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The RR Donnelley Securities Newsletter contains the latest developments and practical guidance for corporate & securities law practitioners. The content is provided by TheCorporateCounsel.net.
The features in this issue include:
Please note the newsletter includes a few password protected links. To access these links, please sign up for a no-risk trial from TheCorporateCounsel.net.
1| Treasury Announces Two Executive Compensation Bills
In mid-July, Treasury announced that it has drafted two different pieces of executive compensation legislation - one related to say-on-pay and the other regarding compensation committee independence - that they've sent to Congress as part of the "Investor Protection Act of 2009." A week earlier, Treasury began issuing other parts of "The Investor Protection Act of 2009" and more sections are forthcoming. These draft bills are consistent with the Obama Administration's June '09 White Paper. Here is the say-on-pay press release and bill language - and here is the committee independence press release and bill language.
Rep. Barney Frank issued a statement in mid-July promising quick action in the House, specifically that the Financial Services Committee will be marking up his bill - "Corporate and Financial Institution Compensation Fairness Act of 2009" - soon. It's unknown what the timetable for consideration in the US Senate will be.
Below is a summary of the two pieces of Treasury's proposed legislation, both of which would be implemented through SEC rulemaking:
1. Say-on-pay vote on executive compensation disclosures:
- Annual meetings after 12/15/09 will be required to include a non-binding shareholder vote on the compensation disclosed in proxy statements.
- The proxy or consent solicitation for any meeting after 12/15/09 involving an M&A transaction or sale of assets must include tabular disclosure of golden parachute payments, and provide for a non-binding shareholder vote to approve these payments.
2. Compensation committee independence:
- Compensation committee members would be subject to the same additional independence standards as audit committees members under Rule 10A-3 (no consulting or advisory fees and cannot be an affiliate).
- Compensation consultants, legal counsel and other advisors to the committee shall meet independence standards to be promulgated by the SEC.
- The compensation committee has the authority to retain independent consultants and is directly responsible for their appointment, compensation and oversight (copied from the audit committee oversight of auditors).
- Proxy statements must disclose whether the compensation committee has retained an independent consultant, and if not, why not.
- The compensation committee has the authority to retain legal counsel and is directly responsible for their appointment, compensation and oversight (copied from the audit committee oversight of auditors). There is no requirement that proxy disclosure be made as to whether the committee retained such legal counsel.
- Companies must provide funding for the hiring of independent consultants and legal counsel by the committee.
The SEC is required to study the use of compensation consultants and report to Congress in two years.
And the prior week, the White House and the Treasury Department released proposed legislation to effectuate the "consumer protection" parts of the regulatory reforms that had been mentioned in the White Paper (although the various provisions are essentially a hodge-podge of proposals, including the SEC obtaining the power to review and ban compensation arrangements at brokers, dealers and investment advisers). Here is the proposed legislation and the related fact sheet. We'll be posting memos analyzing this proposed legislation in our "Regulatory Reform" Practice Area.
Here is Broc's take on what he considers a few oddities in the legislation:
- Consumer Testing of Disclosures and Rules: One part of the proposal would bolster the "SEC's authority to conduct consumer testing." Consumers? I think they mean investors? The SEC's stated mission is investor protection and I don't recall the term "consumer" being mentioned in any of the existing statutes that give the SEC some sort of authority nor any of the agency's rules and regulations.
- Expand Protections for Whistleblowers: Under the proposed legislation, the SEC would gain authority to establish a fund to pay whistleblowers. Although perhaps inviting in concept, this could be tricky to implement. If the SEC Staff dislikes being a referee in the shareholder proposal process, how will they enjoy a process that involves them potentially taking sides more clearly against companies and actually having to dispense money? If adopted, I would consider becoming a bounty hunter because I've always wanted to wear big hats...
