On July 19, 2012, the SEC approved a proposed change to NASDAQ’s rules regarding membership on a listed company’s audit, compensation and/or nominations committee. NASDAQ sought to modify an exception to its Rule 5605, which allows a non-independent director to serve on such committees “under exceptional and limited circumstances” for up to two years. The amendment provides an exception allowing a non-independent director to serve on a company’s audit, compensation and/or nominations committee, where the director has a family member serving as a non-executive employee of the company, so long as the listed company’s board concludes that the director’s membership on the relevant committee is “required by the best interest of the company and its shareholders.”The SEC’s release is available at here.
Archives for July 2012
Glass Lewis Implements Changes to its Voting Analysis Model
GLass Lewis & Co. has announced that, effective for annual meetings taking place after July 1, 2012, it has implemented a number of revisions to its proprietary pay for performance quantitative model. Glass Lewis uses the quantitative model to analyze the degree of alignment between corporate performance and named executive officer compensation. When making voting recommendations to its subscribers on say-on-pay proposals, Glass Lewis analyzes both the quantitative analysis and a qualitative analysis of the company’s named executive officer compensation program.
FASB Votes Against Continuing Loss Contingency Disclosure Reform Project
At a July 9, 2012 meeting, the Financial Accounting Standards Board (“FASB”) voted against moving forward with its outstanding exposure draft to modify the accounting and disclosure requirements for loss contingencies. The FASB considered two alternatives at the meeting: (1) remove the loss contingency project from its agenda; or (2) continue to explore moderate changes to the loss contingency requirements. The FASB Staff recommended that the Board remove the project from its agenda. Chairwoman Seidman and Board members Buck, Golden, Schroeder and Smith voted to remove the project from the Board’s agenda. The majority agreed that the current requirements under Accounting Standards Codification Topic 450 are sufficient and that addressing any concerns with the adequacy of loss contingency disclosures is an issue of compliance and enforcement rather than standard-setting. Board members Linsmeier and Siegel dissented, with each noting that the project should continue with a focus on providing additional guidance on qualitative disclosures about loss contingencies.
UK Government to Require Mandatory Greenhouse Gas Emissions Reporting
On June 20, 2012, British Deputy Prime Minister Nick Clegg announced at the United Nations Rio+20 Summit that the UK will become the first country to require emissions data disclosure in companies’ annual directors’ reports. Pursuant to regulations to be made under the UK’s Climate Change Act 2008, which must come into force by April 2013, all UK “quoted companies” will be required to report their greenhouse gas emissions. (Quoted companies generally are UK companies whose equity share capital is included in the Official List, officially listed in an European Economic Area (EEA), or admitted to dealing on either the NYSE or NASDAQ.) In 2016, the British government will determine whether to extend this requirement to all large UK companies, including private companies.