Topic: Corporate Governance

ISS Data Verification Period Open Until November 11 for New ISS QualityScore

October 31, 2016 | Posted by Ronald O. Mueller; Elizabeth A. Ising; Lori Zyskowski Topic(s): Corporate Governance

ISS Data Verification Period Open Until November 11 for New ISS QualityScore

Today proxy advisory firm Institutional Shareholder Services Inc. (“ISS”) opened the data verification period for its corporate governance rating system, which was formerly known as QuickScore. ISS also announced that it has revised and rebranded the rating system, which will now be referred to as QualityScore. QualityScore is the successor to ISS’s QuickScore, which in turn succeeded ISS’s Governance Risk Indicators (“GRId”) and Corporate Governance Quotient (“CGQ”) benchmarking tools.

SEC Corp Fin Staff Releases Guidance on CEO Pay Ratio Disclosure

October 19, 2016 | Posted by Ronald O. Mueller; Elizabeth A. Ising Topic(s): Compensation Committee; Corporate Governance; Dodd Frank; Executive Compensation; Securities Regulation

On October 18, the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) released five Compliance and Disclosure Interpretations (“C&DIs”) addressing new Item 402(u) of Regulation S-K regarding CEO pay ratio disclosure.

Recent SEC Comment Letters Addressing Non-GAAP Financial Disclosures

October 4, 2016 | Posted by Elizabeth A. Ising; Brian J. Lane Topic(s): Audit Committee; Corporate Governance; Securities Regulation

Since the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) released updated guidance addressing the use of non-GAAP financial measures on May 17, 2016, the Staff has made public over 200 comment letters sent to companies relating to non-GAAP disclosures. The below chart summarizes the major topics addressed in those comment letters and the frequency with which each topic appears.

ISS Releases Survey for 2017 Policy Updates

August 2, 2016 | Posted by Elizabeth A. Ising; Lori Zyskowski Topic(s): Corporate Governance; Executive Compensation; Say on Pay

Institutional Shareholder Services (“ISS”) today launched its annual global policy survey. Each year, ISS solicits comments in connection with the review of its proxy voting policies. At the end of this process, in November 2016, ISS will announce its updated proxy voting policies applicable to 2017 shareholders’ meetings. ISS will publish the results from the policy survey and use them to inform its voting policy review. The survey includes questions on several governance and compensation matters relevant to U.S. companies, as follows:

Schedule 13G “Passive” Investor Status – When Being A Little Active Is Still Passive!

July 16, 2016 | Posted by James J. Moloney; Robert B. Little; Brian J. Lane Topic(s): Corporate Governance; Executive Compensation; Proxy Statements and Annual Meetings; Securities Regulation; Shareholder Proposals

On Thursday, July 14, 2016, the Staff in the Division of Corporation Finance posted a new C&DI on Section 13(d) that provides stockholders (and issuers) with some helpful insights, and perhaps greater clarity, on when significant stockholders can engage in a dialogue with management and still remain on Schedule 13G. As many practitioners know, Schedule 13G (the “short form” for reporting beneficial ownership of equity positions of 5% or more) often requires an affirmative certification from the reporting person(s) that the securities were not acquired, and are not held, with the purpose or effect of changing or influencing control of the issuer. This is commonly referred to as the “passive” investor certification which is set forth at the end of Schedule 13G, directly above the signature line.

When the Tail Wags the Unicorn: SEC Chair Voices Concerns About Pre-IPO Investments

April 11, 2016 | Posted by Andrew L. Fabens; James J. Moloney Topic(s): Corporate Governance; JOBS Act; Miscellaneous; Securities Regulation

On March 31, SEC Chair Mary Jo White gave a keynote address at Stanford University in which she discussed some of the SEC’s emerging priorities with respect to pre-IPO stage companies, private capital markets and fintech. According to Chair White, the SEC is paying particular attention to the risks of fraud and investor confusion that can arise when companies choose to stay private longer.

