Yesterday, the Staff updated a number of C&DIs across several different topic areas. A number of the new or revised C&DIs relate to foreign private issuers, and two new C&DIs provide guidance on the ability of smaller listed issuers to utilize shelf registration under the conditions of General Instruction I.B.6.
The new interpretations are:
– Securities Act Rules Question 256.21 (general solicitation issue for a private fund)
– Securities Act Forms Question 116.22 (calculating 1/3 limit in General Instruction I.B.6.)
– Securities Act Forms Question 116.23 (calculating 1/3 limit in General Instruction I.B.6.)
– Exchange Act Rules Question 110.01 (foreign private issuer status)
– Exchange Act Forms Question 104.17 (Part III must incorporate definitive proxy statement)
– Section 16 Question 101.02 (foreign issuer and Section 16 reporting)
– Section 16 Question 110.03 (foreign issuer losing foreign private issuer status and 16a-2)
– Section 16 Question 110.04 (foreign issuer and 16a-2)
The revised interpretations are:
– Securities Act Sections Question 139.29 (lock-up in registered debt exchange offer)
– Securities Act Sections Question 139.30 (lock-up in registered third party exchange offer)
– Section 16 Question 101.01 (applicability of Section 16 when issuer loses FPI status)
The exchange offer lock-up interpretations were only revised slightly – in the fourth condition, the words “are offered” replaced the words “will receive” when referring to the same amount and form of consideration for all note holders eligible to participate in the exchange offer. Alan Dye will be blogging about the Section 16 C&DI changes on Section 16.net.
Enforcement Keeps its Subpoena Power
One of the high profile changes to the SEC Enforcement process that Chairman Schapiro made this time last year was the delegation of authority for issuing Formal Orders of Investigation, vesting with the Director of Enforcement the ability to designate the Enforcement Staff authorized to issue subpoenas in investigations. Prior to making that change, the Enforcement Staff had to go to the Commission for a Formal Order, thus slowing down the process.
The original delegation of authority had a one-year sunset provision in order to permit the Commission to evaluate the new approach. Yesterday, the Commission issued an order extending the delegation of authority without a sunset provision, so the Formal Orders can keep flowing down at the SEC.
Better than Lotto?
While on the topic of SEC Enforcement, Section 922 of the Dodd-Frank Act establishes enhanced bounty provisions for whistleblowers voluntarily providing information that leads to a successful enforcement action by the SEC. The SEC already had bounty authority in insider trading cases pursuant to Section 21A(e) of the Exchange Act, but earlier this year the SEC’s Inspector General found that the bounty program was rarely used, having received few applications and paying out few bounties over the past 20 years. The SEC asked Congress to significantly expand its authority to pay bounties, and that proposal ultimately found its way into the Dodd-Frank Act.
This time, the SEC won’t be fooling around when it comes to bounties, and there will no doubt be an increase in the flow of applications now that the stakes are so much higher. Under the Dodd-Frank Act provision, awards to whistleblowers range from ten to thirty percent of the collected monetary sanctions (the insider trading bounty was limited to ten percent). That means that if a whistleblower had provided “original information” which led to the recent Enforcement action against Goldman Sachs – with its $500 million settlement touted as the largest penalty against a Wall Street firm in the history of mankind – the whistleblower could have potentially collected $50 million to $150 million under this new law. Obviously, with those kinds of incentives involved, there may be more of an inclination for whistleblowers to go to the SEC (especially since they can do so anonymously up until the time the bounty is paid), particularly in those situations that typically involve very high monetary penalties, such as in the FCPA cases.
While much of our conversation these days has been focused on the implementation of the Dodd-Frank Act, interestingly enough the SEC is still adopting rules to implement pieces of the Sarbanes-Oxley Act of 2002. Recently, the SEC amended its “Informal and Other Procedures” to add a rule that will facilitate interim SEC review of PCAOB inspection reports.
