Survey Results: Related-Party Transaction Procedures and Policies

New Item 404(b) requires that the proxy statement describe a company's "policies and procedures for the review, approval, or ratification of any transaction required to be reported" by Item 404(a). Item 404(a) requires the reporting of any material direct or indirect interest of directors, nominees, their immediate family members and others in transactions involving over $120,000 in which the company or its subsidiaries is a participant.
The description of policies and procedures is to include:
the types of transactions that are covered and the standards to be applied;
the directors or others who are responsible for applying the policies and procedures; and
whether the policies and procedures are in writing, and if not, how such policies and procedures are documented.
Moreover, companies must identify "any transaction to be reported under [Item 404(a)] since the beginning of the ... last fiscal year where such policies and procedures did not require review, approval or ratification or where such policies and procedures were not followed."


1. Indicate which of the following you have in place (or are proposing) to implement for approval of related party transactions: (Total responses: n=113)

(select all that apply, may total more than 100%)
n=48 (42.48%) A stand-alone policy statement regarding related person transactions
n=23 (20.35%) Approval procedures regarding related person transactions covered in one or more board committee charters
n=22 (19.47%) Approval procedures regarding related person transactions covered in our Code of Conduct
n=16 (14.16%) Approval procedures regarding related person transactions covered in our corporate governance guidelines
n=12 (10.62%) Approval procedures not included as part of any of the documents noted above

2. Indicate what process do you use (or are proposing) to use for approval of related party transactions: (Total responses: n=89)
(select only one)
n=55 (61.80%) Pre-approval or pre-clearance of related person transactions
n=0 (0.00%) Monthly review of related person transactions after-the-fact
n=5 (5.62%) Quarterly review of related person transactions after-the-fact
n=11 (12.36%) Annual review of related person transactions after-the-fact
n=13 (14.61%) Periodic review of related person transactions, with timing tied to board/board committee meetings after-the-fact
n=5 (5.62%) Other

3. If someone is responsible for reviewing related person transactions, which of the following will undertake that task: (Total responses: n=90)
(select all that apply, may total more than 100%)
n=11 (12.22%) Full board
n=69 (76.67%) Board committee
n=8 (8.89%) Board committee chair
n=32 (35.56%) General counsel
n=21 (23.33%) Securities counsel
n=1 (1.11%) Other type of inhouse lawyer
n=2 (2.22%) Head of human resources
n=7 (7.78%) Chief compliance officer
n=10 (11.11%) CFO or controller
n=2 (2.22%) Other