The SEC’s Office of Inspector General has been busy, issuing no fewer than four reports this week (even though some are dated March). The most important one is “Audit of Full Disclosure Program’s Staff Interpretive Guidance Process,” given that it is a topic frequently criticized by SEC Commissioner Atkins and something that is a lifeblood for many of us.
Here are my “Top Notables” about this 18-page report (listed in order of where they are mentioned in the report):
1. It took the Inspector General’s office 10 months to draft its report. (pg. 2)
2. The report states that most interpretive guidance comes from four groups of the Staff (Corp Fin’s Office of Chief Counsel and Office of Chief Accoutant and two offices in the SEC’s Office of Chief Accountant). I’m stumped why the report doesn’t include three of Corp Fin’s other specialized offices, which provide plenty of guidance: Office of Mergers & Acquistions; Office of International Corporation Finance and Office of Edgar and Information Analysis. (pg. 3)
3. Corp Fin as a whole answered 32,500 phone calls during 2005 – ouch! (pg. 4)
4. The report notes that Corp Fin’s Office of Chief Accountant provided advice on 340 referrals to Enforcement during 2005 – but oddly doesn’t mention Corp Fin’s Office of Enforcement Liaison, whose main function is to provide advice to Enforcement. (pg. 4)
5. Corp Fin/OCA runs its SABs through the Commissioner’s legal counselsors typically. The Inspector General recommends that the Office of General Counsel look into compliance with the Administrative Procedures Act relating to the processes involved in the SEC issuing SABs, as well as interpretive guidance from the Staff generally. In my view, this is the report’s bombshell as it has the potential to really gum up the works. (pg. 4-5)
6. Corp Fin doesn’t post shareholder proposal no-action responses on its website due to resource limits; it is recommended that Corp Fin post these responses. (pg. 5)
7. The Inspector General is looking for confirmation that Corp Fin’s Shareholder Proposal Task Force does indeed take mailing deadlines into consideration when processing no-action requests. I haven’t heard any company complain about Corp Fin not being conscientious of this need. (pg. 7)
8. Corp Fin issues comments on non-shareholder proposal no-action letters within 30 days of filing – its stated goal – about 50% of the time. (pg. 7)
9. Corp Fin may be updating its 25-year old interpretive release on how to submit no-action letters, including the format they should take. (pg. 11)
10. The report includes esoteric commentary about “uploading” internal documents. This is a process that commenced near the end of my last tour of duty in Corp Fin and luckily I never had to upload a single document. (pgs. 11-12)
The SEC’s IG also issued these reports on Enforcement Peformance Management and Backlog of FOIA Requests for Comment Letters. Before these, the last Inspector General report involving Corp Fin was issued last summer; it dealt with continuous surveillance of larger companies and lifted the curtain a little bit on Corp Fin’s screening process.
Resume Indiscretions Possible at the SEC?
Another new report from the SEC’s Inspector General deals with verification of bar memberships. Not only is it interesting that the SEC hasn’t been verifying bar memberships in light of the highly publicized cases of resume indiscretions in the news lately, it’s interesting because – not so long ago – it was a big deal for a SEC lawyer to pass a bar.
During my first tour of duty in Corp Fin, the SEC didn’t have the luxury of so many lateral hires like it does now. Back in the “day,” most new lawyers came right out of law school. Our new jobs weren’t “official” until we passed the bar and when you did, you were promoted from “law clerk” to “lawyer.” There was a one-year probation period during which you had to pass the bar; so if you failed the bar twice, your probation period will likely have run and you were booted out of the SEC!
The IG’s report does note that lawyers fresh out of school do indeed still have their bars checked; it’s the horde of lateral hires that apparently have not been verified. I’m surprised the SEC fell down on this because it’s pretty easy these days to go online to a state bar website and verify membership. If there was one area I could see falling through the cracks, it would be verifying that Staffers remain members of the bar (eg. someone doesn’t pay their bar dues). It’s easy to forget about – or ignore – state bar requirements.
No mention in the report about whether the SEC checks the CPA licenses of the accountants…
The NYSE Speaks: Latest Developments and Interpretations
We have posted a copy of the transcript from our popular webcast: “The NYSE Speaks: Latest Developments and Interpretations.”
