After I blogged recently about Broadridge’s latest e-proxy stats, a number of members asked how many shareholders were requesting paper. Based on the stats provided by Broadridge, only an average of 0.79% were requesting paper from companies doing e-proxy so far.
We’re receiving so many queries about e-proxy that I created this new “Quick Survey on Voluntary E-Proxy.” Please take a moment to complete the three questions (note that the third question asks you to estimate even if your company doesn’t intend to e-proxy this year).
And after you take the Quick Survey, check out Dominic Jones’ IR Web Report blog about an e-proxying company adjourning their annual meeting because they missed quorum (note it’s an atypical situation because this particular’s company has shareholders that consist solely of veterinarian customers. Sounds like a dream I recently had; you see, there were these two pigs and a goat.).
E-Proxy & California Conflict: An Update
As I noted above, lots of e-proxy questions being posted in our “Q&A Forum” recently; one of them asked if there were any new developments regarding the California law conflict that I blogged about a while back. Here is an update from Keith Bishop:
No new developments to report. The Corporations Committee of the Business Law Section of the California State Bar is working on legislation but I don’t think any legislative fix will be made in time for this year’s proxy season. I don’t believe that there is much basis for a preemption argument and I don’t think that obtaining stockholder consents is a practical option for a public company.
How to Create an Online Annual Report – Free and in 5 Minutes!
Dominic Jones provides us with a real find – as described in his blog – by illustrating how easy it is to use the free software on Issuu.com. However, I second his big caveat: I do not recommend that you convert your online annual report to Flash or images – but if you are going to do so (as too many companies are), then free is the only way to go.
Last week, the IRS made a private letter ruling publicly available that is causing many to rethink the termination provisions in their plans and agreements. This PLR – dated September 21st! – relates to Section 162(m) and the deductability of pay arrangements for executives who are involuntarily terminated or quit with good reason. Many of the commentators so far observe that this is a reversal for the IRS.
We held off blogging on this huge development as we have read the wave of firm memos that have rolled in during the past week, many of them grappling with how to interpret this PLR and some disagreeing with each other. We have posted just over a dozen of these memos in the “Section 162(m) Compliance” Practice Area on CompensationStandards.com.
Next Week’s Webcast: The New IRS Letter Ruling: How It Impacts Your Employment Arrangements, Accounting, Proxy Disclosures, Etc.
– Elizabeth Drigotas, Principal, Washington National Tax, Deloitte Tax LLP
– Mike Kesner, Head of Deloitte Consulting’s Executive Compensation Practice
– Mike Melbinger, Partner, Winston & Strawn LLP
– Paula Todd, Managing Principal, Towers Perrin
– Jeremy Goldstein, Partner, Wachtell Lipton Rosen & Katz
Options Backdating Update
While the tide of new options backdating cases seems to have crested, developments continue with the outstanding SEC/DOJ cases, as well as on the private litigation front.
Last month, Gregory Reyes, the former CEO of Brocade Communications, became the first CEO to be sentenced to jail time for backdating. Reyes now faces 21 months in prison and a $15 million fine. The former CFO of SafeNet, Carole Argo, also received a prison sentence – she will serve a six month sentence and pay a $1 million fine. While no time in prison is a good time, these certainly aren’t the kind long sentences faced by financial fraud kingpins like Dennis Kozlowski and Jeffrey Skilling. I doubt, however, that four or five years ago many would have predicted any sort of prison time from cases that some continue to argue only involve benign paperwork errors and a “technical” accounting issue.
The SEC also recently announced the settlement of civil charges against Andrew McKelvey, the former CEO of Monster Worldwide, for his involvement in a long-running backdating scheme at Monster. While the terms of the settlement provide for an injunction, disgorgement and an officer and director bar, the settlement didn’t include a civil penalty “due to the overriding personal circumstances related to McKelvey.”
On the private litigation front, the derivative lawsuit involving allegations of “spingloaded” options against Tyson foods and some of its current and former directors settled last month. Under the settlement, former Tyson CEO Don Tyson, as well as the company’s largest shareholder, agreed to pay $4.5 million to the company. As Broc noted in the blog last summer, Delaware Chancellor Chandler twice refused to dismiss the lawsuit, citing the inherent unfairness of springloaded options and the board of directors’ concealment of the unlawful scheme. Chancellor Chandler’s opinions in this case are posted in our “Backdated Options” Practice Area on CompensationStandards.com, and I suppose will continue to serve as the main authority out there on the state law implications of spingloading.