- Establish a Permanent Investor Advisory Committee: How many federal agencies have permanent advisory committees? This could set a bad precedent - and even though investors may have been under-represented by those that regularly approach the SEC in the past, the SEC has heard plenty from investors over the past few years. The creation of a permanent committee may swing the pendulum the other way so that the investor perspective dominates the SEC's view of the world.
In the long run, the much more likely result is that regularly meeting with an advisory committee would simply be a waste of time. We like the idea of roundtables on specific issues where all sides are represented - as well as the normal comment process on rule proposals - for the SEC to obtain all the outside input it needs. I'm not a big believer in conducting more meetings as a way to find solutions to problems.
2 | The Big Kahuna: SEC Approves NYSE's Elimination of Broker Discretionary Voting
In early July, the SEC voted 3-2 to approve the NYSE's proposal to amend Rule 452 (and Listed Company Manual Section 402.08) to eliminate broker discretionary voting for director elections. The amendment to Rule 452 will be applicable to meetings held after January 1, 2010 (but won't apply to a meeting that was originally scheduled to be held in 2009 if adjourned to a date after January 1st).
As we've mentioned before, in our opinion, this change is the biggest of the reforms that companies face - bigger than proxy access, say-on-pay, etc. Here is the SEC's press release addressing all of its actions at the July 1st Open Meeting - and here is Chair Schapiro's opening remarks (and Commissioners Walter's statement and Aguilar's statement).
Commissioners Casey and Paredes opposed the proposal, both stating that the broker nonvote issue should be considered in the broader context of rejiggering the proxy process (read "proxy access") as well as examining more completely the impact of this change on companies. In his opening remarks, Commissioner Paredes noted they weren't alone - 93 comment letters (out of a total of 136) also urged a comprehensive review of the proxy system. They also expressed concerns that the change would disenfranchise retail holders at the expense of more control by institutional investors.
Since all the other Commissioners agreed with the importance of studying the proxy system's "plumbing," near the end of the meeting, Chair Schapiro stated that the SEC would conduct this type of review later this year. We see roundtables in our future.
3 | The Surprise: SEC Proposes Expedited Disclosure of Voting Results
Although most of the SEC's July 1st Open Commission Meeting went as telegraphed by earlier statements by the SEC Chair, there was one big surprise. The SEC proposed a new Form 8-K requirement for companies to disclose the results of a shareholder vote within four business days after the end of the meeting at which the vote was held (in contested elections, the final results would be permitted to be delayed under certain circumstances).
As we've complained before, the current disclosure standard doesn't elicit voting results for weeks - or sometimes months - after the vote, which doesn't really work in today's more competitive annual meeting environment.
4 | Not a Surprise: SEC Proposes Say-on-Pay for TARP Recipients
Not surprisingly, the SEC also proposed rules in early July - by a 5-0 vote - that would help implement Section 111(e) of EESA to permit an annual advisory non-binding shareholder vote on executive compensation. The SEC's proposal clarifies how these requirements apply to TARP recipients in the form of new Rule 14A-20. The SEC has posted the proposing release for this one on the same day as the open Commission meeting; could be record time for that. Here is Corp Fin's opening statement.
During the Open Meeting, it was pointed out that - outside of the EESA mandate - the SEC Staff has allowed the inclusion of say-on-pay proposals. Commissioner Casey note that she only supported this proposal because it was required under EESA.
5 | SEC Proposes Changes to Executive Compensation Disclosure Rules
No surprises here either. As expected, the SEC proposed in early July amending Item 402 of Regulation S-K as follows (here is the 137-page proposing release - and here is Corp Fin's opening statement):
- Broader CD&As to cover risk - provide information about how a company's overall compensation policies create incentives that can affect the company's risk - and the management of that risk, including policies for employees generally, including non-executive officers. Such disclosure would only be required if the risks arising from those compensation policies may have a material effect on the company. The SEC did not propose any requirement that would not require the disclosure of specific salaries of any individuals beyond those already required.