There has been quite a bit of commentary about what the SEC did – and didn’t do – in the Apple option backdating case last week. As this SEC press release notes, the SEC brought charges against Apple’s former General Counsel and former CFO Fred Anderson, but didn’t seek a bar against them as an executive or director of another public company (nor has the SEC brought any action against the company itself). The former CFO currently serves as the head of eBay’s audit committee.
From the complaint filed in US District Court by the SEC, it appears that Apple’s CEO Steve Jobs was fully aware of the implications of what was going on with the backdating. It is interesting that the CFO discussed backdating with the CEO, then did it and apparently did not inform the auditors about it – but some argue he did not do it “intentionally”; it seems pretty clear to me from the complaint that the CFO did mean to backdate the options.
And right after the SEC announced what it intended to do in the Apple case, former CFO Anderson spoke up in this WSJ article to claim that Jobs misled him. And then this Joe Nocera column from Saturday’s NY Times gives this story another twist, providing details about why certain mega-grants of options were awarded to Jobs in the first place.
Lawsuit Dismissed: Backdating Alone Not Sufficient to Prove Fraud – But Not Over?
A few weeks ago, Judge Alsup of the US District Court for the Northern District of California granted the defendants’ motion to dismiss the consolidated shareholders’ derivative complaint filed in the connection with alleged backdating at CNET Networks, based on plaintiffs’ failure “to plead with particularity that demand on the board was excused as futile.”
But then, on Monday, Judge Alsup issued a follow-up order to his CNET dismissal, after receiving briefing from the parties. The Judge is allowing the plaintiffs to amend (noting in particular that they should be more specific about whether the company’s compensation committee was allowed to delegate its authority), though he’s denied them discovery. He’s also opened up the possibility of staying the action while plaintiffs pursue discovery through Section 220 of the Delaware General Corporation Law.
So although the original order might end up being useful to those of you mired in backdating litigation – as it shows that plaintiffs will have to allege more than merely that options grant dates differed from the measurement date, or even that the directors received backdated options – there could be future developments. We have posted copies of the order of dismissal dismissal and the follow-up order in the “Backdated Options/Grant Policies” Practice Area on CompensationStandards.com.
Much thanks to Kevin Muck and Felix Lee of Fenwick & West for keeping us apprised of the developments in this potentially important case – here is their memo on the dismissal (and here is a CFO.com article – and a D&O Diary Blog on it). And on a somewhat related note, Kevin LaCroix has a blog about the first settlement of a backdating-related class action lawsuit.
Chairman Cox: SEC Will Resolve Option Backdating Cases Soon
Last Wednesday, in this Reuters article, SEC Chairman Cox apparently stated that the SEC’s investigation into improper awards of options at many of the 130 companies under examination will be resolved within the next few weeks…
Because the response to the first few issues of Compensation Standards has been so positive – with many companies asking for permission to provide additional copies to all their directors – we have decided to provide complimentary subscriptions to the popular Compensation Standards print newsletter to all our friends for the rest of this year. Hot off the press, here is the latest issue: Spring 2007.
Act Now: To receive these complimentary issues, you can do so in one of three ways:
(2) you can email us a list of all the contact information for you and your directors to info@compensationstandards.com (for the directors, we just need their mailing information, company and title; for you, we would also need your email address, phone number and fax number).
(3) you can email us at info@compensationstandards.com with your contact information (including title, company, mailing address, email address, phone number and fax number) and the number of copies you need (which you would then forward to your directors).
If you need assistance, contact our HQ at info@compensationstandards.com or 925.685.5111. Note our HQ is on the West Coast with hours of 8am – 4pm.
Senate Takes Up “Say on Pay” Bill
From ISS’ “Corporate Governance Blog“: After the passage of the “Shareholder Vote on Executive Compensation Act” by the U.S. House of Representatives, Senate Democrats are making it known that they, too, want shareholders to have a vote on executive pay.
A bill seeking to amend the Securities and Exchange Act of 1934 to give shareholders at public companies an advisory vote on executive compensation–or “say on pay”–was introduced April 20 in the U.S. Senate as a companion to the House bill approved the same day. The House legislation passed by a vote of 269-134, indicating that it got some Republican support.