The San Francisco Regional Office Enforcement Staff was interviewed for this recent MarketWatch article concerning the backdating cases. Members of the Enforcement team expressed how shocked they were to first realize that such high level of people had been involved in creating bogus minutes – in particular respected, top-ranking lawyers. According to the article, the Staff used so-called “V-Charts” as a way of identifying suspicious option grants made at the bottom of the “V.” Marc Fagel, Acting Regional Director of the SEC’s San Francisco Regional Office, indicated that their focus in these cases was on management and not lower level employees. He also noted that the first line of defense for many executives – “I am not an accountant and I don’t know anything about this” – typically failed because it turned out that those executives were aware of the issues.
The Advisory Committee on Improvements to Financial Reporting (CIFiR) has posted a Draft Progress Report in anticipation of a public meeting scheduled for Monday, February 11th. The Progress Report largely tracks CIFiR’s earlier Draft Decision Memo, with some tweaks here and there to the draft proposals – for more on those specific tweaks, check out the FEI Financial Reporting Blog.
As I mentioned in yesterday’s webcast – “The Former SEC Staff Speaks” – CIFiR is recommending an ambitious plan for rolling out XBRL, which seems largely consistent with Chairman Cox’s push to make XBRL a reality for at least some subset of issuers later this year. In the current draft proposal on the topic, the Committee recommends that once testing of the XBRL taxonomy currently out for comment is complete – and the voluntary XBRL filers have successfully used the taxonomy to submit tagged reports – a phase-in could commence with the largest 500 domestic public reporting companies “furnishing” separate tagged financial statements (presumably to be mandated as early as this Fall for calendar year-end Form 10-Ks). CIFiR’s draft recommendation further provides that one year later, the domestic large accelerated filer group would be required to furnish tagged data. Depending on the results of these efforts, the Committee would expect that, “over the long term,” the SEC should require all public reporting companies preparing GAAP financial statements to tag their filed financial statements using XBRL. Committee member Peter Wallison from the American Enterprise Institute submitted a separate statement that he believed maintaining a distinction during the phase-in of “furnished” versus “filed” tagged data was not necessary and that the implementation timetable should be left to the SEC.
One of the notable non-financial draft recommendations to be considered by the Committee on Monday is a call to update the SEC’s guidance on the use of corporate websites as a means of disclosing corporate information, including liability issues for summary information provided on a company’s website, hyperlinks from within or outside of a company’s website, treatment of non-GAAP information, and clarification about the public availability of information on a reporting company’s website.
For future consideration, the Committee is exploring the potential use of an executive summary in Exchange Act periodic reports – which is an interesting concept but in my mind potentially could add to the complexity of these already over-stuffed reports.
Posted: Electronic Form D Adopting Release
Yesterday, the SEC posted the adopting release for the rules implementing electronic filing of Form D. Unlike other recent rulemakings that were effective shortly after adoption, these rule changes have a longer lead time. Beginning September 15, 2008, issuers will have the option of filing Form D in paper or electronically – then, beginning March 16, 2009, electronic filing will become mandatory for Form D.
Yet Another SEC Office is Established
Earlier this week, the SEC announced the establishment of an Office of Collections and Distributions. Adding to the proliferation of “special purpose” Offices at the Commission, this group will be tasked with overseeing the distribution of so-called “Fair Funds” to investors. Previously, this function was carried out by the Division of Enforcement.
In a report issued last summer, the GAO criticized the SEC for its management of Fair Funds, citing, among other things, the decentralized approach for managing the Fair Funds program. At the time of the GAO report, the SEC had announced its plans to create this centralized Fair Funds office.
