Category: Corporate Governance Committees, Policies and Practices

Johnson & Johnson May Exclude Shareholder Proposal for Binding Arbitration on Securities Claims

Cam C. Hoang

On February 11, 2019, the Staff of the Division of Corporation Finance granted no-action relief permitting Johnson & Johnson to omit a a shareholder proposal from its proxy statement relating to mandatory arbitration of shareholder claims arising under the federal securities laws. The Staff granted the request under Rule 14a-8(i)(2), which permits exclusion of a proposal that, if implemented, would cause the company to violate...

When It Comes to Self-Identified Diversity: Trust But Verify

Cam C. Hoang

On February 6, 2019, the SEC’s Division of Corporation Finance released Compliance and Disclosure Interpretations (identical Questions 116.11 and 133.13) advising companies on how they should disclose directors’ self-identified specific diversity characteristics (such as race, gender, ethnicity, religion, nationality, disability, sexual orientation or cultural background) in proxy statements. In brief, Corp Fin would expect the company’s discussion of directors’ experience, qualifications, attributes or skills pursuant...

ISS Updates FAQs on US Compensation Policies

Cam C. Hoang

ISS released its annual update of frequently asked questions on its US Compensation Policies on December 20, 2018 (preliminary updates had been released in November). The updates are effective for shareholder meetings occurring on or after February 1, 2019. There are nine new or materially updated questions, which are summarized below: #19 Will any of the quantitative pay-for-performance screens change in 2019?  No.  The screens...

SEC Adopts Hedging Disclosure Rules

Kimberley R. Anderson

The SEC adopted new rules today that will require disclosure of a company’s hedging policies in proxy statements or information statements relating to the election of directors. The new rules are set forth in new Item 407(i) of Regulation S-K and require a company to describe any practices or policies it has adopted regarding the ability of its employees, officers or directors to engage in...

ISS Provides 2019 Voting Policy Updates

Michael Newton

ISS recently announced the 2019 updates to its proxy voting policies, which can be found here and which will be applied to annual meetings held on or after February 1, 2019. Among the various updates provided by ISS, the following policies are particularly relevant for our clients, because they expand the circumstances in which ISS may recommend votes against director candidates: Absence of Board Gender...

SEC Withdraws No Action Letters on Proxy Advisory Firms

Cam C. Hoang

In order to facilitate discussion on the role of proxy advisory firms at the upcoming Roundtable on the Proxy Process, which is scheduled for November 2018, the SEC staff has determined to withdraw two no action letters that provided comfort to investment advisers in relying on proxy advisory firm recommendations: In Egan-Jones Proxy Services (May 27, 2004), the staff had confirmed that by voting based on the...

SEC Issues $1.75 Million Penalty Over Perks Disclosures

Cam C. Hoang

A recent SEC consent order against The Dow Chemical Company reminds companies that when evaluating whether or not to disclose a payment or benefit to an executive as a perk in a proxy statement, the fact that the item has a tangential business purpose, or is convenient for the company, is insufficient grounds to exclude the item as a perk.  In order to be excluded as...

Failure to Disclose Leads to $35 Million Penalty in the Yahoo! Cybersecurity Breach

Cam C. Hoang

The Securities and Exchange Commission (the “SEC”) announced Tuesday that Altaba, the entity formerly known as Yahoo! Inc., has agreed to pay a $35 million penalty to settle charges that it misled investors by failing to disclose one of the world’s largest data breaches in which hackers stole personal data relating to hundreds of millions of user accounts. According to the SEC’s order, within days...

SEC Commissioner Addresses Prospects for CEO Pay Ratio

Cam C. Hoang

This week, during his opening remarks at the 2017 National Conference of the Society for Corporate Governance, SEC Commissioner Michael Piwowar remarked on prospects for repealing or delaying the CEO pay ratio rule. Under the rule, most public companies must disclose the median of the annual total compensation of all employees (including non-U.S., part-time, temporary and seasonal workers), except for the CEO; the annual total...

The House Financial Services Committee to Hold a Hearing on Financial CHOICE Act 2.0 this Wednesday – Here’s a Summary of Governance and Executive Compensation Provisions

Cam C. Hoang

While passage in the House seems likely, the Financial Choice Act may undergo significant changes before it may pass in the Senate. Here is a summary of certain governance and executive compensation provisions that are included in the discussion draft: Prohibit Universal Proxy Ballots. Currently, companies are not required to use a universal proxy ballot in the event of a proxy contest, so shareholders receive...