Category: Corporate Governance
What’s on the Agenda—the SEC’s Regulatory Flexibility Agenda, that is?
SEC Chair Jay Clayton has repeatedly made a point of his intent to take the Regulatory Flexibility Act Agenda ”seriously,” streamlining it to show what the SEC actually expected to take up in the subsequent period. (See this PubCo post and this PubCo post.) The agenda has just been released, and it certainly appears that Clayton has been true to his word: several items that had taken up long-term residency on numerous prior agendas seem to be absent from this one.
Cybersecurity risk disclosure remains at relatively low levels, but for how long?
Even though, in the wake of recent events, cybersecurity is a very hot topic, only 38% of U.S. public companies cite cybersecurity as a risk factor in their annual and quarterly SEC filings, according to a recent study from Intelligize. The study showed that, while only 426 public companies cited cybersecurity as a risk in 2012, that number grew to 1,662 in 2016. However, so far in 2017, the number has been relatively flat at 1,680. But the question remains, how long will that continue?
Boilerplate CAMs in auditor’s reports? That would be a bummer, man
In what were surely unprepared remarks to the American Institute of CPAs conference on SEC and PCAOB developments, as reported by Bloomberg BNA, SEC Chair Jay “the Dude” Clayton commented on the impact he expects the new form of auditor’s report could have on his mood: “‘If it results in quality, I’ll be happy….And if it results in boilerplate, I’ll be really bummed out.’”
Do performance metrics based on rTSR transform an equity award into a lottery ticket?
According to a 2017 report from Equilar, an executive compensation data firm, “relative total shareholder return” continues to be the most common performance measure used in long-term incentive plans for CEOs among S&P 500 companies. (See this PubCo post.) But this article in CFO.com contends that, with a metric of rTSR, the “pay for performance linkage” is “weak”; rather than rewarding long-term performance, use of rTSR is tantamount to giving “management a lottery ticket.”
Corp Fin Senior Special Counsel discusses new SLB on shareholder proposals
On a webcast today, “Shareholder Proposals: Corp Fin Speaks,” presented by TheCorporateCounsel.net, Matt McNair, Senior Special Counsel in Corp Fin’s Office of Chief Counsel, provided some “soft” guidance regarding the implications of the recent SLB 14I on shareholder proposals, particularly the exclusions for “ordinary business” and “economic relevance.” (See this PubCo post.)
Highlights of the 2017 PLI Securities Regulation Institute
Summarized below are some of the highlights of the 2017 PLI Securities Regulation Institute panel discussions with the SEC staff (Michele Anderson, Wesley Bricker, Karen Garnett, William Hinman, Mark Kronforst, Shelley Parratt, Ted Yu), as well as a number of former staffers and other commentators. Topics included the Congressional and SEC agendas, fresh insights into the shareholder proposal guidance, as well as expectations regarding cybersecurity, conflict minerals, pay ratio disclosure, waivers and many other topics.
The end of Section 162(m)?
In case you missed it, according to this article in Bloomberg BNA, the new tax proposal would eliminate tax benefits under IRC Section 162(m), which allows companies to deduct executive compensation over $1 million (in addition to regularly deductible compensation up to $1 million) so long as it is performance-based and meets certain other conditions, such as shareholder approval and approval by a committee of “outside directors.” According to the article, the proposal would retain the $1 million cap on deductible compensation but eliminate the exemption for performance-based pay that exceeded the cap.
’Tis the season: Corp Fin issues new SLB regarding shareholder proposals
Just in time for the beginning of proxy and shareholder proposal season, Corp Fin has posted Staff Legal Bulletin No. 14I, Shareholder Proposals. The SLB addresses four issues:
the scope and application of Rule 14a-8(i)(7) (the “ordinary business” exclusion);
the scope and application of Rule 14a-8(i)(5) (the “economic relevance” exclusion);
proposals submitted on behalf of shareholders (shareholder proposals by proxy); and
the use of graphics and images consistent with Rule 14a-8(d) (the 500-word limitation).
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