Last week, as an “urgency measure,” a bill sponsored by the California Corporations Committee was finally introduced in the California Legislature to address the e-proxy problem that I have been blogging about. It requires a 2/3 vote – but would take effect immediately if passed. Thanks to Keith Bishop for continuing to keep us apprised of the latest.
– Size range of companies using e-proxy varies considerably; all shapes and sizes (eg. 38% had less than 10,000 shareholders)
– Bifurcation is not being used as much as I would have thought; of all shareholders for the companies using e-proxy, only 5% received paper initially instead of the “notice only”
– 0.76% of shareholders requested paper after receiving a notice
– 62% of companies using e-proxy had routine matters on their meeting agenda; another 30% had non-routine matters proposed by management; and 8% had non-routine matters proposed by shareholders
– Retail vote goes down dramatically using e-proxy (based on 61 meeting results); number of retail accounts voting drops from 18.3% to 4.4% (over a 75% drop) and number of retail shares voting drops from 28.8% to 12.6% (over a 55% drop)
Our “Voluntary E-Proxy” Survey Results
Here are the survey results from our recent “Quick Survey on Voluntary E-Proxy,” repeated below:
1. Does your company intend to use voluntary e-proxy this year?
– Yes – 33.8%
– Maybe, not decided yet – 13.0%
– No, but maybe next year – 48.1%
– No, we will never use it since we intend to continue to send paper – 5.2%
2. If the answer to #1 is not “Yes,” which of these reasons did the company consider?
– Concerned about reaching quorum – 21.6%
– Timeframe is too tight to complete proxy materials – 33.3%
– Timeframe is too tight because board/board committee meeting dates pre-set – 13.7%
– Too many shareholders will want paper – 19.6%
– Want to see how other companies fare with e-proxy – 74.5%
3. In case shareholders request paper, we intend to print this amount of proxy materials:
– 7% or greater – 56.5%
– 5-6% – 17.4%
– 4% – 5.8%
– 3% – 2.9%
– 2% – 1.5%
– Less than 2% – 7.3%
– Print materials on demand (such as making Xerox copies) – 8.7%
Please take a moment to answer this new “Quick Survey on More on Blackout Periods”. Always a popular topic, we periodically conduct this type of survey, but it has been three years since the last one…
At an ALI-ABA conference last Friday, Corp Fin Director John White noted that the Staff has “cleared” about 70% of its targeted reviews of executive compensation disclosures, meaning that those companies had received a letter indicating that the review process was over.
The Staff is now using two types of letters to “clear” exec comp reviews. In addition to the typical letter from the Staff indicating that the comments are “all clear,” the Staff is using a modified letter that states that the Staff “neither agrees or disagrees” with the company’s conclusion about its basis for excluding performance targets; this leaves the door open for the Staff to challenge the exclusion at a later date. However, a company that receives this type of letter can consider the Staff’s review complete. While its true the Staff could challenge the exclusion at a later date – most likely in a different filing – they won’t consider the original comment on the 2007 proxy outstanding. Here is a sample of what the “neither agrees or disagrees” letter looks like.
We now have over 100 comment letters (and responses) posted on CompensationStandards.com – and you will want to read Mark Borges’ recent blogs that analyze the meaning of specific comments, including this one that begins “to paraphase Alice in Wonderland, reading the publicly-available comment letters and responses gets “curiouser and curiouser.”
The Section 162(m) Workshop (and Transcript Posted)
We have announced that our 162(m) program – “The Section 162(m) Workshop” – will take place on March 25th on CompensationStandards.com. This webcast will be held in a “workshop” style, where experts provide analysis of the numerous issues raised for specific types of employment arrangements, including guidance on what well-designed plans should look like under the IRS’ latest guidance.
We have also posted the transcript from the recent webcast: “The New IRS Letter Ruling: How It Impacts Your Employment Arrangements, Accounting, Proxy Disclosures, Etc.”
Postponed: This Thursday’s House Hearing on Severance Pay
As noted in this WSJ article, the House Committee on Oversight and Government Reform was scheduled to hold a hearing – “Executive Compensation II: CEO Pay and the Mortgage Crisis” – on Thursday, but today it was announced that it was postponed. When it’s re-scheduled, it should be a “doozy” as three current and former CEOs (Charles Prince, Stan O’Neal and Angelo Mozilo) as well as three chairs of compensation committees not only face the questions of Congress, but those of Nell Minow of The Corporate Library and the mayor of a town in Michigan hit hard by subprime. It should be some interesting theater…
Possible New SEC Commissioners?