This rule was adopted to implement Section 104(h) of the Sarbanes-Oxley Act, which provides that a registered public accounting firm may request interim Commission review of PCAOB inspection reports. These reviews can take place in situations where a registered public accounting firm has responded to the substance of particular items in the PCAOB’s draft inspection report and disagrees with the assessments contained in any final report prepared by the PCAOB following that response, or when a registered public accounting firm disagrees with the PCAOB’s determination that quality control criticisms or defects identified in the inspection report have not been addressed to the satisfaction of the PCAOB within 12 months of the date of the inspection report. The new rules provide for the logistics of making these sorts of review requests, and the SEC has delegated responsibility for the interim reviews to the Chief Accountant.
A Few Things I Learned at the ABA Annual Meeting
The ABA Annual Meeting wrapped up earlier this week in San Francisco, and as always there were a lot of great programs and subcommittee discussions, thanks to the hard work of the Federal Regulation of Securities Committee. I learned a few things at the meeting that I thought might be worth sharing:
1. The walk up California Street from my hotel on the Embarcadero to the Fairmont Hotel in Nob Hill involved climbing what seemed to me to be an incredibly steep hill (note to self: pay more attention to your hotel reservations next time).
2. The “conflict minerals” provision of the Dodd-Frank Act (Section 1502), which Broc recently blogged about, will potentially have a very broad reach once the SEC adopts implementing rules by April 17, 2011. The new disclosure will be triggered whenever conflict minerals are “necessary to the functionality or production of a product” manufactured by a company. The conflict minerals are columbitetantalite (coltan), cassiterite (tin ore), gold, wolframite, or their derivatives, and other minerals that may be determined by the Secretary of State. These minerals are used in such everyday products as cell phones, laptops, digital cameras, tin cans, light bulbs and jewelry (just to name a few). Companies whose products use any of these minerals in their manufacture under the standard referenced above will have to disclose on an annual basis whether they are sourcing these minerals from the Democratic Republic of Congo or adjoining countries (Angola, the Republic of Congo, the Central African Republic, the Sudan, Uganda, Rwanda, Burundi, Tanzania, and Zambia). When minerals are being sourced from these countries, then a report is required which will describe the measures that the company has taken to exercise due diligence on the source and chain of custody of the minerals. This report must include an independent private sector audit conducted in accordance with standards established by the GAO. There is no materially standard contemplated in the statute, so the SEC will not likely be able to apply such a standard when adopting the mandated rules.
3. The CEO pay ratio disclosure required by Section 953 of the Dodd-Frank Act will be required in any filing to which Regulation S-K applies, so presumably the SEC will feel compelled by that statutory language to require the disclosure in more than just the proxy statement. The statute doesn’t contemplate any exclusions from the calculation of median total employee compensation, such as based on status as a part-time, hourly or overseas employee, so it appears unlikely at this point that any such exclusions would end up in the final rules. The practical realities of computing the total compensation numbers using the methodology of the “Total” column of the Summary Compensation Table loom large for companies, although perhaps rulemaking with respect to this particular provision will take a while.
4. Under the new Corp Fin office structure announced last month, the office tasked with reviewing large and financially significant companies will continue to expand the Staff’s efforts to conduct continuous, real time reviews of certain registrants, which involves reviewing everything that these companies file and providing comments in real time. So, for example, the Staff will comment on the earnings release that is furnished by one of these companies so that comments can be addressed in the upcoming 10-K or 10-Q. The new office in Corp Fin tasked with observing capital market trends through the review of 424s will not only have input into rule changes and interpretations that may be necessary based on observed trends in offering techniques and products, but will also issue comments on 424s, presumably on a “futures” basis. This office will also handle inquiries about new products.
5. The SEC is working on rule changes and MD&A guidance that is likely to be out this Fall regarding short-term borrowing disclosure, in order to address recent events indicating that there may not have been adequate disclosure about short-term borrowings, given the way that such borrowings were reflected in the financials.
The New Pay Legislation: Action Items
We have posted the transcript from our pre-conference briefing “The New Pay Legislation: Action Items.”