Senate Bill 1181, which was introduced by Sen. Barack Obama of Illinois, proposes an annual vote on the executive compensation disclosed in proxy statements under the new Securities and Exchange Commission’s standards. Companies would be required to allow a non-binding vote on the compensation disclosure and analysis (CD&A), summary compensation tables, and related material, starting in 2009.
Like the House measure, the Senate bill would give shareholders the opportunity to vote on any severance agreements that are reached while a company is considering a takeover offer or merger.
S. 1181 has been referred to the Senate Committee on Banking, Housing, and Urban Affairs, and has attracted co-sponsorships from at least four of Obama’s fellow Democrats, including Sen. Sherrod Brown of Ohio, Sen. Tom Harkin of Iowa, Sen. John Kerry of Massachusetts, and Sen. Richard Durbin, also of Illinois.
In his invitation to co-sponsors on April 24, Obama wrote, “It’s time that we not only make executive compensation packages more transparent, but that we also allow shareholders to express and debate their views on those packages.”
The Bush administration has expressed opposition to the House legislation, saying it “does not believe that Congress should mandate the process by which executive compensation is approved.”
Understanding What “Say on Pay” Means
To review a new ISS 18-page white paper on pay votes in international markets, please go to the ISS’ “Say on Pay” Information Center. Note that, in this Center, you can track the results of how shareholders voted on “Say on Pay” proposals as they happen.
Our May Eminders is Posted!
We have posted the May issue of our complimentary monthly email newsletter. Sign up to receive it today by simply inputting your email address!
Scandal-ridden Comverse (you might recall the former CEO is on the lam in Africa) adopted a shareholder access bylaw last week in an attempt to defuse shareholder anger. See Article IV, Section 3(b) of Comverse’s restated bylaws.
Below is an excerpt from ISS’ “Corporate Governance” Blog: In a ground-breaking development, Comverse Technology has adopted a proxy access bylaw, a move that may encourage other companies to consider creating mechanisms to allow investors to nominate directors to appear on corporate ballots.
Comverse is the first company to adopt a proxy access provision since a federal appeals court ruled last September that the Securities and Exchange Commission improperly allowed American International Group to omit an access proposal filed by the American Federation of State, County, and Municipal Employees (AFSCME) in 2005. Since that ruling, investor advocates have filed two access proposals and urged the SEC to allow shareholders to pursue the issue at individual companies.
“The action at Comverse is a clear breakthrough as the first company that has amended their bylaws to establish a process for shareholders to nominate directors on the company proxy card,” Richard Ferlauto, director of pension benefit policy at AFSCME, told Governance Weekly.
Also this week, the SEC scheduled three roundtables on the proxy voting process for May 7, May 24, and May 25. Chairman Christopher Cox has said that the SEC will complete work on an access rule before the start of the 2008 proxy season.
Comverse announced the proxy access bylaw this week as part of a series of governance changes as the New York-based company tries to recover from a stock-option grant scandal that led to criminal charges against three former executives. The voice-mail technology firm also is facing a proxy challenge from Oliver Press Partners, which is seeking to call a special meeting and to elect two board nominees.
The new Comverse bylaw is more restrictive than the access provisions that have been proposed by AFSCME and state pension funds this season. Under Comverse’s bylaw, an investor that owns a 5 percent stake for at least two years may nominate one director to appear on the company’s proxy statement. (These ownership and time requirements are consistent with a 2003 draft SEC rule that the agency later abandoned amid corporate opposition.) The Comverse bylaw also would bar an investor from making nominations for four years if its nominee fails to receive at least 25 percent support.
By contrast, a bylaw proposed by AFSCME and three state pension funds at Hewlett-Packard called for allowing two nominations by investors who collectively own a 3 percent stake for at least two years. That binding proposal received 43 percent support in March, despite the opposition of HP management. The California Public Employees’ Retirement System has filed a similar, but non-binding, proposal that will appear on the ballot at UnitedHealth Group on May 29.