- Improved reporting of stock and option awards - revise the way in which stock and option awards are reported in the Summary Compensation Table and Director Compensation Table so that it's based on the award's fair value on the grant date. This would reverse the December '06 "surprise."
- More disclosure about compensation consultants - in an effort to allow shareholders to evaluate potential conflicts, require disclosure about compensation consultant fees and services (and their affiliates) when they play any role in determining the amount or form of compensation for executives and directors, but only if those consultants (or their affiliates) also provide other services to the company.
On CompensationDisclosure.com, we have posted a complimentary copy of the Summer 2009 issue of the "Proxy Disclosure Updates" which analyzes how the latest proxy disclosures looked particularly noteworthy in the wake of ARRA, EESA and the other regulatory responses to the crisis. This valuable quarterly newsletter is part of the Lynn, Borges & Romanek's "Executive Compensation Annual Service." The other part is the 1000-plus page Treatise...
Coming Soon: 2010 Executive Compensation Disclosure Treatise and Reporting Guide: Now that we have seen the SEC's proposals and Treasury's legislation - that will force you to radically change your executive compensation disclosures and practices before next proxy season - we are wrapping up the '10 version of Lynn, Borges & Romanek's "Executive Compensation Disclosure Treatise and Reporting Guide," which we will deliver to subscribers by early October.
Act Now for $100 or More Discount: To obtain this hard-copy '10 Treatise when its printed in October (as well as get online access to the '09 version right now on CompensationDisclosure.com, as well as the valuable quarterly "Proxy Disclosure Updates"), you need to try a no-risk trial to the Lynn, Borges & Romanek's "Executive Compensation Annual Service" now. If you order now, you can take advantage of a $100 or more discount.
6 | SEC Proposes More Corporate Governance Disclosures
Also in early July, the SEC proposed a few governance disclosure enhancements, including revising Item 401 of Regulation S-K to require more disclosure about each director's particular experience, attributes and skills that are appropriate for the person to serve as a director and as a member of any committee to which the person is appointed; extend the disclosure of the director's board memberships to the past 5 years; and expand disclosure of legal proceedings to the prior 10 years.
In addition, the SEC proposed requiring disclosure of why the board selected a particular management/leadership structure, particularly why the board chose to combine or separate the board chair and CEO positions. Although not proposed, the SEC's proposing release will solicit comments about whether the SEC should require disclosure about director diversity, including whether diversity is a factor considered when nominating director candidates.
When the SEC puts out a big proposal, there inevitably are some sleepers because that's the way of the world. We recently received this note from a member about the SEC's recent proxy solicitation proposals:
There are some potent changes in the proposed proxy amendments that will generally make contests easier to conduct. One amendment codifies a recent no-action letter to Carl Icahn that allows insurgents to include nominees of other insurgents on their proxy cards.
And the amendments also overrule a 2004 case (i.e. Mony Group v. Highfields Capital Management) where a court ruled that a shareholder conducting an exempt solicitation can't send shareholders management's proxy card and encourage them to vote as suggested by the insurgent.
7 | Clawbacks: SEC Finally Provides Clues re: "Misconduct" under Section 304
In late July, the SEC announced an action to clawback bonuses and stock profits from a former CEO under Section 304 of Sarbanes-Oxley. The SEC asked the U.S. District Court for the District of Arizona to order the former CEO of CSK Auto Corporation, Maynard Jenkins, to reimburse the company for more than $4 million that he received in bonuses and stock sale profits while the company was committing accounting fraud. This is the third Enforcement action that the SEC has brought regarding CSK's alleged accounting shenanigans, which resulted in two restatements - one of them charges four of the company's executives with wrongdoing (but not the former CEO).
Although this is not the first Section 304 action from the SEC, it's the first one where the "clawee" isn't alleged to have violated the securities laws. The SEC has brought very few 304 actions since the provision was enacted seven years ago, mainly because of the uncertainty over what constitutes the "misconduct" required by the provision. Here is how Section 304 opens:
If an issuer is required to prepare an accounting restatement due to the material noncompliance of the issuer, as a result of misconduct, with any financial reporting requirement under the securities laws, the chief executive officer and chief financial officer of the issuer shall reimburse the issuer...