In Saturday’s WSJ, this article names four possible successors to Commissioner Paul Atkins (who is a Republican) when his term runs out this summer (Douglas Cox, Steven Guynn, Stuart Kaswell, Troy Paredes) – as drawn up by the White House – as well as lists the two Democratic candidates (Luis Aguilar, Elisse Walter) that have been sitting in the White House for some time.
In this podcast, Randy Gegelman of Faegre & Benson explains how employers can deliver proxy materials to plan participants, including:
– How do the SEC’s e-proxy rules differ from the DOL’s guidance on electronic delivery?
– Does that mean that “notice only” method can’t be used for 401(k) plan participants?
– What have plan sponsors been doing?
– Is this strictly an ERISA issue or are there securities issues remaining on the table?
I’m not a big Oscars person, but this satirical montage is hilarious, particularly if you’ve seen any of the movies that were nominated for “Best Picture.”
US Supreme Court: Individuals Can Sue under ERISA against 401(k) Plan Administrators
Last week, the US Supreme Court unanimous decided – in LaRue v. DeWolff, Boberg & Associates – that ERISA permits individual defined contribution plan participants to sue for fiduciary breaches that impair the value of plan assets in the individual’s plan account. This holding could have important implications for future ERISA litigation activity and present significant insurance coverage issues. Here is a copy of the opinion – and we have begun posting memos analyzing this case in our “ERISA Securities Litigation” Practice Area.
The ‘Former’ SEC Staff Speaks
We have posted the transcript from our recent webcast: “The ‘Former’ SEC Staff Speaks.”
Yesterday, the IRS published Revenue Ruling 2008-13, which provides guidance for identifying performance-based compensation for purposes of Section 162(m) and clarifies some of the open issues from the private letter ruling that I blogged about yesterday.
The ruling provides transition relief for awards with a “performance period” (but really meaning the service period to which the performance goal relates) that begins on or before January 1, 2009, or compensation paid pursuant to an employment agreement in effect today, and while that agreement continues in effect (determined without regard to extensions, including auto-extensions). In other words, the clarifications from this new ruling are (1) they expressly cover retirement now and (2) they give relief for a couple of years – and for existing employment agreements.
The transition period will be helpful – but it may not be as “long” as it sounds. Many contracts have automatic renewal provisions that may limit the transition relief (see the language “without respect to future renewals. . . including. . . automatic) – and the “voluntary retirement” holding will likely cause additional issues for companies. At least there will be some time to “negotiate” required changes with executives. Read more analysis of the ruling in “Melbinger’s Compensation Blog.”
Stay tuned for another CompensationStandards.com program – “The Section 162(m) Workshop” – that will take place next month to help you navigate the many issues that you will now need to consider.
California Supreme Court Dodges Internal Affairs Conflict Issue
Last week, the California Supreme Court issued its opinion in the appeal in Grosset v. Wenaas; I blogged about this case way back in 2005 and we have posted memos regarding this case in our “Internal Affairs Doctrine” Practice Area. From Keith Bishop:
The case involved a shareholder derivative suit and a Delaware corporation (JNI Corporation). The Court of Appeal applied Delaware law because the requirements for standing in a derivative action implicate the “internal affairs” of the corporation. The Court of Appeal also found – in the alternative that California imposed a continuous ownership requirement that was consistent with Delaware law. Accordingly, the shareholder was out of luck and he appealed to the California Supreme Court.
The Supreme Court found that because California and Delaware law have parallel continuous ownership requirements there is no conflict of law. Hence, it was able to avoid discussing the Delaware Supreme Court’s decision in Vantagepoint Venture Partners v. Examen.
The case is important because it sets forth the California Supreme Court’s analysis of California’s shareholder derivative statute, Corporations Code Section 800. However, the opinion leaves unanswered how the California Supreme Court will deal with the internal affairs doctrine when it finds that California and Delaware corporate law are in conflict.
Inside Perspective of Accounting Fraud
In this podcast, Walter Pavlo, a money launderer, and Neil Weinberg, Senior Editor of Forbes, explain how they wrote a book about why someone turns to crime – in this case, the biggest accounting fraud ever (which occurred at MCI), including:
– What is the book about?
– Why did you write the book?
– What has been the most interesting feedback about the book?
