Category: COVID-19
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.
Corp Fin staff provides relief for Form 144 paper filings
The Corp Fin staff is once again addressing logistical difficulties that have cropped up in light of COVID-19—this time it’s the submission of Forms 144 in paper. In this statement, the staff is providing temporary relief with regard to paper Forms 144 submitted during the period from April 10 through June 30, 2020. In the statement, the staff advises that it will not recommend enforcement action if, in lieu of mailing or delivering paper Forms 144 under Rules 101(b)(4) or 101(c)(6) of Reg S-T, the filer (or submitter) attaches a complete Form 144 as a PDF attachment to an email sent to PaperForms144@SEC.gov.
SEC Chair and Corp Fin Director call for more forward-looking information
Yesterday, SEC Chair Jay Clayton and Corp Fin Director Bill Hinman issued a statement on the Importance of Disclosure – For Investors, Markets and Our Fight Against COVID-19. The statement urges companies, as they issue earnings releases and conduct analyst and investor calls in the coming weeks, to provide as much information as practicable, focusing their disclosure less on historical information and more on “current financial and operating status, as well as future operational and financial planning” under “various COVID-19-related mitigation conditions.” Among other topics, they encourage companies to address liquidity and resource needs, receipt of financial assistance under government programs, company efforts to protect worker health and customer safety and strategies to incrementally resume regular operations as the crisis resolves.
ISS provides guidance on the impact on policy of the COVID-19 pandemic
Today, ISS provided special policy guidance on the impact of the COVID-19 pandemic, observing that, in light of the current uncertainty, it is appropriate “to provide our stakeholders with some specific guidance on a number of voting policy issues that are likely to be directly implicated over the coming months by the pandemic and the global response to it.” While the guidance suggests that ISS will apply its policies more flexibly under the circumstances, some things never change: option repricings—still disfavored.
Corp Fin staff updates guidance for “notice-only” delivery of proxy materials
The Corp Fin staff announced that it has updated its Guidance for Conducting Shareholder Meetings in Light of COVID-19 Concerns (see this PubCo post), originally published on March 13. The updated guidance clarifies that the prior guidance regarding changes to the date, time and place of annual meetings of shareholders also applies to special meetings. The update also provides some relief for companies that shift to the “notice-only” method of furnishing proxy materials as a result of COVID-19-related delays in printing and mailing of full sets of proxy materials.
NYSE temporarily eases shareholder approval requirements for certain equity issuances
After the 2008 financial crisis, many companies sought to raise capital by selling equity in private placements, often to existing major shareholders, but faced limitations resulting from the NYSE’s shareholder approval requirements. To address that concern in the Covid-19 crisis, the NYSE has proposed, and the SEC has approved and declared immediately effective, an NYSE rule change to waive, through June 30, 2020 and subject to compliance with conditions, application of certain of the shareholder approval requirements in Section 312.03 of the NYSE Listed Company Manual. That rule requires listed companies to obtain shareholder approval prior to certain types of equity issuances. The general effect of the waivers, according to the NYSE, is to make these NYSE shareholder approval requirements more comparable to the similar Nasdaq requirements on a temporary basis. The waivers are intended to provide temporary relief to listed companies that may have urgent liquidity needs in the coming months as a result of the impact of COVID-19.
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