As noted in the "D&O Diary" Blog, "there is no requirement in Section 304 that the CEO or the CFO from whom the reimbursement is sought have any involvement in the events that necessitated the restatement. Indeed, the statute doesn't require any showing of wrongdoing or fault at all." And remember there is no private right-of-action under 304 - only the SEC can enforce it.
Okay, so what type of "misconduct" did the SEC find here? For openers, the SEC's press release refers to the CEO as the "captain of the ship." Did the SEC decide that the captain is responsible for the ship and that alone is enough to find "misconduct"? We don't think so.
Based on a cursory reading of the SEC's complaint, we believe the SEC found that the captain engaged in some "misconduct" - but that misconduct didn't amount to a violation of the securities laws. We get to this conclusion by noting that a number of the allegations (i.e., #43-47) in the SEC's complaint explain the "conduct" and "misconduct" by the company that led to this action and then #48 states: "By engaging in the conduct described above, Jenkins violated, and unless ordered to comply will continue to violate, Section 304(a) of the Act, 15 U.S.C. § 7243(a)."
There's not a lot of meat in the SEC's allegations to explain what role the former CEO actually had in the accounting fraud, leaving the SEC open to criticism (such as this Ideoblog commentary). But maybe that's the SEC's point - that merely being captain of the ship while rampant fraud occurs on your watch is "misconduct" enough. We'll be posting memos analyzing this case in CompensationStandards.com's "Clawback Policies" Practice Area.
At a minimum, the SEC's action seems like a wake-up call to CEOs and CFOs of companies that have had restatements due to some accounting misconduct: you are not safe - the SEC may come after you. And hopefully, this action will spur companies to attempt to enforce their own clawback policies (Equilar reports more than 64% of the Fortune 100 now have them; compared to just 17% in '06). We're not aware of any company that ever has (although it's possible it has happened behind closed doors). We imagine companies sometimes deal with situations where it's not clear if their own clawback policy - or Section 304 - applies. Or if it does apply, whether it's prudent to seek recapture from the executive (weighing cost/time of litigation; indemnification issues, etc.).
Rather than decide to just move on and not do anything, it's time to put teeth into those clawbacks as Broc wrote about in his article "Ten Steps to a Clawback Provision with "Teeth."
8 | The SEC's "Wish List": 42 More Changes!?!
For those that don't think that there have been enough regulatory changes proposed so far this year - or this decade for that matter - you'll be happy to see this list of 42 desired changes that are reported to have been sent by the SEC to Congress. The 42 changes would impact quite a few areas of the federal securities laws - and are unlikely to be grouped together into a single bill. Rather, parts may be embedded into other legislation, etc.
9 | Kick-Off: The SEC's Investor Advisory Committee
In late July, after receiving only a handful of comments on its formation, the SEC's new "Investor Advisory Committee" met for the first time. Run much like an Open Commission Meeting (a Commissioner even gave a speech), this inaugural meeting was available by webcast (here is the archive). Note the Committee even has its own web page.
In connection with the meeting, the SEC Staff prepared a briefing paper entitled "Possible Refinements to the Disclosure Regime," which included discussion questions for these topics:
- Disclosure related to investment products & financial intermediaries
- Mutual fund point of sale disclosure
- Mutual fund/broker fee disclosure
- Disclosure to investors in 401(k) plans
- Environmental, climate change and sustainability disclosure
- Climate change and other environmental issues
- Social, governance and other operational matters
10 | Corp Fin Finishes Overhaul of its "Accounting Training Manual"
In late July, Corp Fin posted an updated "Financial Reporting Manual" to include a new section - Topic 4: Independent Accountants' Involvement - as well as other changes. So it looks like the Staff has finished its overhaul of what used to be called the "Accounting Training Manual," a process that commenced at the end of '08.