Last week, the SEC’s “Advisory Committee on Improvements to Financial Reporting” published a progress report, which includes 12 recommendations for the SEC to consider – many of them important and some of them far-ranging. The key themes include: increasing emphasis on investor perspective in financial reporting system; consolidating process of setting and interpreting accounting standards; promoting design of more uniform and principles-based accounting standards; creating a disciplined framework for increased use of professional judgment; and taking steps to coordinate US GAAP with IFRS. The Advisory Committee will issue a final report (with final recommendations) later this year. Here is a statement from Chairman Cox – and memos analyzing the Progress Report are posted in our “Auditing Process” Practice Area.
Yesterday, the SEC posted these recommendations for public comment, as they have done with other advisory committees. Like other advisory committee reports, there is a short 30-day comment period – given the importance of the issues, don’t forget to weigh in.
E-Proxy: Broadridge’s Candid Assessment
Yesterday, Broadridge posted this interesting article about how e-proxy is faring, which consists of excerpts from five interviews with in-house folks that have recently been through the voluntary e-proxy process. For these five companies, the costs savings have been real, but there have been some “lessons learned” about usability – as aptly noted by Dominic Jones in his “IR Web Report.”
Ninety Law Firms Petition IRS on Section 162(m) Position
Last week’s CompensationStandards.com webcast on the IRS’ recent Section 162(m) private letter ruling was a blockbuster (audio archive available now; transcript coming soon) during which Ken Griffin of the IRS noted that further guidance should be expected from the IRS soon. To help their cause, 90 law firms signed off on this letter that was sent to the IRS on Tuesday. Stay tuned…
Kudos to those individuals that work hard to get so many firms to sign off on anything. Even with the ability to quickly communicate by e-mail these days, it amazes me when these collaborative efforts on short notice get completed. It’s not an easy thing to do.
Brink Dickerson of Troutman Sanders recently delved into the question of “what are the SEC Staff’s most recent views with respect to what a company should do if it is unable to file a Form 10-Q – even after the extension provided by Form 12b-25 – because the company’s auditors have not completed their Reg. S-X 10-01(d) review?” This can occur due to a number of reasons, ranging from an untimely auditor resignation to a complex accounting issue that the auditors simply have not resolved.
Brink states that the Staff generally believes that it is best to disclose as much accurate information as quickly as possible, either through filing a Form 10-Q that has not been reviewed or a Form 8-K. When a Form 8-K is filed, practices range from disclosing just recent high-level operating results and limited other financial data in the body of the filing (or in a press release that is attached as an exhibit) to filing essentially complete financial statements (along with the MD&A) as an Exhibit 99. When the filing is ready to be made, the Staff may either seek the filing an unreviewed Form 10-Q – because of the accompanying certifications and the fact that investors naturally would look for a document labeled as a Form 10-Q for quarterly results – or the filing of a Form 8-K; here is where you may want to contact the Staff that handles your industry to see which approach they prefer.
In all events, Brink says that:
1. the lack of the review needs to be clearly highlighted through an introductory note (see the March 2001 Current Issues Outline Update)
2. the reasons for the lack of the review should be disclosed completely
3. the companies expectations with respect to filing a definitive Form 10-Q (or Form 10-Q/A) should be discussed
4. to the extent that any numbers could be expected to change as a result of the review, those numbers and, if possible, the potential outcomes should be discussed
5. columns containing financial information should be labeled “unreviewed”
Most critically, he points out that the importance of accuracy far outweighs the benefits of filing quickly, and companies should not file either a Form 10-Q or a Form 8-K if it does not have an appropriate level of confidence in the numbers that are disclosed. Unfortunately, a Form 10-Q that has not been officially reviewed by the auditors still will be substantially deficient for ’34 Act purposes, so filing one will not solve Form S-3 eligibility issues. It will, however, help with investor and stock exchange relations – and may solve some covenant violation concerns caused by the absence of any filing. FYI, the review requirements for Form 10-Qs originate from this adopting release relating to audit committee disclosure from 1999.
SEC Certification of Delaware Law Issues
Last summer, the Delaware legislature amended the Delaware Constitution to permit the SEC to certify questions of law directly to the Delaware Supreme Court (one of the many things I have been meaning to blog about, but keeps getting bumped). In this podcast, J.W. Verret of Skadden, Arps and a recent law clerk for Vice Chancellor John Noble analyzes a host of recent Delaware law developments and issues, including:
– What did the Delaware legislature do last year?
– Has the SEC used this new ability yet?
– What are the types of issues that the SEC may ask for certification?