As Broc noted in the blog last summer, the decision in Cyberonics, Inc. v. Wells Fargo Bank N.A. further muddied the debate on whether the language of a typical delivery covenant in an indenture (which obligates the issuer to deliver SEC reports to the trustee) could serve as a basis for declaring a default when an issuer becomes delinquent in filing its Exchange Act reports. The Cyberonics court interpreted a widely used delivery covenant to require that Exchange Act reports be filed with the trustee only after being filed with the SEC, and stated that Section 314(a) of the Trust Indenture Act does not provide a deadline for filing such reports with the SEC. This decision was in stark contrast to a decision of a New York state court in The Bank of New York v. BearingPoint, Inc., where that court ruled that the company’s failure to file its Exchange Act reports when required by the SEC constituted an event of default under the indenture. Both the Cyberonics and the Bank of New York opinions are posted in our “Late SEC Filings” Practice Area.
More litigation of this sort continues in a number of courts, with the next case likely to see a decision being UnitedHealth Group Inc. v. Wilmington Trust Co. in the U.S. District Court for the District of Minnesota.
Moody’s recently issued a report that outlines the issues raised in these decisions and similar litigation, as well as a useful appendix compiling the delivery covenants of a sampling of companies who have received default notices for failure to comply with those covenants. The Moody’s report highlights that of the two most prevalent variations on the delivery covenant, the one with language that states “the Company covenants and agrees to file with the Trustee, within 15 days after the Company is required to file with the Commission” is most protective of bondholder rights. Moody’s reaches this conclusion because – unlike the covenant at issue in Cyberonics and The Bank of New York that merely says reports will be filed with the Trustee “after it files” with the SEC – the more protective covenant expressly requires timely SEC reports while providing a default remedy if the promise is breached, and would avoid the necessity for costly litigation over this issue.
Moody’s notes that while many issuers will take a public stance that they are not in breach of the delivery covenant, only a small minority of issuers will actually choose to litigate this issue. In many cases, Moody’s found that issuers take preemptive action, such as conducting consent solicitations to eliminate events of default.
My two cents: As a devotee of the Trust Indenture Act, I think that Section 314(a) of the Trust Indenture Act does not impose a new or separate filing obligation on the obligor, but rather relies on what the issuer has to file under its obligations pursuant to Exchange Act Sections 13(a) or 15(d). This view is consistent with the holding on this issue in the Cyberonics decision.
Current Reporting Obligations When an Event of Default is Declared
While on the topic of declaring an event of default under an indenture, it is important to keep in mind the potential triggering event under Item 2.04 of Form 8-K around the time of an event of default.
The Staff clarified in Question 20 of its November 2004 Form 8-K FAQs that if the indenture requires notice before an acceleration and notice has not yet been provided, then no 8-K is triggered at that point – but if the acceleration happens automatically without declaration or notice, then the issuer must file the 8-K within four business days of when all of the facts necessary to trigger the default have occurred.
Even if an issuer takes the position that the notice of default fails to state a legitimate claim (as noted above is often the case with delivery covenant defaults), I believe that the Staff would still expect to see the Form 8-K filed within four business days of the triggering event – however, the issuer may include disclosure in the Form 8-K describing why it believes no event of default has occurred.
The transcript has been posted for the first part of the two-part CompensationStandards.com webconference – “The Latest Developments: Your Upcoming Proxy Disclosures—What You Need to Do Now!” You can now read about some of the latest guidance from the Staff based on its targeted review of executive compensation disclosure, including:
– Performance Target Disclosures – Materiality and Confidentiality Standards
– Disclosure of Operational versus Financial Performance Targets
– Disclosure of Performance Targets for Completed versus Current or Future Periods
– “Degree of Difficulty” Disclosure Concerning Performance Targets
– Benchmarking Disclosures – Naming Peer Group Companies
– Presenting Two Years of Compensation Data and Related CD&A Disclosure
– Dealing with FAS 123R Reversals in the Summary Compensation Table
Catch tomorrow’s webcast – “The Former SEC Staff Speaks” – to hear former SEC Senior Staffers Marty Dunn, John Huber and Brian Lane join me in a discussion of the latest rulemakings – and interpretations – from the SEC. This webcast will provide a complete “bring-down” of what’s happening at the SEC – and provide practical guidance about what you should be doing as a result. Among the topics are:
– Shareholder access
– New types of shareholder proposals
– PIPEs enforcement cases
– SEC financial reporting developments
– XBRL and more…
Course Materials Now Available: As part of this webcast, you will want to review these Course Materials that relate to “materiality” determinations.