Access to the audio archive of this webcast and the transcript is free with your registration for our upcoming conferences, the “5th Annual Proxy Disclosure Conference” and the “7th Annual Executive Compensation Conference.” The Conferences take place on September 20th and 21st in Chicago and via nationwide video webcast. Given all that is going on in the wake of the Dodd-Frank Act, you will not want to miss these conferences, so be sure to sign up today if you haven’t already done so.
Did you ever wonder why SEC releases have to be so long? There is no doubt that the SEC has sometimes had a tough time with the review of its regulatory actions in the DC Circuit over the past several years, and that certainly can lead the agency to try to provide as much analysis of its actions as possible in order to comport with the Administrative Procedures Act.
In a case decided last week, the Court of Appeals vacated a 2008 SEC order approving a proposal by NYSE Arca to charge investors a fee for accessing ArcaBook, a “depth-of-book” product developed by the exchange. The petition for review was brought by NetCoalition, a public policy organization composed of approximately 20 Internet companies (including Google and Yahoo!), and SIFMA.
The Court held that the SEC’s “market-based” approach to evaluating the fairness and reasonableness of NYSE Arca’s fees for ArcaBook did not conflict with the Exchange Act, however the SEC did not adequately explain the basis of its approval nor support its conclusion with substantial evidence. As a result, the action was remanded back to the SEC for further consideration.
SEC Staff Seeking More and Better Risk Factor Disclosure
A recent CFO.com article notes that recent filing reviews by the Corp Fin staff have involved comments seeking more information about the risks that companies face. The article notes that the SEC has been asking for more specific risk factor disclosure, particularly in areas such as: reliance on customers, suppliers, governments and key employees; the market for the company’s products and services; the impact of regulatory changes; ineffective disclosure and internal controls; legal exposures and reliance on legal positions; conflicts of interest and related party transactions; a history of operating loss; and going concern issues.
The article also notes that risk disclosure remains an area that “needs fixing” in the SEC’s efforts to review all of its disclosure rules. Last month, Chairman Schapiro indicated that the Staff is working on making a recommendation to change the risk disclosure requirements, all as part of the agency’s overall focus on risk.
There are several factors that could help explain the Staff’s increased focus on risk disclosure in filing reviews. First, there is an overarching focus on risk at all levels of the SEC, so there is no doubt an interest in ensuring that public company disclosures to investors are sufficiently robust from the SEC’s perspective. Second, the SEC has hired more lawyers into Corp Fin, which has enabled that Division to do many more “full reviews” of periodic reports than had been done in the past, and one of the areas ripe for any review by lawyers is the risk factors section. Lastly, the Staff has been casting the net widely in terms of the material that it reviews when looking at a company’s periodic reports (including press releases, trade articles, website postings, earnings releases, etc.), and this may in some instances lead the Staff to ask more questions about potential risks associated with a company’s business and financial condition.
Revisiting Emergency Succession Planning
High profile, rapid CEO departures of the type that we have been seeing lately are a good reminder of the potential need for putting in place an emergency succession plan. Succession planning on the whole has become a focal point of investors, and will likely be a significant issue in the upcoming proxy season thanks to the Staff’s position on CEO succession planning in Staff Legal Bulletin No. 14E. So now may be a good time to revisit your succession planning process.
While not all public companies have implemented emergency succession plans, the implementation of such plans appears to be on the rise these days. The main purpose of an emergency succession plan is to ensure that decisions about successor appointments (usually interim appointments) are made in advance of an unexpected event and can be implemented quickly, so as to minimize the adverse impact on a company’s stock price and ongoing operations.
Keep in mind that an emergency succession plan may be very different from the company’s long-term succession plan. It may be the case that different executive officers or directors are identified to succeed a CEO or other executive officers on an interim basis as compared to the long-term succession plan, because an emergency succession plan is put in place to provide for a transition of management during a crisis situation, rather than seeking to meet the company’s long-term strategy.