Yes, the PDF version of the Manual still bears that legend "For Division of Corporation Finance Staff Use Only" and includes a disclaimer about the informal nature as guidance, even though the SEC now makes the Manual publicly available. But the HTML version does not...
11 | Zacharias v. SEC: DC Circuit Adopts Expansive Meaning of "Underwriter"
Here is an analysis of a case decided in late June excerpted from this Davis Polk memo (which we have posted in our "Securities Act Liability" Practice Area):
In Zacharias v. SEC, the U.S. Court of Appeals for the District of Columbia Circuit affirmed an SEC order finding that two officers and directors of a public company and an unaffiliated third party engaged in a "scheme" to sell securities in violation of the registration requirement of Section 5 of the Securities Act, despite the fact that the only shares sold to the public were freely tradable shares owned by the third party.
The Court's praise of the SEC decision as "a triumph of substance over form" and the reasoning of the case (as well as the result) stand in contrast to the recent decisions of three U.S. District. Courts that rejected the SEC's claims of Section 5 violations in the hedging of "PIPEs" securities.
12 | Early Problems for XBRL? A Mismatch with FASB's GAAP Codification
With mandatory XBRL now upon us for larger companies, it's troublesome that - as noted in this recent CFO.com article - the FASB's new codification of accounting standards that was launched on July 1st (and becomes effective on September 15th) has created a mismatch since all of the mandated XBRL standards apply to the FASB's now-superseded standards. Thanks to Neal Hannon of The Gilbane Group, who started the sleuthing on this issue (e.g., see his blog about whether the SEC can handle XBRL filings).
A new XBRL taxonomy is scheduled to be released in early '10 to solve this problem - but there needs to be a solution to cover the period between the codification's 9/15 effective date and when the new taxonomy is available next year. To tackle this, we hear that the FASB is working with XBRL US to produce an extension taxonomy that is supposed to bridge the GAAP between the old references and the codification - but we don't yet know when that will be released.
But clearly it needs to be well before the Codification's 9/15 effective date because all the XBRL providers need as much time as they can get to incorporate the changes into their software. In other words, we needed that yesterday since the Codification's effective date is only two months away. We'll continue to follow this story - but this looks like a real mess.
13 | SEC Charges Investment Advisor for Buying Votes with Section 13(d) Violations
In late July, as noted in this press release, the SEC charged - and settled - Section 13(d) violations with an investment adviser - Perry Corp. - for failing to disclose that it had purchased substantial stock in a M&A target, King Pharma. Perry purchased the shares in order to vote them in favor of a merger from which Perry stood to profit. Here's the cease-and-desist order, under which Perry agreed to pay $150,000.
The SEC was able to bring charges because the Mylan shares were not acquired by Perry in the "ordinary course of its business," which is one of the requirements of Rule 13d-1(b)(1). However, I was a little surprised that the SEC didn't shoot Perry down by finding that it either (i) did not acquire the shares in the ordinary course or (ii) was not "passive" (since "passive" is also a requirement of the rule). Instead, the SEC focused exclusively on the "ordinary course" requirement of the rule. So I wonder why the SEC didn't use "not passive" as the hook and avoided the seemingly circuitous path to "not in the ordinary course"? I would think the SEC could have made its case by stating that Perry was not passive - and therefore could not be acting in the ordinary course. Let me know what you think.
By the way, the SEC's charges unfortunately didn't address concerns regarding Perry's strategy. In an effort to lock in the merger premium it would receive on its holdings of King Pharma shares, Perry purchased a substantial block of the acquiror's shares (Mylan) that it intended to vote in favor of the merger while contemporaneously entering into hedging transactions that minimized its economic exposure to a decline in the value of those Mylan shares.