Potential Proxy Solicitation Relief for Delinquent Filers
In our November-December 2007 issue of The Corporate Counsel, we mentioned that the Staff was considering how to provide relief for reporting issuers that must defer their annual meeting because reporting delinquencies or a pending restatement makes it impossible to comply with Rule 14a-3’s requirement to deliver financial statements when soliciting proxies. Yesterday, the SEC published an adopting release for an amendment to its delegation of authority rules that will now permit Corp Fin to consider one-off exemptive applications in these circumstances.
Prior to this rule change, Corp Fin would listen to the concerns of issuers facing these problems, but indicate that it did not have the authority to do anything to help them out – now, Corp Fin will be able to formally consider an issuer’s specific request for exemptive relief from the requirements of Rule 14a-3(b) or Rule 14c-3(a).
While there is not likely to be a flood of these sorts of applications, it will certainly be something that can be used when an issuer finds itself stalled out in its SEC reporting due to a restatement or internal investigation – particularly when hostile shareholders are at the door demanding an annual meeting.
More Executive Compensation Inquiries
Some of the larger companies that have recently wrapped up their executive compensation comment process with Corp Fin now have a new inquiry to deal with – this time from the House Oversight and Government Reform Committee, chaired by Henry Waxman (D-CA). The Committee announced last week that it had sent letters to the compensation committee chairs of each of the Fortune 250 companies, requesting information about how those companies utilize compensation consultants in setting executive pay. As I noted in the blog back in December, the same Committee’s Majority Staff recently released a report raising concerns about potential compensation consultant conflicts of interest. Apparently that was not the end of the story, because the Committee indicates that its investigation into the role of compensation consultants in setting executive pay is ongoing.
The Committee’s questions focus on areas such as: (i) the retention of consultants; (ii) the parties to whom the consultant reports; (iii) the other services performed by the consultant; (iv) disclosure about the role of the compensation consultant; and (v) whether the company has a written policy about the other services that an executive compensation consultant can perform for the company. The Committee is expecting responses back by February 22, 2008.
The SEC has proposed yet another one-year delay in implementation of an independent auditor’s attestation report on the internal controls for the smallest public companies. As noted in the blog at the end of last year, Chairman Cox had promised this delay in his testimony before the House Committee on Small Business.
Under the proposal, non-accelerated filers would be required to provide auditor’s attestation reports beginning with their annual reports filed for fiscal years ending on or after December 15, 2009. The proposal does not affect the requirement that management complete its own assessment of internal control over financial reporting – which is now required for all filers, regardless of size. The proposing release is out for a 30-day comment period.
The proposed delay in fully implementing Section 404(b) – to over seven years after Sarbanes-Oxley was enacted – coincides with an announcement that the Staff has commenced its previously discussed study of the costs and benefits associated with the auditor attestation requirement for smaller companies. This is supposed to be an analysis of “real world” data in order to measure experience with the recent SEC and PCAOB guidance for management and auditors. The final results of the study are not expected for several months.
Yet Another PIPEs Case Gone Bad
Something else the SEC should consider studying (and fast) is why it keeps getting its critical Securities Act Section 5 claims dismissed in federal District Courts across the land. I recently blogged about the dismissal of the SEC’s Section 5 claims in the case of SEC v Edwin Buchanan Lyon, IV. Only a few weeks after that setback, a judge in the Eastern District of Pennsylvania dismissed similar Section 5 claims in SEC v. Berlacher.
Unfortunately, with these decisions now coming in fast and furious, hedge funds that short in anticipation of PIPEs and then cover with the registered securities are emboldened to continue that strategy in the absence of any swift SEC action to protect the legal position.
I will be discussing these cases in more detail with the great panelists on our webcast – “The ‘Former’ SEC Staff Speaks” – coming up this Wednesday.
Our February Eminders is Posted!
We have posted the February issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!
The new auditing standard and the related amendments were adopted in the wake of the FASB’s issuance of FAS 154, Accounting for Changes and Error Corrections, as well as in light of the FASB’s impending issuance of The Hierarchy of Generally Accepted Accounting Principles.
