On August 17, 2018, the Securities and Exchange Commission (SEC) approved amendments to certain of its disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other SEC disclosure requirements, U.S. generally accepted accounting principles (GAAP), international financial reporting standards (IFRS), or changes in the information environment. These changes include amendments to Regulation S-K and Regulation S-X, which provide many of the disclosure requirements that apply to annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, registration statements and other documents filed with the SEC. These amendments become effective 30 days after publication in the Federal Register.
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SEC Approves Nasdaq’s Proposed Rule on Third Party Payments to Directors and Director-Nominees – The “Golden Leash” Disclosure
On July 1, 2016, the Securities and Exchange Commission (the “SEC”) approved, on an accelerated basis, proposed amendments to the listing rules of The Nasdaq Stock Market LLC (“Nasdaq”) to require Nasdaq-listed companies to disclose annually any “compensation” or “other payment” provided by third parties to directors or director-nominees in connection with their candidacy or service on the company’s board of directors. These arrangements are referred to as “golden leash” arrangements and commonly occur when an activist stockholder compensates its nominee for service on the company’s board of directors based on achieving certain criteria that are important to the activist stockholder. The new rule, Nasdaq Rule 5250(b)(3) (the “Rule”), became effective July 31, 2016.
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SEC Proposes Amendments to Update and Simplify Disclosure Requirements as Part of Overall Disclosure Effectiveness Review
On July 13, 2016, the Securities and Exchange Commission (the “SEC”) announced proposed amendments in order to update and simplify its disclosure requirements. The SEC’s proposed rule (the “Proposed Rule”) can be found here.
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SEC Staff To Express No Views On Conflicting Shareholder Proposals Under Rule 14a-8(i)(9)
On January 16, 2015, SEC Chair Mary Jo White issued a directive that the staff of the SEC review its position on Rule 14a-8(i)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”). Concurrent with SEC Chair White’s directive, the Division of Corporation Finance announced that it will “express no views” on the application of Rule 14a-8(i)(9) for the current proxy season.
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NASDAQ Proposes The Adoption Of A New All-Inclusive Annual Listing Fee
On August 26, 2014, The NASDAQ Stock Market LLC (“NASDAQ”) filed with the Securities and Exchange Commission (the “SEC”) certain proposed amendments to the NASDAQ Stock Market Rules (the “Amendments”) to provide for, among other things, a new all-inclusive annual listing fee (the “All-Inclusive Annual Fee”). The Amendments were effective upon the filing with the SEC; however, NASDAQ has designated that the Amendments will become operative on January 1, 2015. Companies that become subject to the All-Inclusive Annual Fee will pay a single annual listing fee to cover various matters which had previously been subject to an annual fee and several other separate fees. NASDAQ’s incorporation of the All-Inclusive Annual Fee into its fee structure is expected to simplify NASDAQ’s payment process as well as promote visibility into the costs associated with listing on NASDAQ. NASDAQ also indicated that the All-Inclusive Annual Fee program will give NASDAQ greater visibility into its revenue and allow it to continue to invest in technology and other resources available to NASDAQ-listed companies. As part of the Amendments, NASDAQ also modified certain listing fees and clarified certain provisions of the NASDAQ Stock Market Rules.
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Client Alert – Considerations for 2014 Proxy Season and Beyond
2014 Proxy Season
Following are some topics that public companies may want to consider in preparation for the 2014 proxy season.
Shareholder Proposals
The 2013 proxy season reflected a continued increase in the number of shareholder proposals submitted to public companies, while the SEC no-action relief process resulted in fewer successful efforts of public companies to exclude shareholder proposals from proxy statements compared to recent years. However, public companies appear to be having success in negotiating with shareholders as an increased number of shareholder proposals were withdrawn prior to the stockholder meeting in 2013 compared to prior years. Common shareholder proposals in 2013 included (i) proposals to appoint an independent board chair, (ii) proposals to declassify classified boards of directors (and dismantle other similar protective provisions), and (iii) proposals to increase the diversity of the board of directors. Shareholder proposals for 2014 are expected to include (i) elimination of super-majority provisions to amend by-laws, (ii) proxy access, (iii) ability of stockholders to act by written consent and/or call special meetings, and (iv) social and environmental proposals related to political contributions, human rights policies and environmental sustainability. In its 2014 Policy Update, ISS stated that (a) starting in 2014 it will review the responsiveness of a board to any shareholder proposal that receives one year of a majority of votes cast in support (rather than the previous triggers of either two years of a majority of votes cast in a three-year period or one year of a majority of shares outstanding); (b) ISS has adopted a case-by-case approach, including a list of factors for analysts to consider, for assessing board implementation of prior successful shareholder proposals, and (c) ISS provided analysts with broader discretion when determining which directors to hold accountable in the event the level of responsiveness to shareholder proposals is found to be insufficient. Among the changes for 2014 related to board action on successful shareholder proposals is that ISS will consider in the case-by-case analysis the board’s rationale provided in the proxy statement for not adopting a shareholder proposal.Continue Reading Client Alert – Considerations for 2014 Proxy Season and Beyond