In essence, Perry intended to vote its Mylan shares in favor of a transaction that was not in the economic interests of other Mylan shareholders because it had a more substantial economic interest in the merger being consummated as a result of its holdings in King Pharma. Similar issues arose in connection with AXA's acquisition of MONY. Although this issue has received considerable attention in the US and the UK, no clear solution has been found. Rather, the focus has been on enhanced disclosure obligations. The SEC's charges solely relate to Perry's failure to file a Schedule 13D with respect to its acquisition of more than 5% of Mylan's shares with the intent of influencing the direction or management of Mylan. Hopefully, manipulation of the voting process will be examined as part of the SEC's plan to rethink the proxy plumbing this Fall. We have resources on share lending, overvoting, empty voting, etc. in our "Share Lending/Overvoting" Practice Area.
14 | Broadridge's E-Proxy Stats for '09 Proxy Season
Last year, Broadridge was feeding TheCorporateCounsel.net new statistics about e-proxy during each month of the proxy season. This year, we have the beneficial owner statistics as of the end of the proxy season, which we have posted in the "E-Proxy" Practice Area.
As of May 29th:
- 1312 companies (technically, it's not companies - it's "distributions" which is a greater number than the number of companies) used voluntary e-proxy between July '08 and May '09 (compared to 653 for the same period in the year prior). And 12% of all distributions used N&A during this '08-'09 period.
- Size range of companies using e-proxy continued to vary considerably for all shapes and sizes (eg. 28.9% of distributions on jobs between 10,000 and 50,000 shareholders used N&A).
- 5.9% of beneficial positions held in companies using N&A received full package by bifurcation, in addition to the 9.2% that received full packages by prior consent. Note that the 5.9% represents positions, not companies.
- 0.8% of shareholders requested paper after receiving a notice; this average is down 25% from last year's 1.05%.
- 54% of companies using e-proxy had routine matters on their meeting agenda; another 34% had non-routine matters proposed by management; and 12% had non-routine matters proposed by shareholders. None were contested elections.
- Retail vote continued to slip, although just slightly compared to the same period last year (recall that retail voting was down dramatically last year compared to pre-eproxy days) - the number of retail accounts voting dropped from 26.6% to 24.4% (a 8% drop from the prior year's period).
Note that the slight drop in retail voting refers to those shareholders who got a Notice only and not a full package through stratification, consent, or fulfillment. The number of retail holders getting full packages increased - and this group votes at a higher rate, which somewhat offset the drop in the retail Notice-only group.
15 | More '09 Proxy Season Statistics
In addition, Broadridge has posted its statistics for the proxy season more generally. Among the more interesting stats:
- Overall Number of Shares Voted: 85.7% (I wish we could get that rate for our political elections)
- Average Percentage of Broker Nonvotes: 19.1% (backing these out probably lowers the overall voting percentages to what happens in political elections)
- Methods by Which Shares Voted: 9.2% of shares voted by paper; 0.9% by phone; 10.6% online; and 79.3% by ProxyEdge (ie. institutional investors using Broadridge's proprietary service)
16 | Executive Pay Surveys
In this CompensationStandards.com podcast, Susan Wolf of Schering-Plough describes her company's experience with using a survey to canvas shareholders about their executive pay practices, including:
- Why did the company decide to try a survey?
- What was the reaction of shareholders?
- Were there any surprises? What would you change if you did it again?
17 | Consultant Market Shares: An Analysis of Fortune 1000 Companies
For those that may not be aware of it, "The Advisors' Blog" on CompensationStandards.com is populated with new thoughts from compensation experts daily. For example, below is a blog from Equilar that was posted last week:
With executive compensation issues firmly in the public spotlight, the SEC is once again considering expanded CD&A disclosure requirements. The SEC's most recent proposals include improved disclosure on the connection between compensation and risk, greater detail on overall compensation philosophy and design, and further insight into potential conflicts of interests between compensation consultants and the companies they advise.
