is each report tailored to the board’s specific needs and sufficiently strategic?
– Is the board pack shared in a timely manner to allow sufficient review and meeting preparation?
In the latest 20-minute episode of the “Women Governance Trailblazers” podcast, Courtney Kamlet and I talked with Niamh Corbett, who is Head of Americas for Board Intelligence. We discussed:
1. Niamh’s career path, from investment banking to Board Intelligence commercial roles and national thought leadership.
2. Top trends in board communication and advice on how boards can be most effective.
3. Similarities and differences between the U.K. and U.S. on board reporting and corporate governance, including stances on diversity and inclusion.
4. The biggest risks and opportunities for today’s boards of directors.
5. What governance practitioners should be thinking about in the U.S. deregulatory environment.
To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on TheCorporateCounsel.net or use your favorite podcast app. If there are “women governance trailblazers” whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Shoot me an email at liz@thecorporatecounsel.net.
If you work with life sciences companies, you know that clinical data developments and releases do not always fit neatly into SEC disclosure and fundraising rules. Two recent Fenwick memos give must-read roadmaps on these topics. Here are a couple of disclosure considerations (also read this fundraising / IR piece):
What if data are expected around the time of a Form 10-K or Form 10-Q filing or a planned investor meeting?
If the company has undisclosed topline clinical data when filing an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q, it generally must disclose those data in the filing.
To avoid issues, you can either advance the Form 10-Q filing to a date before the company receives the data or delay the data receipt until after the scheduled filing.
Once the CEO or any other key executives who regularly engage with investors are aware of the data, they should stop all discussions with investors prior to disclosure.
Does the four business day reporting deadline for Form 8-K apply to topline clinical data releases?
No. A span of six to seven days from the point of receiving the data to public release is typical, however, more rapid disclosure may be necessary with negative results. Additionally, there may be other important timing considerations if the data are expected to support a financing for the company. A proactive legal strategy includes early discussion of the preferred release time with your investor relations team.
The memo also covers special blackouts, conference presentations, and more. Given these complexities, it’s smart to think ahead. The Fenwick team outlines how to prepare in advance:
When should I start preparing for disclosure?
Preparations can often begin several months in advance. Once a calendar is set for planned readout dates, establish a strong communication channel with the clinical team working on the trial readout, your investor relations team and your legal team. Make sure that you understand the basics—the trial structure, when the data are planned to arrive, and what data are anticipated. This will help you evaluate regulatory risks and necessary disclosures while setting expectations for the internal and external flow of information. Having a communications plan in place early can also be helpful if it becomes necessary to disclose data early (e.g., if there is a safety signal necessitating early unblinding or trial termination).
What can I prepare in advance?
It can help to develop a detailed day-by-day task plan. This plan should include proposed tasks from the moment the data arrives at the company for processing and reviewing, right up to the date of disclosure, and even beyond. This approach also helps solidify your position as a crucial participant in decisions about data timing and provides structure for the internal dissemination of data during the pre-public release phase.
Collaborate with the cross-functional team responsible for managing the data release to create core forms of press releases, corporate presentation slides and other supplementary items, such as a preliminary Q&A.
Establishing a structured timeline can be instrumental in ensuring everyone is aligned on key disclosure dates, the availability of key stakeholders, and assessing potential training needs in advance of receiving data.
2. The “ordinary business,” “micromanagement” and “economic relevance” bases for exclusion following SLB 14M
3. Whether companies will continue to submit a “board analysis”
4. The significance of SLB 14M’s note that the 2022 proposed amendments to the “substantial
implementation,” “duplication” and “resubmission” bases for exclusion under 14a-8 have not been adopted
5. SLB 14M’s guidance on proof of ownership and deficiency letters
6. What the timing of SLB 14M means for companies as they navigate this shareholder proposal season
If you have insights on a securities law, capital markets or corporate governance issue, trend or development that you’d like to share, email John at john@thecorporatecounsel.net or Meredith at mervine@ccrcorp.com.
Here’s something that Meredith blogged Friday over on DealLawyers.com: Yesterday, Corp Fin released an updated version of Securities Act Sections CDI 239.13 and Securities Act Forms CDI 225.10 governing the use of Form S-4/F-4 to register offers and sales of a buyer’s securities after it has obtained “lock-up” commitments from target insiders to vote in favor of the transaction. The CDI permitted registration in certain circumstances but noted that the Staff has objected to the subsequent registration of offers and sales to any of the target shareholders where the insiders also previously executed consents approving the deal – because it viewed the offer and sale as already completed privately.
Now, as you can see from the redline, the CDI provides that the Staff will not object to the subsequent registration on Form S-4/F-4 where the target company insiders also deliver written consents, as long as (1) those insiders will be offered and sold securities of the acquiring company only in an offering made pursuant to a valid Securities Act exemption and (2) the registered securities will be offered and sold only to target company shareholders who did not deliver written consents.