Since FAS 154 established retrospective application as the required method for reporting a change in accounting principle (in the absence of explicit transition guidance in a newly adopted accounting principle), and redefined the term “restatement,” it was necessary for the PCAOB to revisit AU Section 320, Consistency of Application of Generally Accepted Accounting Principles, which reflected the provisions of the now superceded APB 20. Under the new Auditing Standard No. 6, auditors will be required to evaluate the consistency of a company’s financial statements and report on any inconsistencies. The standard will require an auditor’s report “to recognize a company’s correction of any material misstatement, regardless of whether it involves the application of an accounting principle.”
With respect to the GAAP hierarchy, the PCAOB seeks to remove the hierarchy from the auditing standards, based on a belief that the hierarchy is more appropriately located in the accounting standards. The effective date of the FASB’s Statement of Financial Accounting Standards setting forth the GAAP hierarchy is expected to coincide with the PCAOB’s changes.
Last month, the Seventh Circuit Court of Appeals issued its decision in Makor Issues & Rights, Ltd. v. Tellabs, which had been remanded by the Supreme Court in June 2007.
On remand, the Seventh Circuit addressed whether the plaintiffs’ securities fraud allegations created a “strong inference” of scienter – as defined by the Supreme Court in its opinion – so that the complaint could survive a motion to dismiss under the pleading standards established by the Private Securities Litigation Reform Act. In adhering to its prior decision and reversing the lower court’s dismissal of the suit, the Court concluded that it was “exceedingly unlikely” that the material misrepresentations allegedly made by the corporate defendant were “the result of merely careless mistakes at the management level based on false information” provided by lower level employees. The Court found that the defendants asserted “no plausible story” to indicate that Tellabs senior management, who were involved in “authorizing or making public statements,” did not know the statements were false.
You can find additional analysis of this case in the memos posted in the Pleading Requirements section of our “Securities Litigation” Practice Area.
Alan Dye’s Section 16 Webcast: Transcript Posted
We have posted the transcript from Alan Dye’s popular Section16.net and Naspp.com webcast – “Keeping Yourself Out of the Section 16 ‘Hot Water.’” Among the questions Alan answered on the webcast were:
– What is the current practice regarding average price reporting now that the Staff has issued its interpretation saying it isn’t permissible?
– We missed a Form 4 filing deadline by minutes – is there any way to avoid treating the missed deadline as a late filing, so that we don’t have to disclose the delinquency in the proxy statement?
– Do you see any reason to prohibit executives from electing, during a quarterly blackout period, tax withholding of shares upon exercise of an option or vesting of restricted stock?
– What is the best practice to follow when preparing a Form 4 to report a transaction that does not affect the insider’s other holdings? That is, is it best to report all of the insider’s other holdings, even though there was no activity involving those holdings?
There is nothing worse than having your registration statement bounced by EDGAR because of an unpaid filing fee (I think the correct term is being put into “fee suspense” or something like that). Unfortunately, that is what could happen to you if you mail or wire a filing fee to the old Mellon Bank account after this Friday.
Earlier this month, the SEC put out a notice that the lockbox financial agent is changing, and now this week the agency published final rules implementing the changes. Effective Monday, February 4th, U.S. Bank will take over as the lockbox agent, so all checks and wires need to be sent to U.S. Bank beginning on Monday. The SEC states that no payments should be submitted to Mellon Bank after tomorrow.
The SEC’s notice provides the specifics on how to wire fees to U.S. Bank. The most critical data for getting your fee through to the lockbox are the SEC’s account number at U.S. Bank and the SEC-assigned account number, identified as the CIK number. Payments may still be made by a certified or bank cashiers check as well, and the notice provides the new U.S. Bank addresses for mail or courier delivery of checks.
The final rules eliminate the option of making payments in cash or personal check – I wonder how many fees have actually been paid with a briefcase full of cash?