NASDAQ Proposes Disclosure of Third-Party Compensation for Directors and Nominees

April 11, 2016 | Posted by Lori Zyskowski Topic(s): Corporate Governance; Miscellaneous; Proxy Statements and Annual Meetings; Securities Regulation

NASDAQ has proposed changes to its listing standards to require disclosure of third-party compensation arrangements for directors and nominees. After withdrawing an initial proposal on this subject, NASDAQ has revised the proposal, and it has been published in the Federal Register for public comment. Comments are due on or before April 26, 2016. The proposal is available here, and a redline showing proposed changes to the rule text begins on page 21 of the document. Under amendments NASDAQ is proposing to Rule 5250(b), NASDAQ companies would have to disclose all agreements and arrangements between any director, or director nominee, and any third party that provide for compensation or other payments in connection with the individual’s candidacy or service as a director. The proposed rule would be construed broadly to apply to both compensation and other forms of payment, such as health insurance. The disclosure requirement would not apply to reimbursement of expenses incurred in connection with serving as a nominee. The proposal also addresses the following aspects of the proposed disclosure requirement:

Corp Fin Issues New Guidance on Unbundling of Proposals

November 5, 2015 | Posted by James J. Moloney; Andrew L. Fabens; Robyn Zolman Topic(s): Corporate Governance; Securities Regulation

On October 27, 2015, the Division of Corporation Finance of the Securities and Exchange Commission (the “SEC”) issued two new Compliance and Disclosure Interpretations (“CDIs”) regarding the “unbundling” of certain proposals under Rule 14a-4(a)(3) of the Exchange Act in the context of mergers, acquisitions, and similar transactions. Federal proxy rules generally prohibit the grouping of separate matters into a single proposal submitted for shareholder approval. The rules provide that companies must separately submit — or “unbundle” — proposals to allow shareholders to vote on each matter. In connection with business combination transactions, acquiring companies have at times attempted to bundle several amendments to their organizational documents with the business combination when seeking shareholder approval of the transaction. The new CDIs clarify the Staff’s position with respect to this circumstance, requiring separate votes for the transaction and for any material amendment to the acquiror’s organizational documents. The new CDIs are available here.

SEC Staff Reverses Longstanding Precedent on Exclusion of Conflicting Shareholder Proposals Rule; Affirms Business as Usual on Ordinary Business Rule

October 26, 2015 | Posted by Ronald O. Mueller; Elizabeth A. Ising; Lori Zyskowski Topic(s): Corporate Governance; Proxy Access

On October 22, 2015, the Securities and Exchange Commission’s ("SEC" or "Commission") Division of Corporation Finance (the "Division") issued Staff Legal Bulletin No. 14H ("SLB 14H"), setting forth a dramatically different standard for when it will concur that a shareholder proposal that conflicts with a company proposal can be excluded from the company’s proxy statement under Rule 14a-8(i)(9). The Division also reaffirmed its views on the application of the "ordinary business" standard in Rule 14a-8(i)(7). SLB 14H is available here.

ISS Opens Comment Period for Draft 2016 Proxy Voting Policy Updates

October 26, 2015 | Posted by Elizabeth A. Ising; Lori Zyskowski; Ronald O. Mueller; James J. Moloney Topic(s): Corporate Governance; Executive Compensation; Say on Pay; Securities Regulation

Today Institutional Shareholder Services (“ISS”) proposed for comment three changes to its 2016 U.S. proxy voting policies. Comments on the proposed changes can be submitted via e‑mail to [email protected] by 6 p.m. ET on November 9, 2015. ISS will take the comments into account as part of its policy review and expects to release its final 2016 U.S. policy updates on November 18, 2015. We note that ISS’s final 2016 proxy voting policies, which will apply to shareholder meetings held on or after February 1, 2016, likely will reflect additional changes beyond these on which ISS has solicited comments.