Last month, I blogged that I was “wow’ed” that Corp Fin had allowed the exclusion of a golden parachute shareholder proposal. Since then, I’ve been surprised that my blog is the only piece of writing I’ve seen about that development since I considered it significant.
But apparently folks were tracking it because I got a flood of emails yesterday when Corp Fin reversed course and issued this no-action letter noting that it had reconsidered its position and decided to not allow the exclusion at Navistar. Although the incoming letter is addressed to the SEC’s Secretary, it appears that this reconsideration was made at the Staff level and not at the Commission level (the incoming letter doesn’t “cc” the Commissioners), although it is possible that one or more Commissioners influenced Corp Fin. Rule 14a-8 reconsiderations at any level at the SEC are rare – but as this development proves, they do happen.
Note that we have added shareholder proposals as a topic for next Wednesday’s webcast – “How to Implement Dodd-Frank for This Proxy Season” – so tune in to hear more about this development and others in the Rule 14a-8 area. As all memberships expired at the end of the year, please renew if you haven’t yet to catch this program. If not yet a member, try a no-risk trial now.
The Facebook and Goldman Saga: All About Section 12(g) and Section 12(h) Applications
For securities law geeks, the outpouring of interest in the nuances of when companies are required to register their securities under Section 12(g) of the ’34 Act – and whether Facebook has violated the terms of the exemptive relief granted from Corp Fin back in 2008 – surely is big fun. Back when I served in Corp Fin’s Office of Chief Counsel in the mid-90s, I handled the Division’s Section 12(h) exemptive requests so it has been fun for me (not that there are many; I had never heard of them when I was “asked” to take them on). These requests are fairly technical in nature and require much analysis.
Anyways, I started dabbling in using Quora over the break to check it out and answered a few queries on the ability of new exchanges to trade shares in private companies (eg. SecondMarket, Sharespost and more) because there was so much misinformation out there (eg. that the SEC was “forcing” Facebook to conduct an IPO). And now we have the news about Goldman Sach’s offer to certain clients to invest in Facebook. Rather than repeat my answers from Quora (you can “follow me” there), I share related stories from others:
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:
– SEC Proposes Rules to Increase Oversight of Private Fund Advisers
– His Lips Are Moving: Deception During Conference Calls
– SEC and DOJ Announce Resolutions of FCPA “Industry Sweep”
– European Union Agrees to Economic Governance Changes
– SEC Enhances Centralization of Tip Gathering and Analysis Functions
In this podcast, Dave Lynn and Marty Dunn engage in a lively discussion of the latest developments in securities laws, corporate governance, and pop culture. Topics include:
– Dealing with gifts under Rule 144
– Gifts and insider trading concerns
– The Best Debut Album after “Meet the Beatles”
SEC Approves PCAOB’s Risk Assessment Rules: Eight New Auditing Standards Created
Right before Christmas, the SEC issued this order approving the PCAOB’s rules regarding auditor’s assessment of – and response to – risk. The PCAOB had proposed these rules back in September and results in eight new auditing standards – Auditing Standards #8-15 – replacing six interim standards. In one fell swoop, the PCAOB has more than doubled the number of its standards. The PCAOB’s new rules are effective for audits of fiscal years beginning on or after December 15, 2010.
SEC Approves the PCOAB’s 2011 Budget and Accounting Support Fee
Over the break, not only did Congress finally approve the SEC’s budget, but the SEC approved the PCAOB’s annual budget and accounting support fee. As Dodd-Frank provides the PCAOB with the authority to oversee auditors of brokers – and allocate its support fee among both brokers and issuers now – this year’s budget and support fee reflect these changes. As noted in this PCAOB press release, the 2011 budget is $204.4 million, which is $21.1 million (or 11.5%) above last year’s budget.
On CompensationStandards.com, I just posted the Winter 2011 issue of our Compensation Standards newsletter that contains practical guidance, which supplements what I wrote in our “Say-on-Pay Solicitation Playbook” this past summer. The Winter issue covers these topics:
– Say-on-Pay: Five Steps to Maximize Your Shareholder Engagement Efforts
– Say-on-Pay Preparation: Six Other Actions to Consider
– Say-on-Pay Frequency: What Recommendation Should Management Make?