Corp Fin Releases New Smaller Company Compliance Guides
The Staff recently posted two new “small entity compliance guides” to explain the new smaller reporting company disclosure system that replaces Regulation S-B and the expanded eligibility for primary offerings by smaller companies on Form S-3. The Staff prepared these guides under the mandate of Section 212 of the Small Business Regulatory Enforcement Fairness Act, and they admonish that the guides are not to serve as a substitute for reading the actual rules.
The guide entitled “Eligibility of Smaller Companies to Use Form S-3 or F-3 for Primary Securities Offerings” outlines the new S-3 primary eligibility requirements for companies with less than a $75 million public float. This guide is more bare-bones, perhaps because the adopting release already included a number of detailed examples of the calculations involved.
The Staff also posted a small entity compliance guide for Rule 14-8(i)(8) earlier this month. This guide explains 14a-8 very generally and then talks about the amendment to (i)(8) to permit exclusion of access proposals.
All in all, it looks like these guides (particularly the smaller reporting company guide) can be useful resources. Unlike the Section 404 compliance guide, these latest guides weren’t accompanied by a catchy slogan like “it doesn’t have to be a chore.” Personally, I would have gone with something like “Form S-3: Not Just for the Big Dogs Anymore”
– Fairness Opinions after Revised NASD Rule 2290: Models & Analysis
– Navigating a Loan-to-Own Transaction: 11 Steps
– Practical Guidelines for Special Committees
– Perspectives from an Industry Insider: Understanding Activist Hedge Funds
– M&A Implications of New Changes to Rules 144 & 145
As all subscriptions are on a calendar year basis, it is time for you to renew your subscription. If you are missing these critical issues, try a 2008 no-risk trial to get a non-blurred version of this issue for free.
Many of you have registered for the big webconference – “New Rule 144: Everything You Need to Know – And Do NOW” – which will be video webcast today starting at noon eastern (video archive will be available starting tomorrow).
Remember you need to register to attend; members of TheCorporateCounsel.net get a discount – but the Conference is not automatically part of the site’s membership. It’s not too late to register, even if the Conference has started since everything will be archived.
Here are instructions on how to attend the Conference:
1. Ensure you have the proper “Player”: To watch the Conference, you will need either the Windows Media Player or the Flash Player (which works for a Mac); RealPlayer will not work for this Conference. You can download a free player if you need to.
2. Determine whether CLE credit is available in your state: This Conference is accredited for CLE in 15 states – here is the list of CLE states. CLE credit will not be available for states that are not on this list.
3. If you seek CLE credit, you will need to input your contact information in our “Online CLE Tracker”: To comply with certain state bar requirements, we have built a system whereby those in states where this webcast is accredited and want to earn CLE will need to click through a series of periodic prompts (i.e. about every 15-20 minutes) to prove they sat through the webcast. When you go to the webconference, you will see a link in a red box to go to the “Online CLE Tracker.”
5. Attend today starting at noon eastern: If you intend to attend live today, the Conference starts at 12:00 noon eastern time. Here is the Conference Agenda, which has the schedule of panels (remember that all panels will be archived and you can watch them afterwards).
To attend, go to the home page of TheCorporateCounsel.net and – and click on the large link at the top with the Conference title and input your ID and password when prompted. If you have questions, please email our HQ at info@thecorporatecounsel.net.
Part II: “The Latest Developments: Your Upcoming Proxy Disclosures —What You Need to Do Now!
Over 50 Executive Compensation Comment Letters: Our Updated List
In the “SEC Comments” Practice Area on CompensationStandards.com, we continue to update our list of links to the SEC’s executive compensation comment letters and responses.
We have now posted 50 comment letters and responses (some companies have more than one letter and response available). During last week’s CompensationStandards.com webcast, Staffer Mike Reedich noted that about 70% of the 350 companies that received comment letters had received a second comment letter – so my guess is that the number of letters being posted to the SEC’s site will continue to trickle rather than flood.
By the way, these letters and responses were the inspiration for an article in yesterday’s WSJ entitled “SEC Unhappy With Answers on Executive Pay.” It still strikes me as odd whenever the mainstream media writes a piece about the SEC comment process…
House’s Severance Hearing Postponed
Perhaps because Countrywide CEO Anthony Mozilo agreed to forego the $37.5 million in cash severance and other benefits that he stood to receive if the company’s acquisition by Bank of America is completed, the hearing before the House Oversight and Government Reform Committee on severance packages – originally scheduled for next week – has been postponed until Thursday, February 28th.
