On August 3, 2017, the proxy advisory firm Institutional Shareholder Services (“ISS”) launched its annual policy survey. Each year, ISS solicits comments in connection with the review of its proxy voting policies. ISS then uses the data to inform its voting policy review. At the end of this process, ISS will announce its updated proxy voting policies applicable to 2018 shareholder meetings.
Executive Compensation
SEC Corp Fin Staff Releases Guidance on CEO Pay Ratio Disclosure
| 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. |
ISS Releases Survey for 2017 Policy Updates
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!
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.
FASB Modifies Accounting Rules for Stock-Based Compensation
On March 30, 2016, the Financial Accounting Standards Board (FASB) released Accounting Standards Update (ASU) 2016-09, which amends ASC Topic 718, Compensation-Stock Compensation, to require changes to several areas of employee share-based payment accounting.
Mark Your Calendars – Pending Deadlines for Submitting Updated Company Peer Group Information to ISS and Equilar/Glass Lewis
Institutional Shareholder Services (“ISS”) has announced that companies can provide it with updated information as to the company-selected compensation benchmarking peer group, beginning at 9 am EST on Tuesday, November 24, 2015. In addition, Equilar Inc.’s (“Equilar”) company-selected peer group update portal opened earlier this week. Since July 2012, Glass Lewis & Co., LLC (“Glass Lewis”) has been using peer groups generated by Equilar in its pay-for-performance analysis.
ISS Opens Comment Period for Draft 2016 Proxy Voting Policy Updates
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 policy@issgovernance.com 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.
ISS Releases Survey for 2016 Policy Updates
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 2015, ISS will announce its updated proxy voting policies applicable to 2016 shareholders’ meetings.
SEC Proposes Rules Regarding Clawbacks
The Securities and Exchange Commission (the “SEC”) today voted, 3-2, to issue proposed rules implementing the mandate in Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) that the SEC require national securities exchanges and associations to adopt a listing standard that requires listed companies to adopt and enforce a clawback policy.
SEC Proposes Rules On “Pay Versus Performance” Disclosures
To Our Clients and Friends:
On April 29, 2015, the Securities and Exchange Commission ("SEC" or "Commission") voted, 3-2, to issue proposed rules implementing the pay-versus-performance disclosure requirement in Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). In summary, the proposed rules would require proxy statements or information statements setting forth executive compensation disclosure to include (1) a new compensation table setting forth for each of the five most recently completed fiscal years, the "executive compensation actually paid" (as defined in the proposed rules), total compensation as disclosed in the Summary Compensation Table, total shareholder return (TSR), and peer group TSR, and (2) based on the information set forth in the new table, a clear description of the relationship between executive compensation actually paid to the company’s named executive officers and the company’s TSR, and a comparison of the company’s TSR and the TSR of a peer group chosen by the company.