It remains to be seen whether other companies will follow Comverse’s example. Last year, investors hailed Intel’s decision to adopt a majority voting bylaw, which since has been copied by dozens of major firms. Likewise, proponents of annual advisory votes on executive pay express hope that other firms will follow the lead of Aflac, which plans to hold such a vote in 2009.
Ferlauto said Comverse’s new bylaw and the vote at HP “indicate that proxy access will be part of the corporate governance landscape going forward and puts increased pressure on the SEC to set some standards for an approach for shareholder nominations.”
Comverse is believed to be the first U.S. company to adopt a proxy access bylaw. In 2003, California-based Apria Healthcare adopted a policy to allow shareholders to submit names for inclusion on its ballot, but the company’s board can reject those candidates, according to Bloomberg News. While other firms, such as HP, allow shareholders to suggest nominees, investors have no recourse if management ignores those suggestions but to wage a costly proxy solicitation.
Shareholder Voting: Economic Perspectives – and the Power of Proxy Advisors
Last week, SEC Chief Economist Chester Spatt delivered this speech on shareholder voting and corporate governance. Here is a noteworthy excerpt:
“Some of my SEC economist colleagues and I are pursuing an academic style study of the role of proxy advisors in proxy “contests.” We focus upon contests as compared to more routine proxy votes because there is relatively more uncertainly about the outcome and therefore, relatively greater potential impact and effects associated with the recommendations.
In our sample of contests with publicly-announced advisory vote recommendations, we find evidence that recommendations lead to price responses and in particular that the market tends to assess recommendations for the dissident as relatively positive news. That there appears to be a substantial valuation impact in the marketplace at the announcement of a contest recommendation also suggests that the recommendations reflect more than just previously public information or conflicts.
In addition, our empirical evidence shows that the recommendations are good predictors of contest outcomes; for example, a recommendation that supports the dissident is a good predictor that the dissident will prevail. The findings are associated with both “influence” and “prediction” hypotheses on the role of the advisor-that the recommendation either influences or helps investors to predict the outcome, or both.”
On a somewhat related note, as reflected in this press release, global regulators are working in tandem more than ever before. One of my first speaking gigs, well over a decade ago when I was at the SEC, was at an IOSCO function. I found it’s pretty hard to get a message across when the audience comes from such a wide variety of backgrounds (different legal frameworks – and don’t forget that there are language barriers to boot) – so that these global regulatory meetings tend to stay at a pretty high level.
On Tuesday, the SEC announced the “next steps” it will take along its path towards the “IFRS Roadmap.” The next steps include a concept release that will pose questions about whether US based companies should be permitted a choice between filing in IFRS or US GAAP – as well as a rule proposal to give non-US companies that choice. Both are expected this summer – with comments due in the fall – as the SEC towards its goal to eliminate reconcilation by 2009.
In addition, the SEC recently announced a protocol for implementing the Work Plan between the SEC and the Committee of European Securities Regulators to share information on application of IFRS by issuers listed in the UK and the US. Things here are moving along towards some an end game that is a huge development…
US Senate: Attempt to Railroad Section 404 Reform Fails
On Wednesday, the US Senate voted, 62-35, to table an amendment of the COMPETE Act offered by Sens. DeMint (R-SC) and Martinez (R-FL) that would have impacted Section 404 of Sarbanes-Oxley. The Compete Act – S. 761 – is a bill addressing math and science education and US competitiveness in that area. The DeMint amendment would have made Section 404 compliance optional for companies with: market cap of less than $700 million, or revenue of less than $125 million, or fewer than 1500 shareholders. If this threshold ever became law, it would exempt 70% of the public companies out there from internal controls reporting.
As a counter to the DeMint amendment, Sens. Dodd (D-CT), Shelby (R-AL)
and Reed (D-RI) offered a “Sense of the Senate,” which is a symbolic Senate statement expressing support for efforts already under way by the SEC and PCAOB to fine-tune Section 404. This symbolic statement received a vote of 97-0 in support.
SEC Commissioner Atkins Rants on Excessive Regulation
Earlier this week, SEC Commissioner Paul Atkins delivered this speech entitled “Is Excessive Regulation and Litigation Eroding U.S. Financial Competitiveness?” Not atypical for those that have closely followed Commissioner Atkins over the years.
