Tug-of-war over shareholder proposals for lobbying disclosure

Just like the 2017 Consolidated Appropriations Act, the 2018 Consolidated Appropriations Act expressly precluded the use of any of the appropriated funds for issuance or implementation by the SEC of any rule regarding the disclosure of political contributions, contributions to tax exempt organizations or dues paid to trade associations. Not that political spending/corporate lobbying disclosure rules were a hot prospect at the SEC these days anyway.  So what’s a political spending/lobbying disclosure true believer to do? Shareholder proposals, of course.  After all, private ordering seemed to work for proxy access. And now it seems like everyone is getting into the act.

Center for Audit Quality issues tool for board oversight of cybersecurity risk

The Center for Audit Quality has just issued Cybersecurity Risk Management Oversight: A Tool for Board Members.  The tool offers questions that directors can ask of management and the auditors as part of their oversight of cybersecurity risks and disclosures.  The questions are designed to initiate dialogue to clarify the role of the auditor in connection with cybersecurity risk assessment in the context of the audit of the financial statements and internal control over financial reporting (ICFR), and to help the board understand how the company is managing its cybersecurity risks.

Fallout from pay-ratio reporting

As a general matter, SEC rules do not mandate companies to disclose details about the composition or location of their workforces; Reg S-K requires disclosure of only the number of employees, but no information about them. And the vast majority of companies provide little detail voluntarily. But now, as this article in the WSJ reports, companies are beginning to disclose more information about their workforces overseas, and the impetus for that disclosure is the new pay-ratio rule—all at a time when issues of overseas versus domestic employment are especially fraught. 

Auditors in the crosshairs (re-posted)

It’s certainly a rare event, but both ISS and Glass Lewis have recommended voting against a proposal to ratify the appointment of GE’s auditor, KPMG, at the GE annual shareholders meeting. Most often, the issue of auditor ratification is not very controversial—in fact, it’s usually so tame that it’s one of the few matters at annual shareholders meetings considered “routine” (for purposes of allowing brokers to vote without instructions from the beneficial owners of the shares).  Are we witnessing the beginning of a new trend?

Corp Fin further refines Rule 14a-8(i)(9) exclusion

In past few years, after Corp Fin issued Staff Legal Bulletin 14H redefining the meaning of “direct conflict” under the Rule 14a-8(i)(9) exclusion for “conflicting proposals,” the staff has continued to fill in the outline of what works and what doesn’t work under the new interpretation of the exclusion. In American Airlines Group (avail. April 2, 2018), the staff concluded that the approach taken by the company was coloring outside the lines and denied no-action relief.

Corp Fin posts two new CDIs regarding non-GAAP financial measures in the M&A context

Corp Fin has posted two new CDIs regarding the use of non-GAAP financial measures in connection with business combinations, summarized below:

Study: What makes a good board chair?

In this article from the Harvard Business Review, “How to Be a Good Board Chair,” the author, an academic and consultant, discusses good practices for the board chair’s role based on a survey of 200 board chairs from 31 countries, 80 interviews with chairs and 60 interviews with board members, shareholders and CEOs.  According to the author, international differences notwithstanding, he “found a remarkable degree of agreement about what makes a good chair.”