– Say-on-Pay Frequency: Does Management Need to Make a Recommendation?
– Say-on-Pay Frequency: Keep Tabs on How It Works in Practice
– A Future Regulatory Fix? Acquiring Executives Not Subject to Golden Parachute Vote
A few weeks ago, ISS issued a set of 2011 US Compensation Policy FAQs. There are four FAQs regarding say-on-pay vote frequency, nine on problematic pay practices and four on golden parachute votes.
Poll: Say-When-on-Pay Recommendations
In his “Proxy Disclosure Blog,” Mark Borges gives us the latest say-when-on-pay stats – with 71 companies filing so far, 55% recommend a triennial vote; 24% recommend a biennial; 11% recommend an annual and 10% make no recommendation.
Despite this early indication that triennial will be the most popular recommendation, there are those that think that annual will come out on top by the end of the day (including me for the reasons that I set forth in the Winter 2011 issue of the Compensation Standards newsletter). Take a moment and participate in this anonymous poll:
Cary Klafter of Intel quickly responded by sharing what I imagine has to be the world’s largest holiday disclaimer, running for 8 pages – so long that I don’t dare repeat it verbatim in this blog – rather I posted it as a PDF. But here is a small excerpt from the opening so you can get a taste:
Please accept, with no obligation, implied or implicit, the best wishes of the Corporate Legal Group (sometimes hereinafter referred to as the “wisher” or “us” or “publisher” or however else we refer to ourselves in this document in our complete and unfettered discretion) for an environmentally conscious, socially responsible, low stress, non-addictive, gender and gender-identity neutral, celebration of the winter solstice holiday, practiced within the most enjoyable traditions of the religious persuasion of your choice, or secular practices of your choice, with respect for the religious/secular persuasions and/or traditions of others, or their choice not to practice religious or secular traditions at all . . . . . and a fiscally successful, personally fulfilling, and medically uncomplicated recognition of the onset of the generally accepted calendar year 2011, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make America great, (not to imply that America is necessarily greater than any other country or is the only “America” in the western hemisphere or that there are not other hemispheres of equal dignity), and without regard to the race, creed, color, age, physical ability, religious faith, or sexual preference or identity of the wishee (or lack thereof with regards to any or all of such, or other, factors) (and further not to imply that the winter solstice should be considered a holiday for those afflicted, through no fault of their own, with some form of psychological or physical depression occasioned by the natural reduction of sunlight or increase in precipitation due to seasonal factors (or increase/reduction for those in the so-called Southern Hemisphere)). (Note: based on some news stories we are modestly concerned about the Mayan calendar since it apparently predicts the End Of Time (EOT) in 2012, unless inappropriately interpreted by non-Mayan so-called “scholars”, but we disclaim any responsibility for the EOT and as a matter of public policy we do not advocate the EOT).
And here is another funny electronic holiday card, courtesy of Shareholder Representative Services…
Europe’s Answer to Dodd-Frank? The MiFID Review Affects Almost Everyone
As noted in these memos posted in our “European Law” Practice Area, the European Commission published proposals for revision of the Markets in Financial Instruments Directive (“MiFID”) last month. The comment period is open until February 2nd and the Commission is scheduled to publish its final proposals, including legislative text, in the spring (probably in mid-May).
Our January Eminders is Posted!
We have posted the January issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!
To start off the New Year right, remember this Seinfeld gem…
I’m trying real hard not to blog this week, but just can’t resist pointing out this excellent piece of investigative journalism by Dominic Jones of IR Web Report about how Reuters is now distributing press releases of its parent company’s corporate clients in its editorial feed to Yahoo! Finance, the world’s most popular investing website.