Here is an excerpt from Jack Ciesielski’s “AAO Weblog” pertaining to the Commissioner’s attack on the Staff’s interpretive process:
“Commissioner Atkins argues that Staff Accounting Bulletins (SABs) are subject to review under the Administrative Procedure Act – something that would dramatically impede the SEC’s ability to widely disseminate their positions on application of accounting problems they’ve observed in practice. SABs are the result of observations by SEC reviewers and the Office of the Chief Accountant; sometimes they deal with new standards (see SAB 107); sometimes they deal with problems observed in practice over many years (see SAB 108). They are always the result of observed reporting issues, and they are issued in order to keep all registrants on the same page, accounting-wise. They’re not loved by companies, because they can force them to change things. Putting them into an Administrative Procedure Act would slow down their issuance even further. Atkins’ take:
‘I have no opposition to our staff’s attempting to explain or apply an SEC rule or accounting standard to a current situation. Staff guidance can provide very helpful advice to all participants in the capital markets. Such guidance can be issued faster and is particularly appropriate to situations with a unique set of facts and circumstances.
But sometimes staff pronouncements can fundamentally change existing market practices. For example, Staff Accounting Bulletin No. 101 (SAB 101) addressed in depth various aspects of revenue recognition. The final guidance required registrants to reflect the adoption of SAB 101 as a change in accounting principle, similar to the adoption of a new FASB standard. With all of the attributes of rulemaking from the perspective of affecting the marketplace, it is difficult to argue that such pronouncements are not rules and should not be subject to the requirements of the Administrative Procedure Act.’
SAB 101 was nothing new: it was a compendium of revenue recognition issues pulled from existing accounting literature, and a description of the SEC’s take on various misapplications of them. Not all companies had to “change accounting principles” to comply with it, and those that did, probably weren’t employing the proper principles in the first place. Sounds like another front is being opened in the battle to tamp down fair reporting to shareholders.”
[Get your Friday “Moment of Zen” by watching a hunk of cheese age, another piece of Web genius: the cheddar cheese webcam.]
Much thanks to Marc Trevino and Joseph Hearn of Sullivan & Cromwell for this interesting survey of compensation disclosure trends by the Fortune 50 (it’s really a survey of 30 companies from the Fortune 50; those are the companies that had filed as of the survey date). We have posted this survey on CompensationStandards.com under our “The SEC’s New Rules” Practice Area. I plan to blog about various statistics from this survey in the near future.
Results of Quick Survey: CD&As
Well over 400 of you responded to our recent survey on the CD&As drafting process. Below is a summary of the results:
1. At my company, the first draft of the CD&A was drafted by:
– In-house lawyer – 37.9%
– In-house corporate secretary – 7.4%
– Human resources staffer – 28.2%
– Outside compensation consultant – 8.1%
– Lawyer in outside law firm – 12.7%
– Other – 5.8%
2. At my company, the following people spent the indicated number of hours drafting and/or reviewing the CD&A (note – this survey is just the CD&A, not the remainder of the compensation disclosures and tables; if more than one person in a category spent time on the CD&A, combine their time):
Yesterday, the SEC announced it will hold three roundtables in May (scheduled for May 7, May 24 and May 25), which will consist of panels addressing:
– The federal role in upholding shareholders’ state law rights
– The purpose and effect of the federal proxy rules
– Non-binding and binding proposals under the proxy rules
No word yet on who will serve as the participants in the roundtables…
Huge Settlement Personally Paid by Outside Directors
As noted in this article from Monday’s WSJ, five former outside directors of a bankrupt company – Just for Feet – paid out a combined $41.5 million of their own money to settle allegations that they breached their fiduciary duties to shareholders, easily surpassing the out-of-pocket settlements paid by former outside directors of Enron and WorldCom. This lawsuit was filed in an Alabama court, where filings show that only $100k of liability insurance remained available to the directors, as most of it had already been exhausted by the company’s officers in settling a shareholders’ lawsuit.