I heard Professor Bob Howell do his thing a few weeks back and he is quite the entertainer. In this podcast, the Professor explains how to best approach drafting disclosure for proxy materials, including:
– What are desired practices for MD&A?
– How should companies draft their risk factors?
– What is the best way that companies can get their message across in the “letter to shareholders” in the annual report?
– How should companies be disclosing “economic (e.g. cash) performance”?
1. Start with a blank sheet of paper – Uh, yeah, OK. No one ever does this. It’s just something SEC staffers like to say because it sounds good in theory. I guess they have visions of us sitting down with our CEOs, CFOs, GCs and Controllers at off-site locations with nothing on the agenda except for brainstorming about what story we want to tell this year. But in reality, unlike Richard Nelson Bolles, the author of “What Color Is Your Parachute,” none of us has time to completely re-write our disclosures every year. Our senior officers’ calendars are too packed to get everyone to be in the same room for more than 10 minutes (particularly if they know lawyers will be in the room). That’s not what they are getting paid those “Holy Cow” numbers to do. Plus, none of us in the in-house world are paid enough to put ourselves through that exercise every year!
2. Consider filing under XBRL – Again, not something many of us are going to do unless we’re forced to, but I thought I’d throw it in to receive “brownie” points from Chairman Cox in case he reads this!
3. Start early – Ha! Another one that sounds good, but no one ever does it. It’s just like the papers we were assigned to write in high school and college–we started doing all of the research and writing the papers the night before the due date (and after “Late Night with David Letterman”). I guess life would be too boring without last minute fire drills.
8. Analysis, analysis, analysis – As they say in New Jersey, “Puh-leeze!” Ever notice that the words “analysis” and “analyst” start with the letters A-N-A-L.
5. “All” means all – NOT! All means everything you are required to disclosed based on the rules. Anything over and above that is just voluntary stuff that could potentially lead to a post on one of those blogs like Footnoted.org whose only real goal is to embarrass you and your executives, or worse, could get you fired!
265. Don’t use generic risk factors that don’t apply to your company’s business – Are you kidding me? If risk factors constitute your insurance policy, as we are all so fond of saying, and it only costs whatever the printer charges for your document to be a couple of pages longer, throw in the kitchen sink! Too many risk factors can’t possibly get you in trouble. No one ever got sued for having too many risk fators.
7. Check the numbering on your exhibits list – Seriously, misnumbering is a tell-tale sign of sloppy lawyering! (Note the misnumbering of this list!)
Jan-Feb Issue of The Corporate Counsel
We recently mailed the Jan-Feb issue of The Corporate Counsel. For those that haven’t tried a no-risk trial, here is a blurred version of the issue so you can get a sense of it. This issue includes analysis of:
– The Commission’s Useful Integration (Rule 152, etc.) Guidance in August’s Reg D Proposing Release
– Yet Another Statutory Basis for a Reg D Offering: Section 28
– This Year, Preliminary Proxy Filing Can Lead to Real-Time Review of 402/404 Disclosures
– S-K Item 404(a) Follow-Up—More on Which In-Laws are Related Persons
– Audit Committee Involvement in Drafting the CD&A—Why Pile On?
– “Proxy Access”
– Bebchuk Shareholder Proposal Follow-Up
– Google’s TSOs—S-3 Registration Rather Than S-8—Follow-Up
– Stoneridge!@#$%
– Enforcement Staff Busy Advising Backdaters and Others When Investigation Has Closed
– Bulletin Board Companies Left Out of S-3 Expansion
– Cheap Stock—IPO Disclosure Overkill
– Management Blogs—Reg FD Dissemination?
– 8-K Amendment Coming to Clarify that 4.02 Reporting Cannot Be (Buried) in 10-Q/K
– FASB Re-Examining FAS 5 Disclosure Criteria—Eventual Impact on the Audit Letter Process
– Fixed 1934 Act Fees?
– Annual Salary Survey
– New Staff 144 Positions on Gifts and Pledges by Affiliates—and Blockbuster Position On Hedging