At the same time, Corp Fin also released five new Tender Offer Rules and Schedules CDIs (101.17 through 101.21), adding to the 34 CDIs released in March 2023. The five new CDIs address the “general rule” that an offer should remain open for at least five business days after a material change is first disclosed and clarify the Staff’s views regarding when a change related to financing and funding conditions constitutes a “material change.” For example, to paraphrase three of the CDIs:
– CDI 101.18 clarifies that the Staff views a subsequent securing of committed financing to be a material change where an offeror had commenced an all-cash tender offer without sufficient funds or committed financing. The CDI details steps the offeror must take in that situation.
– On the other hand, CDI 101.20 and 101.21 clarify that the Staff does not view either the substitution of a funding source or the actual receipt of the funds from the lender when the offeror had already obtained (and disclosed) a binding commitment letter to be a material change. The CDIs address disclosure considerations for these situations and where the lender does not fulfill its obligation to provide the funds.
Check out our DealLawyers.com site for more information – we’re posting memos in the “Tender Offers” Practice Area.
For those of you who have followed this blog for a long time, you may be asking yourself “Why does Dave always seem to blogging about government shutdowns?” I promise you that I do not have some sort of weird government shutdown fixation, it just seems that our elected representatives in Congress consistently have a hard time getting their act together to fund the government, so we go through this now seemingly routine cycle of getting down to the wire on a government shutdown, with a bad habit of averting the crisis at the very last minute. With chaos reigning in Washington these days, the prospect of a government shutdown after March 14 seems more likely, and this time we could be in for lengthy shutdown given the views of the Administration toward the federal workforce and the distinct lack of any incentive on the part of either party to reach across the aisle to find a solution. Perhaps it is time again to start playing The Government Shutdown Blues!
Not to get off-topic too much here, but my seemingly endless fixation with government shutdowns prompts some reflection on certain of my less-than-stellar parenting moments, when I would very often lecture my kids about Aesop’s fable of the boy who cried wolf, and in particular how frequently raising the alarm about something that did not happen would lessen one’s credibility when in fact something significant did happen. I am certain that these lectures have caused my children everlasting distress and anxiety, and for that I am truly sorry. Perhaps I should get a taste of my own medicine when it comes to always raising the alarm on government shutdowns.
As this Reuters article notes, the Speaker of the House is aiming to hold a vote on a continuing resolution by next Tuesday, and he believes that he has enough votes to pass the bill, although we have all seen this movie before and we know that a lot of things could go wrong between now and March 14. Given the prevailing uncertainty, I incorporate by reference into this blog some of my greatest hits on shutdown preparedness, including my top ten takeaways from the Staff’s previous shutdown guidance that you should consider now in the face of yet another potential government shutdown:
As I did at around this time last year, I will note one piece of guidance that is particularly relevant at this point in the proxy season. Corp Fin’s latest government shutdown guidance from December 2024 notes:
Will the Division provide a response to my Rule 14a-8 no-action request if I need to print my proxy materials during the shutdown?
No. The staff will not be able to review or respond to 14a-8 materials during a shutdown. We ask that companies and proponents work together to resolve questions to the best of their ability. It is important to note that the staff’s no-action responses to Rule 14a-8(j) submissions reflect only informal staff views.
The staff will return to reviewing no-action requests when our operating status changes.
In light of this stark warning, companies with a Rule 14a-8 no-action request pending with the Staff should reach out to check on the status of that request and should prepare contingency plans in the event that they do not receive a response from the Staff prior to mailing the proxy materials. In past government shutdown scenarios, we have seen companies note in their proxy materials that a no-action request is pending with the Staff regarding the potential exclusion of the proposal, and if the company hears back from the Staff that the proposal can be excluded, the proposal would not be presented for a vote at the annual meeting. I would also note that today is a great time to call your examiner in Corp Fin about any pending registration statements that you would like to get effective before any potential government shutdown kicks in.
Last year, I blogged about the PCAOB’s adoption of rules requiring registered accounting firms to disclose performance metrics regarding their larger audit engagements, and earlier this year I blogged about the pushback that the SEC received on these requirements. As Dan Goelzer notes in the February 2025 Audit Committee and Auditor Oversight Update, the SEC recently posted a notice stating that the PCAOB had withdrawn its rules on firm reporting and firm and engagement metrics. Dan notes:
On February 11, the Securities and Exchange Commission issued a notice stating that the Public Company Accounting Oversight Board had withdrawn its rules on firm reporting and firm and engagement metrics. PCAOB rules and standards cannot take effect unless approved by the SEC. Therefore, the PCAOB’s decision to withdraw these rules from SEC consideration means that they are dead, at least for now. News accounts reported that the Board withdrew the rules after consultation with the SEC and that it would continue “to work with the Commission and all stakeholders to protect investors and increase transparency.”