NY Times Directors Register 42% Withheld Vote
Yesterday, as noted in this Forbes article, four NY Times directors received a 42% withheld vote, up from a 30% withheld vote last year. The Times is family-controlled, with the remaining nine directors receiving 100% of the vote from holders of the Times’ Class B shares, which are controlled by the Ochs-Sulzberger family.
I bother to blog on this development for two reasons: first, because it is further evidence that voting is “real” these days, even for companies that maintain their plurality structure – and second, family-controlled businesses should be aware that they are not left untouched by the changed governance environment.
SEC: Nasdaq Capital Market Securities as “Covered Securities”
Last week, the SEC finally adopted an amendment to a rule under Section 18 of the ’33 Act to designate securities listed on the Nasdaq Capital Market as “covered securities” for purposes of Section 18, so that they will be exempt from state “blue sky” law registration requirements. The amendments are effective 30 days after publication in the Federal Register.
At the same time, the SEC also cleaned up an issue, as requested by the states and ABA, concerning the availability of the exemption for all markets listed in the SEC’s rule.
On Friday, this Washington Post article outlined the AFL-CIO’s campaign against six directors of Verizon (all on the company’s compensation committee) to vote “no” due to the CEO’s pay package. This vote on May 3rd should be interesting because Verizon is one of the companies that switched to a pure majority vote standard recently (and Verizon also has a “say on pay” proposal on the ballot). However, ISS has recommended a vote for all the director nominees – so it’s unlikely that this campaign will “win” the day and result in a “failed” election (ie. more votes “against” a director than “for”).
When it comes to determing who “won” in these battles with investors, it depends on one’s definition of “winning.” From the perspective of investors, this “limit CEO pay” movement is just getting off the ground – when you realize the tactic of directly confronting directors by challenging their board seats is truly in its infancy. I would consider support for a campaign of this sort in the 20% range to be a win for the AFL-CIO.
According to the Post article, a few weeks ago, “shareholders of Toll Brothers registered their dissatisfaction by withholding votes for the director who chairs its compensation committee. The luxury-home builder has yet to release vote tallies, but the Laborers’ International Union of North America, which led the protest, said a quarter of shareholders withheld support.” To me, that’s a win and you can bet the Toll Brothers board is nervous as that level of “against” votes should rattle the average director. And remember that the support for these types of investor campaigns typically builds each year.
E-mails to Employees Explaining a CEO’s Pay Package: A Proxy Solicitation?
For us securities law junkies, an interesting sidenote is that the AFL-CIO has sent this letter to the SEC’s Division of Enforcement to complain about an e-mail that the Verizon’s CEO sent to employees last week about the AFL-CIO campaign. The AFL-CIO contends that the e-mail should have been filed with the SEC as additional soliciting material (as most employees are also shareholders). The Post article notes that a Verizon spokesperson said that the e-mail was not a solicitation for votes.
You be the judge; it’s a tough call as “proxy solicitation” has a broad definition, yet the e-mail doesn’t specifically mention a solicitation, the targeted directors or the shareholders’ meeting. In our “Investor Demands for Reasonable Pay” Practice Area on CompensationStandards.com, we have posted copies of the AFL-CIO’s letter to the SEC as well as a copy of the email from Verizon’s CEO to employees. Take a gander and e-mail your analysis to me (which I shall keep confidential if you wish).
We’re Number #3!
Congrats to the SEC for landing the #3 spot in a “Top Places to Work in the Federal Government” survey for large federal agencies for the 2nd year in a row (albeit its score dropped from last year). This ranking is conducted by the Partnership for Public Service and the Institute for the Study of Public Policy Implementation, based on a Office of Personnel Management’s Federal Human Capital Survey.
What’s surprising to me is not that the SEC fared so well – it’s that the #1 ranked Nuclear Regulatory Commission is deemed to be a large agency. I’m a long-time DC resident and have never met a soul who worked there – but apparently it has 3500 employees, according to this report. Thus, the NRC is roughly the same size as the SEC. So what do I know about anything…
On Friday, the US House of Representatives passed H.R. 1257 – the “Shareholder Vote on Executive Compensation Act” – by a vote of 269-134. Since the Democrats only hold a 31-seat majority in the House, the vote indicates that the bill attracted some Republican support.