Not only does Dominic expose this unconventional move, but he proposes a theory as to why Reuters has gone this route – as well as pointing out that “the inclusion of news releases in Reuters’ feed to Yahoo! Finance is also likely to create regulatory headaches for Thomson Reuters’ European corporate clients whose securities are not registered with the SEC and cannot be promoted or sold in the US.”
Although I know many are worried that the demise of traditional mass media will result in the death of investigative reporting, I like to think that the opposite is true – the Web has created thousands of worthy journalists who have the expertise and will take the time to fill the shoes of the many reporters that have been laid off or taken early retirement…
Yesterday, President Obama signed a continuing resolution that will fund the SEC for two more months. In an unusual twist, this resolution states that it is deemed to be the SEC’s “regular appropriation” for fiscal year 2011. Thus, it will trigger changes in the fee rates as noted in this SEC press release.
As a result, effective December 27th, the filing fee rate applicable to the registration of securities will increase from $71.30 to $116.10 per million dollars, a 63% hike as I blogged back when it was first announced. Since tomorrow is a federal holiday – and the SEC is closed – this filing fee hike takes effect after 5:30 pm eastern today (except filings pursuant to Rule 462(b) get the current rate until 10:00 pm eastern).
To track Santa Claus on his travels, you may wish to try the following:
In yesterday’s blog, I noted the heavy volume of electronic holiday cards and I was remiss in not highlighting this hilarious card from Manatt. The whole darn thing is funny – but probably the best part is the disclaimer at the end that I reproduce for you here:
The wishes provided herein represent the sentiment of the sender as of the date written and may not reflect the sender’s sentiments on the date this is first received or anytime thereafter. The sender reserves the right to deny the sender ever wished the recipient wishes, whether warm, cold or any temperature whatsoever. Also, the wishes are not dependent on warmth and may just be wishes, with all of the privileges accorded to the state of wishing, including grandiosity but not excluding practicality. The wish, whether warm, neutral or cold, is under no obligation to come true, but that does not exclude the possibility that it may come true.
A trained eye will recognize that the disclaimer is based on typical safe harbor language pulled from a press release or other writing…and this video ain’t bad either…
Recently, I have received a slew of e-mailed holiday cards, far more than ever before. While one can chalk that up to popularity, the likely reason is that I subscribe to every list under the sun due to my efforts to pretend to be a reporter. Thanks to those who have sent them – although some wonder whether “should you send holiday cards to analysts and investors?” In return, I offer you a silly video recapping the year (you’ll want your audio turned up for this):
And one member notes: In Miracle on 34th Street (1947 version), Susan Walker explained to an associate that she fired Santa Claus because he was crazy. The associate did not want her to fire him and responded with “But… but maybe he’s only a little crazy like painters or composers or… or some of those men in Washington.” I suppose some things are timeless.
Friday’s poem on this blog – “Twas Two Weeks Before Quarter’s End” – elicited strong member feedback. Not to be outdone, here is a capital markets poem crafted by Anna Pinedo of Morrison & Foerster:
Twelve Days of Christmas
On the first day of Christmas my lovely client sent to me, A bought deal off an S-3
On the second day of Christmas my lovely client sent to me, Two NDAs and A bought deal off an S-3
On the third day of Christmas my lovely client sent to me, Three ASRs Two NDAs and A bought deal off an S-3
On the fourth day of Christmas my lovely client sent to me, Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3
On the fifth day of Christmas my lovely client sent to me, Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3
On the sixth day of Christmas my lovely client sent to me, Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3
On the seventh day of Christmas my lovely client sent to me, Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3
On the eighth day of Christmas my lovely client sent to me, Eight fixed-to-floaters Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3
On the ninth day of Christmas my lovely client sent to me, Nine autocallables Eight fixed-to-floaters Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3
On the tenth day of Christmas my lovely client sent to me, Ten call spreads Nine autocallables Eight fixed-to-floaters Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3
On the eleventh day of Christmas my lovely client sent to me, Eleven F/X swaps Ten call spreads Nine autocallables Eight fixed-to-floaters Seven standstills Six 3(a)(9) exchanges Five subscription agreements Four 13-Ds Three ASRs Two NDAs and A bought deal off an S-3, and
On the twelfth day of Christmas my lovely client wired to me, the remainder of this year’s fee.
