Tag: Council of Institutional Investors
SEC approves NYSE proposal for direct listings (updated)
[This post has been updated to reflect the joint statement of Commissioners Allison Lee and Caroline Crenshaw, posted today.]
On August 26, the SEC’s Division of Trading and Markets took action, pursuant to delegated authority, to approve a proposed NYSE rule change that would allow companies going public to raise capital through a primary direct listing. (See this PubCo post.) Five days later, that rule change hit a “snag,” as the WSJ put it—the SEC notified the NYSE that the approval order had been stayed because the SEC had received a notice of intention to petition for review of the approval order. The petition, submitted by the Council of Institutional Investors, was granted in September. Yesterday, after cancelling the open meeting scheduled to address the NYSE rule, the SEC approved, by a vote of three to two, the NYSE’s proposed rule change, as amended. According to the NYSE President, the approval “is a game changer for our capital markets, leveling the playing field for everyday investors and providing companies with another path to go public.” Will primary direct listings now replace SPACs as the favored alternative offering format? Some have even suggested that the approval “will ‘unquestionably’ usher in the end of traditional initial public offerings.” That remains to be seen.
Happy holidays! Happy new year!
SEC approves NYSE proposal for direct listings
On August 26, the SEC’s Division of Trading and Markets took action, pursuant to delegated authority, to approve a proposed NYSE rule change that would allow companies going public to raise capital through a primary direct listing. (See this PubCo post.) Five days later, that rule change hit a “snag,” as the WSJ put it—the SEC notified the NYSE that the approval order had been stayed because the SEC had received a notice of intention to petition for review of the approval order. The petition, submitted by the Council of Institutional Investors, was granted in September. Yesterday, after cancelling the open meeting scheduled to address the NYSE rule, the SEC approved the NYSE’s proposed rule change, as amended. According to the NYSE President, the approval “is a game changer for our capital markets, leveling the playing field for everyday investors and providing companies with another path to go public.” Will primary direct listings now replace SPACs as the favored alternative offering format? Some have even suggested that the approval “will ‘unquestionably’ usher in the end of traditional initial public offerings.” That remains to be seen.
Happy holidays! Happy new year!
No primary direct listings for now—order approving NYSE rule change stayed
On August 26, the SEC’s Division of Trading and Markets took action, pursuant to delegated authority, to approve a proposed NYSE rule change that would allow companies going public to raise capital through a primary direct listing. (See this PubCo post.) This week, that rule change hit a “snag,” as the WSJ put it—the SEC notified the NYSE that the approval order had been stayed because the SEC had received a notice of intention to petition for review of the approval order. What’s that about?
Is pay for performance a mirage?
Yes, it can be, according to the Executive Director of the Council of Institutional Investors, in announcing CII’s new policy on executive comp. Among other ideas, the new policy calls for plans with less complexity (who can’t get behind that?), longer performance periods for incentive pay, hold-beyond-departure requirements for shares held by executives, more discretion to invoke clawbacks, rank-and-file pay as a valid reference marker for executive pay, heightened scrutiny of pay-for-performance plans and perhaps greater reliance on—of all things—fixed pay. It’s back to the future for compensation!
CII advises on disclosure of board evaluation processes
The Research and Education Fund of the Council of Institutional Investors has released a new report regarding disclosure of board evaluation processes in proxy statements. Robust board evaluation processes are considered a key element in strengthening board effectiveness and, as a result, institutional investors have expressed an intense interest in the review process. While companies have been discussing their board evaluation processes in their proxies with increasing frequency, CII suggests that these discussions could be more robust.
Will Corp Fin revisit (again) Rule 14a-8(i)(9), the exclusion for conflicting proposals?
The Council of Institutional Investors has sent a letter to William Hinman, director of Corp Fin, raising objections to the staff’s treatment of a recent shareholder proposal. The staff permitted the company, the AES Corporation, to exclude a shareholder proposal submitted by John Chevedden that sought to reduce the threshold required for shareholders to call a special meeting from 25% to 10%. The basis for exclusion was Rule 14a-8(i)(9), which allows a shareholder proposal to be excluded if it directly conflicts with a management proposal to be submitted for a vote at the same shareholders meeting. In its letter, CII charged the company with “gaming the system to exclude a vote on a legitimate proposal that receives substantial shareholder support when it is voted on at other companies – to reduce the threshold for calling a special meeting,” and urged the SEC to revisit, once again, its approach to Rule 14a-8(i)(9).
CII updates its best practices for proxy access
As proxy access bylaws have continued to proliferate—with 60% of the S&P 500 now having adopted some form of proxy access provisions—the Council of Institutional Investors has decided that the time is right to update its 2015 best practices guide. In particular, the 2017 update addresses practices that, while viewed by companies as designed to ensure the legitimate and appropriate use of proxy access, are viewed by CII as impairing the ability of shareholders to use proxy access. But will companies be guided by CII’s advice?
More opposition to the virtual-only annual meeting
by Cydney Posner In case you missed it, Gretchen Morgenson’s column in the Sunday NYT railed against virtual-only annual meetings, which according to her data (provided by Broadridge), have increased in number from 21 in 2011 to 154 in 2016. And joining in the condemnation of the practice was NYC […]
CII hunts zombie directors
by Cydney Posner A new analysis from the Council of Institutional Investors, announced on October 31, reports a relatively high proportion of “zombie directors” remaining on corporate boards. (The date was not lost on CII: the press release was called a Halloween media advisory.) As you probably know, a “zombie […]
Will the virtual-only shareholders’ annual meeting, once disparaged, be rejuvenated?
by Cydney Posner For many years, annual meetings of shareholders have been viewed as increasingly moribund rituals of corporate governance, as fewer and fewer shareholders are able or willing to overcome the logistical and financial burdens of attendance in person. As a result, in many cases, meetings have evolved into […]
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