Governance & Compliance Insider

SEC Warns That ICOs and Other Internet Token Sales May Be Securities Offerings Subject to Federal Securities Laws

SEC Enforcement / Securities Act Compliance

27 Jul, 2017

SEC Warns That ICOs and Other Internet Token Sales May Be Securities Offerings Subject to Federal Securities Laws

On Tuesday, July 25, as many practitioners probably expected, the SEC issued a warning that offers and sales of digital assets (virtual coins or tokens) by organizations using blockchain or distributed ledger technology (often referred to, among other things, as Initial Coin Offerings (“ICOs”) or Token Sales) are subject to the requirements of the federal securities laws. Depending on the offering, investors may use an...

SEC Updates Regulatory Flex Agenda, Tables Dodd-Frank Rules on Executive Compensation Disclosure

Compensation Committees / Exchange Act Reporting and Disclosure Effectiveness / Executive Compensation and Disclosure / Legislative Actions / SEC Rulemaking

24 Jul, 2017

SEC Updates Regulatory Flex Agenda, Tables Dodd-Frank Rules on Executive Compensation Disclosure

The SEC’s semi-annual update of its rulemaking docket was released on July 20. Overall, the SEC has cut its rulemaking agenda by about half under the Trump administration. A number of long-anticipated Dodd-Frank rulemakings on executive compensation disclosure are missing from the docket: Pay Versus Performance Listing Standards for Recovery of Erroneously Awarded Compensation (Clawbacks) Disclosure of Hedging by Employees, Officers and Directors Incentive Compensation at...

Stock Transfer Restrictions Should Be Conspicuously Noted, Delaware Chancery Court Opinion Reminds Issuers

Securities Act Compliance

24 Jul, 2017

Stock Transfer Restrictions Should Be Conspicuously Noted, Delaware Chancery Court Opinion Reminds Issuers

In Henry v. Phixios Holdings, Inc., C.A. No. 12504-VCMR,the Delaware Court of Chancery held that pursuant to Section 202 of the General Corporation Law, in order for a stockholder to be bound by stock transfer restrictions that are not “noted conspicuously on the certificate or certificates representing the security,” he must have actual knowledge of the restrictions before he acquires the stock. If the stockholder...

ISS Peer Group Submission Window Closes This Friday, for Companies with Fall/Winter Meetings

Compensation Committees / Exchange Act Reporting and Disclosure Effectiveness / Executive Compensation and Disclosure / Proxy Statements and Annual Meetings

17 Jul, 2017

ISS Peer Group Submission Window Closes This Friday, for Companies with Fall/Winter Meetings

For U.S. and Canadian companies with annual meetings to be held between September 16, 2017, and January 31, 2018, the window for alerting Institutional Shareholder Services (ISS) about changes to self-selected peer groups used for executive compensation benchmarking closes this Friday, July 21st, at 8:00 pm EDT. Information on self-selected peer groups may influence ISS as it constructs the peer groups that it uses in...

All Issuers Eligible to Confidentially Submit Draft IPO Registration Statements

SEC Rulemaking / Securities Act Compliance

7 Jul, 2017

All Issuers Eligible to Confidentially Submit Draft IPO Registration Statements

One of the more utilized provisions of the Jumpstart Our Business Startups Act (JOBS Act) has been the confidential submission of IPO registration statements by Emerging Growth Companies (EGCs) to the Securities and Exchange Commission. The nonpublic nature of the SEC review process has allowed EGCs to submit IPO registration statements and respond to SEC comments outside the public eye and without having to alert...

SEC Commissioner Addresses Prospects for CEO Pay Ratio

Compensation Committees / Corporate Governance Committees, Policies and Practices / Exchange Act Reporting and Disclosure Effectiveness / Executive Compensation and Disclosure / Legislative Actions / Proxy Statements and Annual Meetings / SEC Rulemaking

1 Jul, 2017

SEC Commissioner Addresses Prospects for CEO Pay Ratio

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...

Board Governance and Compensation / Proxy Statements and Annual Meetings / Shareholder Activism

27 Jun, 2017

Proxy Access “Fix-It” Proposals Fizzle

As the 2017 proxy season winds down, one clear take-away is that shareholder proposals attempting to modify the terms of previously adopted mainstream proxy access bylaws did not fare well. Many of these proposals focused solely on the aggregation limit, seeking to increase the number of shareholders (usually 20) that are required to meet the minimum ownership threshold (usually 3% of outstanding shares) in order...

Smaller Issuer Relief in the Financial CHOICE Act

Audit Committees and Independent Auditors / Exchange Act Reporting and Disclosure Effectiveness / Legislative Actions

9 Jun, 2017

Smaller Issuer Relief in the Financial CHOICE Act

As noted in the earlier post, the House passed the Financial CHOICE Act yesterday. While the headline-grabbing aspects of the Financial CHOICE Act relate to a repeal of the Volcker Rule and reducing the authority of the Consumer Financial Protection Bureau, there are some other interesting tidbits relating to public company disclosure, including two that would provide significant relief for smaller issuers. However, the Financial...

Say-on-Pay Voting Frequency ― The Financial CHOICE Act Adds Uncertainty to the Process

Board Governance and Compensation / Executive Compensation and Disclosure / Legislative Actions / Proxy Statements and Annual Meetings

9 Jun, 2017

Say-on-Pay Voting Frequency ― The Financial CHOICE Act Adds Uncertainty to the Process

The House passed the Financial CHOICE Act on Thursday as part of the new administration’s bid to overhaul Dodd-Frank. It is not expected to get through the Senate in its current form, but it does provide an interesting read. While current disclosure requirements have become too lengthy and cumbersome in many respects, the proposed change to Say-on-Pay voting frequency requires a materiality determination that may...

SEC Charges CEO with Failing to Disclose Perks to Shareholders

Executive Compensation and Disclosure / Securities Act Compliance

1 Jun, 2017

SEC Charges CEO with Failing to Disclose Perks to Shareholders

Companies frequently wrestle with perks in their proxy executive compensation disclosure. Whether an item constitutes a perk often requires judgment based on the facts and circumstances,¹ and disclosure may elicit intense, public scrutiny over what amounts to a relatively small percentage of an executive’s total compensation package.² From time to time, the SEC issues a cautionary tale that perks need to be accounted for and reported...

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