– Why are bylaws so important?
– How does Rule 14a-8 relate to Delaware corporate law?
– Does it matter whether a new proposed bylaw put forward by shareholders goes on the company’s ballot?
– How clear is Delaware law on what a new bylaw can say?
– What is the likelihood the Delaware Supreme Court will accept a question certified from the SEC?
– What are the consequences of the SEC giving a no-action letter on a bylaw without pre-certifying?
MAC Clauses: All the Rage
Join DealLawyers.com tomorrow for the webcast – “MAC Clauses: All the Rage” – to hear from the experts on how “material adverse change” provisions are under more scrutiny than ever, causing some deal practices to change. These changing practices not only impact how lawyers negotiate deals, but they entail wide-ranging ramifications for dealmakers. The panel includes:
– Professor Steven Davidoff of Wayne State Law School and the “M&A Law Prof” Blog
– John Grossbauer, Potter Anderson & Corroon
– Travis Laster, Abrams & Laster
– Patrick Lord, Dechert
– Derek Winokur, Dechert
The Latest Developments: Your Upcoming Proxy Disclosures —What You Need to Do Now!
We have posted the transcript from Part II of the CompensationStandards.com webconference: “The Latest Developments: Your Upcoming Proxy Disclosures —What You Need to Do Now!”
A number of members e-mailed me after Friday’s blog about the parenthetical on the cover page of the 10-Q (which is also on the Form 10-K cover page). The parenthetical states: (Do not check if a smaller reporting company).
One member noted that if you look at the PDF version of the SEC’s adopting release – rather than the version published in the Federal Register – you will see that (on page 210) the parenthetical is located underneath the check box for “non-accelerated filer.” He inferred that, since smaller reporting companies are non-accelerated filers, the SEC wanted smaller reporting companies to check only the box for “smaller reporting company” and not both boxes.
I agree that this makes sense if the parenthetical is properly lined up with “non-accelerated filer” (one wonders why a similar instruction isn’t required to ensure a Large Accelerated Filer doesn’t also check the “Accelerated Filer” box). The same check box disclosure also appears on the cover page of other forms – and the location of the parenthetical is consistent across all of the them, so it wouldn’t appear that the parenthetical was an oversight, notwithstanding what was told by someone on the Staff to the members who fed me the information for Friday’s blog.
SEC Proposes Changes to Foreign Private Issuer Reporting and Registration Requirements
Last Wednesday, the SEC proposed a series of amendments to its filing, disclosure and registration requirements for foreign private issuers. Among other proposed changes, the SEC would require FPIs to file their reports electronically on EDGAR (ie. no more paper filings) – and shorten the existing 6-month filing deadline for FPIs to file annual reports on Form 20-F to 90 days for large accelerated and accelerated FPIs and 120 days for smaller reporting FPIs. Here is the SEC’s press release and Corp Fin’s opening statement. Here is some analysis of the SEC’s actions from Cleary Gottlieb:
Based on the description provided by the SEC staff, the proposed amendments would appear to have both positive and negative potential consequences for non-U.S. companies:
– On the positive side, the amendments would provide an automatic exemption from SEC registration for many non-U.S. companies that do not list or publicly offer securities in the United States, so long as they publish English versions of their home country annual reports and certain other documents on their websites. The current version of the exemption requires companies to submit an application to the SEC (which many companies do not do), and to submit paper copies of their home country documents to the SEC.
– On the other hand, the amendments would for the first time make eligibility for the exemption contingent on a company meeting substantive eligibility criteria: no more than 20% of its share trading volume can take place in the U.S. over-the-counter market, and it must maintaining a listing in its primary market. The current version of the exemption is available for all non-U.S. companies that do not list or publicly offer their securities in the United States.
– Additionally, the amendments would shorten the deadline for non-U.S. reporting companies to file their annual reports on Form 20-F, to 90 days after the end of a fiscal year for larger companies and 120 days for smaller companies. This proposal is likely to solicit significant comment, particularly in Europe where the home country reporting deadline is 120 days, as well as in other countries with home country reporting deadlines that are longer than the 90-day proposal.
The text of the proposed amendments is not yet publicly available, but should be published for public comment shortly. Once this occurs, it should be possible to assess more definitively the potential practical consequences of the amendments.
Impersonations on Earnings Calls
I found this WSJ article on Saturday fascinating about how someone has gained entry into a number of earnings calls recently to ask questions by impersonating well-known analysts. I caught up with Joe Herrick to ask him how – and why – he has done these impersonations in this podcast.