It’s still very early in the proxy season but I know many are interested in the proxy statements being filed and what those companies are recommending regarding the frequency of future say-on-pay votes. In his “Proxy Disclosure Blog” on CompensationStandards.com, Mark Borges has been blogging daily about what the most recent say-on-pay resolutions and disclosures look like – and he periodically is tallying up what the frequency recommendations look like so far.
Davis Polk also is tracking the frequency of say-on-pay recommendations internally – and here’s their latest scorecard: “From November 19 through December 16, 2010, we have tracked the frequency of say on pay proposals for 19 companies, including 16 large accelerated filers. Thirteen have recommended triennial votes, one has recommended a biennial vote, and another has recommended an annual vote. One company made no recommendation, indicating that it has decided to consider the views of shareholders before making a determination. The three smaller companies included in our survey all proposed annual votes.”
Unless something major happens over the next two weeks, this blog is taking a rare hiatus. Spend that extra time you will have not reading this blog by taking 30 seconds to cast a vote for us in the ABA’s blog voting contest. Here are voting instructions. Voting doesn’t end until December 31st.
Also don’t forget to renew your membership to this site since all 2010 memberships expire at the end of this month. Looking forward to 2011! Enjoy your holidays…
Twas Two Weeks Before Quarter’s End
Here is something cute penned by Gary Raven of Builders FirstSource:
Twas two weeks before quarter’s end, when all through the company,
Every accountant worked late, preparing spreadsheets while sitting on their rumpy.
Debits and credits all filled the air,
In hopes that outside auditors would be acutely aware.
Most employees were into their third pitcher laughing at the bar,
While fantasies of raises and bonuses were coupled with dreaming of a shiny new car.
And the CFO in his green-visor and the Controller in his as well,
Knew nothing could replace their swiftly dwindling brain cells.
In the computer room there came such a sudden smell,
Were too many cached files burning, no one could tell.
The CIO made a run to the processor room,
Throwing the switch on the exhaust fan to avoid any doom.
The wisps of smoke could barely conceal,
The visage of something with which the mind had to deal.
When to the door the creature stepped into his dominion,
To reveal it was St. Sox and eight beleaguered minions.
Omnipresent, thorough and replete,
Everyone knew it would be difficult to compete.
Onward with bureaucracy, forward they came,
As St. Sox called them each by name.
Now Sarbanes! now Oxley! Now Tyco and Enron!
On Greenspan! On 404! On Arthur and Anderson!
Take general accounting and turn it on its head,
Make small companies wish they were dead!
As each measure resulted in more and more invented controls,
It became difficult to know which way a company could roll.
So to the accounting department St. Sox did go,
With all his minions, measures, cures, and fixes in tow.
With flurry and bravado he sat down to work,
Telling each employee to not understand was to be a jerk.
He pointed his fingernails to his book,
Exclaiming that to comply, all they had to do was look.
On to his head he placed two Bluetooth devices against each ear,
And when he was plugged in he was in great cheer.
His IPODs were maxed with memory and band,
So that today’s case law was held in his hand.
A fanciful mirth replaced his mood, previously dreary,
He would show how compliance need not be teary.
With slickened hair greasy with pomade,
He just knew he had come to their aid.
His Italian suit, pleated in the back,
Cast a pall against the minions dressed off the rack.
Of bad breath and teeth of yellow,
He did not make his companions feel mellow.
As his LED screen turned on its light,
Perhaps we thought he really may be bright.
Importing the data he turned to his right,
Saying that Maestro was about to help their plight.
He spoke not a word but went right to work,
Then made all the printers go berserk.
“See there is the proof of the matter,”
The gleeful proclamation silencing all chatter.
“For a yearly retainer I can show you the ropes,
You’ll pass all audits until new laws hit the books.”
With that, the accounting department, not meaning to be redundant,
Hung him with a rope and placed him next to all the other consultants.