I am at the ABA Annual Meeting in San Francisco, and, not surprisingly, the conversation at the meetings is dominated by the Dodd-Frank Act. One of the provisions of particular note in the Dodd-Frank Act is Section 957, which requires that each national securities exchange amend its rules to prohibit its member organizations from voting shares without specific client instructions on matters related to executive compensation and in the election of directors (as well as in any other matters determined by the SEC).
Section 957 was effective upon enactment, so the NYSE has now issued an information memorandum to indicate how the provision will be interpreted while rule changes are in the works. The information memorandum notes that the NYSE intends to file an amendment to Rule 452 to prohibit members from voting uninstructed shares if the matter to be voted on relates to executive compensation, including “say-on-pay” proposals, at meetings occurring after July 21, 2010. The NYSE notes that an exception will be made for those meetings on which the NYSE has issued a “may vote” ruling prior to July 21, 2010, however, effective immediately, those proposals involving executive compensation matters for which brokers had previously been allowed to vote uninstructed shares will be treated as “may not vote” rulings going forward.
The NYSE notes that it has already amended Rule 452 to eliminate discretionary voting in director elections, and that the SEC may prescribe further areas where discretionary voting by brokers must be eliminated.
SEC Fight Over Clawbacks
Before we had Section 954 of the Dodd-Frank Act (which will require the adoption of compensation clawback polices by listed companies), we of course had Section 304 of the Sarbanes-Oxley Act, which provided the SEC with the means for recouping incentive compensation in the event of a restatement involving someone’s misconduct. Several years went by before the SEC started using that particular Sarbanes-Oxley provision in Enforcement proceedings, perhaps recognizing the legal uncertainties involved with the statute. To date, the SEC has sought to clawback compensation under Section 304 in only a handful of cases. At the same time, Section 304 has no doubt inspired quite a few companies to adopt compensation recoupment policies in one form or another.
Now, according to this WSJ article from over the weekend, Commissioner Aguilar is expressing concern that the SEC is not utilizing the clawback provision enough in enforcement cases, and he has threatened to recuse himself from consideration of cases where he doesn’t agree with the Staff’s recommendations. The Staff, meanwhile, has been trying to come up with a policy as to how it will use its clawback authority going forward.
It remains to be seen whether the implementation of Section 954 of the Dodd-Frank Act will lessen the need for the SEC to use its clawback authority, given that listed companies will now be mandated to recover previously paid compensation under a broader set of circumstances.
PCAOB Adopts New Auditing Standards on Risk Assessment
Last week, the PCAOB announced that it has adopted Auditing Standards No. 8 through No. 15, all of which relate to the effectiveness of an auditor’s assessment of, and response to, the risks of material misstatement in the financial statements. These standards, which replace six interim standards, will become effective for audits of fiscal periods beginning on or after Dec. 15, 2010, if approved by the SEC.
Sick of Dodd-Frank already? This video of clowns diving in unison is hilarious…but begs the question: why are they doing it? Take this anonymous poll to weigh in:
This blog has never had a true vacation in over eight years and it probably never will. Dave will be blogging next week when I am off. I need it after reading this recent NY Times article about how online journalists burn out. I’ll see you again on August 16th.
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:
– Analyst Calls: Another Reason to Exercise Caution
– FTC Challenges CEO’s Statements as an “Invitation to Collude”
– Dude, Where Did You Get All that Stuff?
– SEC Loses Insider Trading Case – But Wins War on Swap Jurisdiction
– More on “Drafting Standing Delegations of Authority from the Board: Factors to Consider”
I normally don’t blog about rumors, but the SEC repeatedly has indicated that it would hold an open Commission meeting to adopt proxy access soon so that it will be in place for the next proxy season. So when Kara Scannell wrote in this WSJ article earlier this morning that the SEC’s meeting would be Wednesday, August 25th – according to “people familiar with the matter” – I thought I would pass it along and stem the flow of emails asking me when it would happen. Of course – until we see the SEC’s official meeting notice – that date may change, as rumored meeting dates often do…
Three Prominent UK Pension Funds Urge Companies to Resist Annual Director Elections
Here is news culled from this Wachtell Liptonmemo written by Adam Emmerich, William Savitt and Brian Walker:
In response to new “good governance” guidance from the UK’s Financial Reporting Council (FRC) that requires companies either to put their directors up for annual reelection or to explain why they have opted for triennial elections, three of the UK’s largest institutional investors wrote an open letter urging companies to resist.