As a result of amendments to the disclosure rules for “smaller reporting companies” adopted in December and effective last week – February 4th – there are changes to Form 10-K that all reporting companies need to make in their Form 10-K reports. For companies that are not eligible (and do not elect) to report under the new “smaller reporting company” framework, these changes are minor – essentially amounting to changes in the check boxes relating to the company’s status on the cover page of Form 10-K.
Courtesy of John Newell of Goodwin Procter, we have posted “Comparison of Changes to Form 10-K,” which is a redline comparison of the newly-effective cover page of Form 10-K compared to the old version (this is a Word file and should help you tweak the Form you saved from last year; here is a PDF version if you need it).
On Monday, the SEC finally posted an updated Form 10-K – even though the new Form had been effective for a week – and as several members have e-mailed me, the SEC mistakenly reverted back to an old version of the Form for the Part III in its PDF…
More Glitches in Smaller Company Reporting
Recently, I blogged about a glitch in the SEC’s smaller company reporting scheme relating to audit committee reports – and there have been a few others identified in our “Q&A Forum.” Thanks to Steve Amen and Grant Leach of Kutak Rock, here is another:
“We’ve been working on a Form 10-Q for a company with a September 30th year end that qualifies as a “smaller reporting company.” As we looked at the SEC’s adopting release regarding changes to Form 10-Q resulting from the new smaller reporting company rules, we noticed that the familiar paragraph in which registrant’s indicate their filing status has been modified (as expected) to include the new option for “smaller reporting company”. However, in the adopting release, the whole thing looks like this:
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
– Large accelerated filer
– Accelerated filer
– Non-accelerated filer
– Smaller Reporting Company
(Do not check if a smaller reporting company)
We could not make any sense out the parenthetical language at the bottom and we finally decided to call the Corp Fin Staff for clarification. Turns out it’s a glitch and we were told we could delete it from the cover page.”
Let The Trades Begin: New Rule 144 Is Now Effective
Starting today, new Rule 144 is effective. The SEC has posted a copy of the new Form 144 in a PDF; we have a Word version available in our “Rule 144″ Practice Area.
As noted by Ron Orol in this The Deal.com article, as much as $35 billion in restricted securities will suddenly be available to trade – so you can expect a sudden uptick in Rule 144 activity. So I posit this reminder: have you sent your memo to all our officers and directors explaining the new rule changes?
During our recent “Rule 144 Conference,” it was stressed that all companies need to get their officers and directors up to speed, particularly with the new potential pitfalls now facing affiliates. If you have not yet done so, we encourage you to furnish all your officers and directors with the model memorandum provided in the Conference “Course Materials.” It will get your key executives and directors updated on what they need to know now—and prevent costly violations.
By the way, I just posted a podcast with Ron Orol on DealLawyers.com regarding his new book: “Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking On The World.”
As part of its executive compenation review project, the SEC Staff has issued many comments on change-of-control and severance disclosures. We have urged companies to improve the clarity of disclosures in this area by providing full walk-away values in a table this year – including not just unvested grants, but previously exercised grants and projecting out future grants (here is a model table; learn more how to do this in our “4th Annual Exec Comp Conf” Archive). This is something that shareholders clearly want to see – and can help companies shorten their executive compensation section.
Below is a recent blurb from Mark Borges’ “Proxy Disclosure” Blog on CompensationStandards.com (and since Mark posted the blog below, he has added another one about a different company):
Out on the speaking circuit, one of the more provacative executive compensation disclosure topics is whether companies should be reporting the “walk-away” number as part of their termination and change-in-control disclosure. While I can’t say that I’ve seen any trend start to emerge yet, it’s a subject that never fails to stimulate strong positions and lively debate.
Recently, Scott Spector pointed me to the Starbucks proxy statement (filed on January 24th) which contains the first “walk away” numbers I’ve seen this year. As part of its “Potential Payments Upon Termination or Change in Control” disclosure, the company provides a table showing the fiscal year-end value of outstanding vested stock options, aggregate deferred compensation plan account balances, and unvested stock options that would accelerate upon the occurrence of certain specified triggering events. It also totals these amounts, with and without the accelerated vesting portion, essentially showing what its named executive officers would receive if they left the company under any circumstance.
Since this is Starbucks’ first filing under the new rules, I can’t tell if they elected to provide this disclosure to get out ahead of the issue or because this level of transparency made sense given the relative simplicity of their executive compensation program. In any event, it will be interesting to see whether other companies follow their lead this proxy season.
