Governance & Compliance Insider

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...

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

Corporate Governance Committees, Policies and Practices / Executive Compensation and Disclosure / Legislative Actions

24 Apr, 2017

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

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...

Unexpected Risks of Early Exercise Incentive Stock Options

Board Governance and Compensation / Compensation Committees / Equity Compensation / Executive Compensation and Disclosure

19 Apr, 2017

Unexpected Risks of Early Exercise Incentive Stock Options

Companies that permit the grant of early exercise incentive stock options (“ISOs”) do so primarily to limit the impact of the alternative minimum tax (“AMT”). However, due to fairly counterintuitive tax regulations, structuring options in this fashion can expose optionees to negative tax consequences in the event of a disqualifying disposition. Read more about the tax effects of early exercise ISOs and how the tax...

SEC Enforcement

17 Apr, 2017

Compensation to Newsletter Writers Must Be Disclosed

On April 10, 2017, the SEC’s Division of Enforcement brought enforcement actions against 27 individuals and entities behind various alleged stock promotion schemes. These actions arose when public companies, through promoters or communications firms, hired newsletter writers to generate publicity for their securities without publicly disclosing that the writers were being paid. While it is not illegal to hire newsletter writers, Section 17(b) of the...

Gender Pay Gap Reporting for Companies with More Than 250 Employees in Great Britain

Legislative Actions

12 Apr, 2017

Gender Pay Gap Reporting for Companies with More Than 250 Employees in Great Britain

Beginning April 2017, companies with 250 or more employees in England, Wales and Scotland on April 5th should be aware of a requirement to begin publishing annually on their own website and on a government website the following four figures: Gender pay gap (mean and median averages) Gender bonus gap (mean and median averages) Proportion of men and women receiving bonuses Proportion of men and...

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