The letter, published in the Financial Times and delivered to every company listed in the FTSE All-Share index, criticizes the FRC’s guidance as unnecessary and damaging to the interests of companies and shareholders. The measure threatens to “engender a short-term culture with the risk of effective boards being distracted by short-term voting outcomes,” the investors write, which would be “detrimental to the interests of shareholders such as the pension funds we represent, who seek to have long-term, constructive, relationships with the directors of companies in which they invest.” The letter closes with a promise to support boards of directors who provide a reasonable argument for retaining triennial elections.
The investors manage three of the UK’s biggest pension funds – Hermes Equity Ownership Services, Railpen Investments and Universities Superannuation Scheme – who between them manage assets of £106 billion (US$169 billion). The letter is a powerful reminder that corporate governance arrangements should be designed to encourage the long-term strategic vision and direction necessary to maximize value for all constituencies. Replacing experienced and contemplative stewardship with myopic proxy politics encourages asymmetric risk-taking and similar tactics that pay off today at the expense of tomorrow.
As we have long argued, subjugating the corporate enterprise to the whims of the moment benefits no one – least of all shareholders, as these influential investors recognize. This very public resistance by large, sophisticated, long-term investors to the one-size-fits-all prescriptions of “good governance” may well mark a turning point in the fight for the preservation of shareholder capitalism in a form that allows for the continued strength and growth of American and European public companies.
July-August Issue: Deal Lawyers Print Newsletter
This July-August issue of the Deal Lawyers print newsletter was just sent to the printer and includes articles on:
– Will Mandatory Shareholder Approval of Golden Parachutes Dull Their Luster?
– Mini-Tender Offers: More Frequent – No Less Troubling
– Latest Developments in Use of Top-Up Options
– Blood in the Water? Use of Delaware’s Two-Record Date Statute May Provide Flexibility, But Can Also Expose a Weak Hand
– Delaware Protects Attorney-Client Privilege for Investment Banker Communications
– Leveraged Acquisitions: A New Post-Credit Crisis Structure
– Delaware Court of Chancery Announces New Rules for Controlling Shareholder Freeze-Out Transactions
With so many provisions in Dodd-Frank, it is understandable if a number of “sleepers” arise. But perhaps they won’t since many of us are looking for them – and if they’re found, they aren’t “sleepers” by definition, right? I guess it depends on your definition of “sleeper.”
My definition of the terms mean that the provision applies to many companies, not just a few. As a result, something like this nice find of an Investment Company Act issue in this Pillsbury memo doesn’t really apply to our community since most of us don’t deal with hedge funds investing in exchange traded funds.
The new Congo disclosure requirement in Section 1502 – “whether company products contain minerals from Congo or neighboring countries and if so, what steps those companies are taking to track the source of the minerals” – isn’t much of a sleeper since most companies won’t be required to make this type of disclosure; plus it has been written upon plenty (see these memos). Even the Washington Post has written an article about it.
My guess is that something will be overlooked somewhat at first; much the same way that Section 404 – “internal controls” – was overlooked when Sarbanes-Oxley was enacted. I’m curious to hear your thoughts on what the sleepers of Dodd-Frank are…shoot me an email.