How Many Companies Will Disclose Performance Targets This Year?
A recent poll by Watson Wyatt Worldwide got a bit of play in the mainstream press; in the poll, the consulting firm found only 42% of companies plan to disclose the specific goals used in their executive compensation plans for the 2007 fiscal year; 31% have no plans to reveal the goals and the remaining 27% are unsure.
However, this “poll” was far from being scientific – just like our “Quick Surveys” aren’t – since it encompassed only 135 representatives from companies that were listening to a Watson Wyatt webcast. So I would take these numbers with a grain of salt – particularly given the SEC Staff’s continued strong interest in this area (see our recent webcast where a SEC Staffer addressed this topic at length) and institutional investors very strong interest in improved performance target disclosure this year. This was a hot topic during RiskMetric’s Conference last week and those companies that don’t adequately disclose performance targets should expect to become targets themselves during ’09.
Update: We now have over 80 comment letters (and their responses) posted in the “SEC Comments” Practice Area on CompensationStandards.com.
Directors Speak Out on Internal Pay Equity
According to a recent survey by Heidrick & Struggles and the Center for Effective Organizations, 90% of director respondents said CEO pay should be no more than two to three times higher than the next highest paid executive. And 85% said the mix was right at their company right now.
But I wonder whether these directors truly conduct an internal pay analysis since only a few hundred companies (out of 10,000; thus a small fraction) disclosed last year that they consider this benchmarking tool as a factor in their decisionmaking – and even those few companies that truly do consider internal pay equity don’t always conduct the analysis properly (eg. neglecting to include equity grants in the calculation). This issue of the Compensation Standards print newsletter from last year has an article explaining “How to Implement Internal Pay Equity.”
Also in the survey: 32% of the director respondents said CEOs are overpaid; up from 25% in the past – the respondents blamed it on compensation consulting firms and the creation of new incentive compensation programs.
A Rememberance: Sadly, Anita Karu passed away on Sunday after a brief illness. As many of you know, Anita was a senior attorney that worked in Corp Fin for over 25 years (much of it in Chris Owings group). She was a true believer in the Commission’s mission – very dedicated. We will all miss her!
Many of the memos analyzing the recent Private Letter Ruling – which reverses the IRS’ long-standing position on the effect of standard severance arrangements on the deductibility of performance-based compensation under Section 162(m) – have raised questions about the magnitude of the change (eg. whether there is a retroactive impact). Come hear Ken provide some guidance about the latest IRS’ positions. This webcast promises to be a “biggie.”
The following panelists will address the tax, accounting, plan design and disclosure issues raised by this PLR:
– Ken Griffin, Associate Chief Counsel, Executive Compensation Branch, IRS
– Elizabeth Drigotas, Principal, Washington National Tax, Deloitte Tax LLP
– Mike Kesner, Head of Deloitte Consulting’s Executive Compensation Practice
– Mike Melbinger, Partner, Winston & Strawn
– Paula Todd, Managing Principal, Towers Perrin
– Jeremy Goldstein, Partner, Wachtell Lipton Rosen & Katz
– Dave Lynn, Editor, CompensationStandards.com
Corp Fin Rejects “Proxy Access” Proposals: AFSCME to Sue Next?
As expected – given the SEC’s recent rulemaking to “stay the course” on how it wants Corp Fin to handle “proxy access” proposals – Corp Fin agreed with five companies on Monday to allow them to exclude proposals submitted by AFSCME that would amend the bylaws to require that the companies include in their proxy materials the name, along with certain disclosures and statements, of any person nominated for election to the board by a shareholder who has beneficially owned 3% or more of the company’s outstanding common stock for at least two years.
Given the SEC’s rulemaking, AFSCME expected this response and said as much when it announced last month that it was submitting these proposals. It is expected that AFSCME will sue like it did two years ago in the AFSCME v. AIG case, where it won in the 2nd Circuit.
We should be grateful to the SEC for posting these no-action responses, since they made a special effort to post them. Typically, shareholder proposal responses are not posted because there are so many that it would drain the Staff’s limited resources. Fyi, Corp Fin posted these on its “Frequently Requested Materials” page.
Pro or Troll #5: Risk Management and Governance Trends in 2008
Courtesy of Jennifer Meiselman, Managing Director of Risk Advisory Services, BDO Consulting, come try your hand at our newest “Pro or Troll” game – this one focusing on risk management.