Though the bill passed by a fairly wide margin in the House, the legislation’s prospects of becoming law are uncertain. Senator Barack Obama (D-IL.) has stated that he intends to introduce an identical bill within the next few weeks, where Democrats hold a 51-49 majority- but the bill could have a tough time in committee. The Bush Administration has indicated that it opposes the House bill, as noted below.
While the White House released a short statement on April 17 expressing opposition to the bill, President George W. Bush has stopped short of saying he will veto the measure if it reaches his desk. The Bush administration said it “does not believe that Congress should mandate the process by which executive compensation is approved.” The White House said recent governance improvements, such as the Securities and Exchange Commission’s new pay disclosure rules, “should be given time to take effect” before additional requirements are imposed.
In response, Frank and other bill supporters emphasize that bill “will not set any limits on pay.” According to Frank’s committee staff, the legislation will ensure that shareholders have an advisory vote on executive pay practices “without micromanaging the company.”
Meanwhile, investors continue to show interest in annual advisory votes on executive pay. On April 17, shareholder proposals at Citigroup and Wachovia won about 43 percent and 40 percent support, respectively, according to the proponent, the American Federation of State, County, and Municipal Employees. The following day, a proposal filed by the Benedictine Sisters received 30.4 percent at Coca-Cola Co., the company reported. So far this season, pay vote resolutions have averaged about 39.7 percent support at six meetings.
Investors at nine companies will vote on the issue next week. Those meetings include Wells Fargo and Merck on April 24; Wyeth, Lockheed Martin, Capital One, and Valero Energy on April 26; and Abbott Laboratories, AT&T, and Merrill Lynch on April 27.
A Few Notes about Possible Timing of SEC Actions
On Friday, the WSJ ran this article – entitled “The SEC’s Mr. Consensus” – in which SEC Chairman Cox indicated that these four regulatory initiatives will be addressed this year, even if a consensus among the five Commissioners is not reached: shareholder access, mutual fund governance, option backdating penalities and modifying Section 404 of Sarbanes-Oxley. The article notes “Mr. Cox plans to leave the agency after the next presidential election.”
According to FEI’s “Financial Reporting Blog, after his internal controls testimony last Wednesday, Chairman Cox told reporters that: “The SEC staff is aiming to make a final recommendation on the management guidance proposal by May 23.”
Private Equity M&A Nuggets
Tune in tomorrow for a DealLawyers.com webcast – “Private Equity M&A Nuggets” – to hear a lightening round of nuggets from Jill Goodman of Lazard, Julie Jones of Ropes & Gray, Glenn West of Weil Gotshal and Geoff Levin of Kirkland & Ellis.
No registration is necessary – and there is no cost – for DealLawyers.com members. Take advantage of our no-risk trial for this timely webcast.
– What are the latest interpretations regarding director independence issues? Regarding shareholder approval of equity plans?
– What is the impact of the merger with Euronext?
– What rulemakings has the NYSE proposed and adopted recently? What is on the NYSE’s rulemaking agenda for this year?
– What should companies consider when they have a material development from a NYSE listing standard perspective?
– How does one go about getting an interpretive question answered by the NYSE Staff?
Heating Up: NYSE and Nasdaq’s Battle for Listed Companies
Did you catch the WSJ article from a while back about the NYSE and Nasdaq facing off for listed companies? This competiton has existed for as long as I can remember – as would be expected since they do compete for listings – but it’s still interesting to note how going public might cause the exchanges to redouble their efforts.
In this vein, the NYSE recently changed its rules to eliminate the initial listing fee if a company transfers its listing from another national securities exchange. The fee waiver is not available if the company still maintains its listing on the other exchange. At the same time, the Nasdaq has modified its annual and listing fees.
Spring Fever?
From a member with spring fever perhaps: “Since your blog sometimes ventures into popular culture (many thanks last year for the “Talk Like a Pirate Day” reminder), I bring to your attention something I had never heard of until yesterday through my son’s high school principal: April 20th is a day when students are likely to skip school and get high. The 4:20 pm time of day referenced in this Wikipedia entry has morphed into 4/20 the day.” It won’t be long before every day is a holiday of some sort or another…