Dodd-Frank: A FOIA Flap Over the SEC’s Exemption
Over the past week, a debate has grown over Section 9291 of Dodd-Frank. That provision provides an exemption for the SEC from FOIA relating to information obtained during “surveillance, risk assessments, or other regulatory and oversight activities.” The debate started when a Fox News article expressed concerns about the potential for overbroad application. Since then, the SEC has responded with letters to Congress, as noted in this Washington Post blog, and this statement:
The new provision applies to information obtained through examinations or derived from that information. We are expanding our examination program’s surveillance and risk assessment efforts in order to provide more sophisticated and effective Wall Street oversight. The success of these efforts depends on our abilty to obtain documents and other information from brokers, investment advisers and other registrants. The new legislation makes certain that we can obtain documents from registrants for risk assessment and surveillance under similar conditions that already exist by law for our examinations. Because registrants insist on confidential treatment of their documents, this new provision also removes an opportunity for brokers, investment advisers and other registrants to refuse to cooperate with our examination document requests.
As noted in the WaPo blog, the SEC has sought this exemption for some time, so that those it regulates would be more receptive to providing information the SEC wanted access to, such as emails. We’ll see if the clamor for tweaking this provision to limit this new exemption will continue as one member emailed me: “It is reasonable as a law enforcement agency that the SEC keeps documents and evidence gathered in a law enforcement and prosecution case confidential until a case is closed, to ensure fairness to the case and defendant. However, in the case of examination and inspection reports, it seems that keeping such reports “dark” and non-public, after the exam has been completed, has led to bad behavior on the part of regulators and those regulated which in turn has not served the public well.”
Hotties of Investor Relations
For something light-hearted, check out Dick Johnson’s recent blog on his “IR Cafe,” discussing a recent Dealbreaker piece that lists attractive women in the IR world…
According to this WSJ article, CalPERS, CalSTRS and CII are jointly gearing up for proxy access by establishing a database of prospective directors. The database is tentatively dubbed 3D for “Diverse Director Database.”
Below is an excerpt of an interview recently conducted by Francis Byrd of The Altman Group with Anne Sheehan who runs the governance initiatives for CalSTRS (here is the full interview) that relates to the 3D project:
Byrd: Recent media stories have reported that CalSTRS and CalPERS, working with other investors, are in the process of developing a database of potential director nominee candidates for short slates and for submission to companies. What skill sets are you seeking from these potential candidates and how will you assure that these individuals meet (or exceed) the criteria specified by companies’ boards of directors?
Sheehan: We are working on establishing a database of independent director candidates and we are doing that for a few important reasons. One reason is that there is now demonstrated economic value from having a diverse board of directors and we believe that makes the composition of boards a shareholder value issue.
Another reason is the necessity to expand the pool of qualified candidates. Almost 3,000 of the sitting directors on companies in the Russell 3000 are between the ages of 70 and 90, a lot of companies have retirement policies that typically go into effect at 72, and couple that with the adoption of majority voting standards by companies and this looks like a significant long-term shareholder value concern. Add to that the last three decades of market collapses, beginning with the 1987 crash, and we as long-term investors have to take the director pool seriously.
In each of these major collapses, the one thing that is a constant is that these failures were cultural, related to the people that were serving on the boards and how they discharged their duties to shareholders. We can only have an effect on the cultural mind-set by expanding the pool. This is not a short-term goal and we realize that this will not be accomplished in one annual meeting season. As to qualifications, the SEC’s recent disclosure rules requiring disclosures regarding director qualifications is going to be very valuable for shareholders because we should learn why the sitting directors are on the boards.
Naturally, the qualifications are going to have to match the company’s needs. We will put quality people in the database, many of whom will not have prior public company board service and we will do some screening to be sure that the qualifications that people put forth are true, but the final decision will still be made by shareholders when they vote. The nominating committees on these boards are going to be critical to this effort as well and in the final analysis, we are dealing with a human problem and there are no guarantees. There aren’t any in the current environment and the existence of the CalSTRS/CalPERS data base is not going to produce any magical guarantees either.
Here is a guest post on CorpGov.net that sets forth an academic’s view of how proxy access might work, with directors colleges run by activist investors serving as the training ground.
