All posts by Cydney Posner

Rulemaking petition to allow use of e-signatures

Three Silicon Valley firms, Cooley being one, have submitted a rulemaking petition to the SEC asking the SEC to amend Rules 11 and 302 of Reg S-T to allow the use of electronic signatures in SEC filings.   Although the staff has granted some flexibility in connection with retention of manual signatures in its Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns, the petition contends that, given current health and safety requirements, “obtaining and retaining manual signatures in compliance with the Staff Statement remains a significant logistical burden.”

Federal District Court dismisses a challenge to California board gender diversity statute

In Meland v. Padilla, a shareholder of a publicly traded company filed suit in federal district court  seeking a declaratory judgment that SB 826, California’s board gender diversity statute, was unconstitutional under the equal protection provisions of the 14th Amendment.  A federal judge has just dismissed that legal challenge on the basis of lack of standing. (Update: This case has been appealed to the 9th Circuit.)

What were the results of the NYC Comptroller’s Office Boardroom Accountability Project 3.0?

You might recall that, in October last year, the Office of the NYC Comptroller launched its Boardroom Accountability Project 3.0, an initiative designed to increase board and CEO diversity. This third phase of the initiative called on companies to adopt a version of the “Rooney Rule,” a policy originally created by the National Football League to increase the number of minority candidates considered for head coaching and general manager positions.  Under the policy requested by the Comptroller’s Office, companies were asked to commit to including women and minority candidates in every pool from which nominees for open board seats and CEOs were selected. Last week, Stringer announced the initial results of the initiative.

Nasdaq tolls compliance period for certain continued listing requirements

The SEC has declared immediately effective a Nasdaq rule proposal providing relief to listed companies that, in light of market conditions resulting from the impact of COVID-19, have fallen out of compliance with two of the Nasdaq continued listing standards.  The relief will provide companies with a longer period to regain compliance with the bid price and “market value of publicly held shares” continued listing requirements by tolling the compliance periods through June 30, 2020.  Nasdaq believes that this temporary tolling will permit companies to focus on their business operations and the health and safety of their employees, customers and communities, rather than on Nasdaq listing requirements. In addition, Nasdaq believes that temporary tolling will allow investments in these shares without concern for near-term delisting.

Preparing for the possibility that the CEO tests positive

Given the pervasiveness of COVID-19, one issue that boards have had to face is what to do if the CEO or other executive critical to business continuity is suddenly taken ill or required to self-isolate because of exposure to the virus.  What about succession planning? How should the absence be communicated?  A couple of recent pieces from prominent consultants provide some guidance on these issues.

Want to know the number of virtual meetings planned for this proxy season, so far? Ask ISS

ISS now has established a COVID-19 resource center, which offers, among other things, a searchable list of companies that are holding virtual meetings this proxy season.  As of April 15, the tally for virtual meetings in the U.S. held or to be held this proxy season is 1,015; according to ISS, that number was 286 for all of calendar 2019.  In addition, 83 meetings have so far been cancelled or postponed. 

How are finance executives navigating the economic crisis resulting from COVID-19?

Recently, both CFO Research and PwC conducted surveys of finance executives to elicit information about how they were navigating the economic crisis resulting from the COVID-19 pandemic.  Not surprisingly, their responses indicated concerns regarding the effect on revenues of a compelled decline in economic activity—projections from The Conference Board indicate a sharp contraction in the U.S. economy in 2020 between 3.6% and 7.4%—as well as liquidity pressures. The results may provide some insights for purposes of disclosure and financial reporting. Remarkably, perhaps, there was a hint of optimism about a potential recovery (or were they just putting on happy faces)? 

The Conference Board weighs in on key areas for board focus during the pandemic

In this article, the executive director of the ESG Center and the managing director, ESG, of The Conference Board identify seven key areas for board focus in light of the COVID-19 pandemic, essentially an update, given today’s practices and today’s crisis, of the Board’s 2009 report in the wake of the financial crisis. At the end of the day, while the pandemic has led to “increased responsibility, scrutiny, and uncertainty” for boards, the authors advocate that boards address those demands with “increased humanity. This is a time for board members to acknowledge their own abilities and limitations, as well as those of others; to act with increased understanding, compassion, and respect toward each other; and to call upon the untapped reserves of resilience and resourcefulness that abide in us all.”

Glass Lewis considers impact on policy of the COVID-19 pandemic

Like ISS (see this PubCo post), proxy advisor Glass Lewis has also revisited the application of its policies to take into account the impact of COVID-19—having conducted, in its words, “scenario planning in order to consider how this will impact governance and broader ESG issues in the present and future.”  Glass Lewis advises that it expects, currently and probably through 2021, “all governance issues and most proposal types to be impacted by the pandemic,” including balance-sheet and executive comp issues, on which Glass Lewis expresses some rather strong opinions.  Relying on the flexibility inherent in its “contextual approach,” Glass Lewis plans to exercise its “existing discretion and pragmatism” in connection with voting on any affected proposals. 

SEC Chair provides some color on the types of disclosure investors are “thirsting for”

CNBC has posted an unofficial transcript of Andrew Ross Sorkin’s recent interview with SEC Chair Jay Clayton.  While much of the interview covers ground familiar from the last couple of days regarding forward-looking disclosure, particularly the joint statement that Clayton released with Corp Fin Director Bill Hinman (see this PubCo post), Clayton’s interview does provide some helpful color.