In November 2024, the PCAOB adopted rules requiring registered accounting firms to disclose performance metrics regarding their larger audit engagements. These rules would have required firms that audit accelerated filers or large accelerated filers to publicly report eight metrics relating to specific audit engagements or to the firm’s overall audit practice (e.g., hours worked by senior professionals relative to more junior staff across all of the firm’s large accelerated and accelerated filer engagements and on each specific engagement). The Board also adopted expanded firm operational and financial condition reporting. Under the firm reporting rules, PCAOB-registered accounting firms would have been required to disclose certain financial information (e.g., aggregate fees billed to issuer clients), governance information (e.g., the names of the individuals holding certain leadership positions), network relationships, and material events impacting the firm’s audit services. See PCAOB Adopts Pared Back Engagement Performance Metrics and Audit Firm Reporting Rules, November 2024 Update.
The SEC published the firm reporting and performance metrics rules for comment in early December, and both rules attracted considerable comment. Opponents, including several large accounting firms, argued that the rules had been rushed to approval without a full analysis of their costs and benefits and that the performance metrics were potentially misleading. Investor advocates strongly supported the rules, arguing that they would provide audit committees and investors with useful information that would better inform decision-making and auditor evaluation. In conjunction with the change in the Presidential Administration, SEC Chair Gensler and Democratic Commissioner Lizárraga resigned from the Commission in January, and it seems unlikely that a majority of the remaining Commissioners would have approved the rules. See SEC Sidetracks PCAOB Engagement Metrics and Firm Reporting Rules, January 2025 Update.
While mandatory disclosure of the PCAOB’s metrics seems unlikely in the foreseeable future, audit committees are free to request any performance data they feel would be useful from their auditor.
I am very pleased to be hosting the “Mentorship Matters with Dave & Liz” podcast with Liz, where we share our thoughts on mentorship, career paths, and how to succeed as a corporate and securities lawyer. In the latest episode of the podcast, we tackle the topic of client relationship management, addressing:
– Identifying “the client” – and common situations that complicate relationships
– How to attract and retain clients as outside or in-house counsel
– How client relationship management and business development changes over the course of one’s career
– Qualities that the most successful advisors possess
– What to do if you make a mistake or encounter a difficult situation
– How mentorship can help you navigate new trends that may affect corporate and securities law career paths
Thank you to everyone who has been listening to the podcast, and we appreciate all of the great feedback. If you have a topic that your think we should cover or guest who you think would be great for the podcast, feel free to contact me or Liz by LinkedIn or email.
Meredith noted a few weeks ago that Glass Lewis sent a letter to its clients stating that it was re-evaluating its DEI-related voting guidance in light of the Trump Administration’s Executive Orders addressing DEI, and earlier this week Glass Lewis advised clients of the outcome from that review. As noted on Cooley’s The Governance Beat blog, the new guidance indicates that Glass Lewis will continue to apply its existing policies for the 2025 proxy season. The blog goes on to note:
However, Glass Lewis will now provide a “For Your Attention” flag on any proxy report with a negative diversity-related director recommendation, “pointing clients to a supporting rationale they can leverage if their preference is to vote differently from the recommendation.” Under Glass Lewis’s existing board diversity policies:
– For Russell 3000 companies, Glass Lewis generally recommends voting against the nominating committee chair of a board that is not at least 30% gender diverse or all nominating committee members of a board with no gender diverse directors. For companies outside of the Russell 3000 index, Glass Lewis will recommend voting against the nominating committee chair if there are no gender diverse directors.
– For Russell 1000 companies, Glass Lewis generally recommends voting against the nominating committee chair of a board with fewer than one director from an underrepresented community.”
Back in February, Corp Fin issued updated CDIs on the filing of Schedules 13D and 13G that threatened Schedule 13G eligibility for investors “influencing” through director votes, which prompted a suspension of engagement activities by BlackRock and Vanguard. Meredith noted on the Proxy Season Blog that BlackRock resumed its engagement activities back on February 24, while Vanguard only just resumed its engagement activities earlier this week.
As this Reuters article notes, Vanguard issued internal guidance to personnel to guide communications around on-going engagements:
The document seen by Reuters summarizes a message that Vanguard representatives are sharing with portfolio companies, aiming to underscore the passive design of its funds.
It states that considering the new SEC guidance, “and to ensure that companies understand that we invest and engage for investment purposes only, we are taking some steps to further clarify communications regarding our engagements with portfolio companies.”
Among other things, Vanguard will make proactive statements at the start of each meeting about the funds’ passivity, the document states.
As I noted earlier this week, State Street Global Advisors prefaces its Proxy Voting and Engagement Policy with the statement: “When engaging with and voting proxies with respect to the portfolio companies in which we invest our clients’ assets, we do so on behalf of and in the best interests of the client accounts we manage and do not seek to change or influence control of any such portfolio companies.”