CalSTRS & Relational Investors Threaten Occidental Petroleum with a Proxy Fight
As noted in this WSJ article yesterday, CalSTRS (not CalPERS, as erroneously noted in many media pieces) and Relational Investors threatened to launch a proxy fight recently at Occidental Petroleum by sending this letter to the company’s board, complaining about excessive pay practices and poor CEO succession planning. You may recall that Occidental was one of the three companies that lost a say-on-pay vote during this proxy season, as noted in this blog.
Critical FCPA Diligence in Deals Today
We have posted the transcript for the recent DealLawyers.com webcast: “Critical FCPA Diligence in Deals Today.”
The standard 10b5-1 plan document recently was re-written by one of the major brokerage firms. It is better than their old form, but still not a good approach. I have several concerns with most broker-prepared 10b5-1 plans. First, while the rule is very simple in what a plan must include, the plans tend to ask for representations and other commitments from the executive that simply are not germane to having an effective plan.
I’m more troubled by what some of the plans ask from issuers. Issuers should be willing to verify the number and terms of outstanding options, and can commit to honoring option exercises against the payment of the exercise price, but should go no further. In particular, issuers should not commit to providing notices upon various corporate events. Brokers should get this information from customary exchange and market sources. The bottom line here is that Rule 10b5-1 plans are not the “issuer’s plans,” but the “executive’s plans,” and issuer involvement simply is not justified.
I am also is troubled by the representation that some of the plans contain that the executive will not disclose any non-public information to the broker. But what if the broker, through its investment banking operation, is executing a major transaction for the issuer? Still no disclosure? Of course not, but that is not how the plans read.
Transcript: “Evolving Insider Trading Policy and 10b5-1 Plan Practices”
We have posted the transcript for our popular webcast: “Evolving Insider Trading Policy and 10b5-1 Plan Practices.”
ISS Solicits Feedback for Its Policy Survey
As it has done the past few years, ISS is soliciting feedback ahead of announcing its policy updates for the 2011 proxy season. It’s shorter this year with just 29 questions, but the deadline is tomorrow even though the survey was posted late last week…
Our August Eminders is Posted!
We have posted the August issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!
On Monday, I blogged about how a movement towards shareholder approval of political spending was gathering steam. Yesterday, as Ted Allen blogged in ISS’s Insight Blog, the House Financial Services Committee approved a bill introduced by Rep. Michael Capuano – by a vote of 35-28 – that would require companies to obtain investor approval before spending more than $50,000 per year in general corporate funds on political activities. We’ll see if this goes anywhere…
Survey Results: Director Education/Orientation
We have posted the results from our recent survey regarding director education & orientation, repeated below:
1. Does your board require directors to obtain continuous education:
– Yes – 15.2%
– Not anymore, we removed the requirement over the past year – 6.1%
– Never did require it – 78.8%
2. If you answered “not anymore” or “never” above, does your board encourage directors to obtain continuous education:
– Yes – 77.8%
– No – 14.8%
– Not yet, but it’s under consideration – 7.4%
3. Do any of your directors obtain – or will obtain during the next year – continuous education by:
– Third-party director colleges – 46.9%
– Third-party education provided in-house (i.e. the teachers come to the boardroom) – 40.6%
– Other educational opportunities (e.gs. in-house training in the boardroom, “homework,” plant visits) – 71.9%
– Doubt they will obtain any director education over the next year – 15.6%
4. If your directors obtain continuous education, are the topics covered:
– More business/operational in nature – 23.3%
– More legal/governance/ethics in nature – 76.7%
5. Does your company have a director orientation program for new directors:
– Yes – 72.7%
– No – 27.3%
6. Does the board require new directors to participate in the company’s director orientation program:
– Yes – 69.7%
– No – 30.3%
Please take our new “Quick Survey on Rule 10b5-1 Plan Practices.”
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:
– What is Corporate Access Worth? Cost Estimates to Reach Company Reps
– Judge Rakoff Addresses Stanford Directors’ College
– NASAA: The Long-Awaited “One-Stop Filing” System for Rule 506 Notice Filings
– SEC Cops Don’t Need Guns, Badges on Their Beat
– CEO Succession Study: Fewer CEOs Are Being Forced Out