With these developments in mind, Equilar recently used its "Compensation Consultant League Table" database to complete an analysis of executive compensation consultant market share at Fortune 1000 companies. In 2008, boards at 90.7% of Fortune 1000 companies retained the services of at least one compensation consulting firm.
The following table lists the Top 10 consulting firms, by executive compensation consulting market share during '08, at Fortune 1000 companies:
1. Towers Perrin - 19.3%
2. Frederic W. Cook & Co. - 17.5%
3. Hewitt Associates - 14.5%
4. Mercer Human Resources Consulting - 11.4%
5. Watson Wyatt Worldwide - 7.5%
6. Pearl Meyer & Partners - 5.4%
7. Semler Brossy Consulting Group - 3.8%
8. Hay Group - 2.3%
T-9. Exequity - 1.6%
T-9. Deloitte Consulting - 1.6%
Note: FY 2008 market share percentages are based on a total of 867 engagements with boards of directors at 824 of 908 Fortune 1000 companies studied. See methodology statement below for more information. Also note that Towers Perrin and Watson Wyatt announced plans to merge into a new firm called Towers Watson on June 29, 2009. The combined firm would have a market share of 26.8 percent.
Additional Key Findings:
- Top 10 Firms Lose Overall Market Share as Smaller Firms Proliferate - In 2008, Fortune 1000 companies listed a total of 53 executive compensation consulting firms as advisors to their boards of directors. Among these firms, the Top 10 consulting firms held a combined market share of 84.9 percent. In contrast, Fortune 1000 companies listed only 42 executive compensation consulting firms as advisors in 2006, when the Top 10 consulting firms held a combined market share of 93.8 percent.
- Independent Firms Gain Market Share - In 2008, independent executive compensation consultants held 39.3 percent of engagements with boards of directors at Fortune 1000 firms, up from 37.4 percent of engagements in 2007. Market share for independent firms had increased from 35.0 percent to 37.4 percent between 2006 and 2007. Independent firms are defined by Equilar as companies that focus primarily on executive compensation consulting.
- Full-Service Firms Maintain Market Share Above 60% - Full-service firms, which are defined by Equilar as companies that offer accounting, broad-based HR, retirement and/or benefits consulting in addition to executive compensation services (though not necessarily to the same client), held 60.7 percent of engagements with boards of directors at Fortune 1000 firms in 2008.
Readers of this analysis should take the following methodology notes into consideration:
- To study trends on the use of executive compensation consulting firms at public companies, Equilar reviewed disclosures at 908 firms listed in the Fortune 1000 index. Each firm covered by the study has an updated CD&A statement for fiscal year 2008.
- Among the companies included in this analysis, 824 firms (or 90.7 percent) retained an executive compensation consultant to advise their board of directors on executive pay. The remaining firms either have no consultant or a consultant retained by management. For the purposes of tracking market share at Fortune 1000 companies, Equilar only considers direct engagements between a board of directors and a consulting firm.
- In some cases, a board of directors may engage multiple executive compensation consulting firms during the course of a single year. Equilar counts these cases as a full engagement for all consulting firms involved. As such, the 824 companies with an executive compensation consultant for their board of directors produced a total of 867 engagements in fiscal year 2008.
Here is an extended version of Equilar's compensation consultant market share analysis, including data on year-over-year changes in market share. Equilar is an information services firm specializing in executive compensation research.
18 | Launch of Shareowners.org: Social Media Comes to Retail Holders
Recently, a new social media site - Shareowners.org - was launched with the hopes of binding retail shareholders together. Although this is not the first such site (eg. Broadridge's "Investor Network"), this one might take off. And just the fact that these attempts to have investors network online bears close watching as it may someday soon dramatically impact activist efforts.
In this podcast, Rich Ferlauto, AFSCME's Director of Corporate Governance and Pension Investment Policy, describes the new social media site, including:
- What is Shareowners.org?
- What is your goal with the site?
- Any surprises so far?
19 | July-August Issue: Deal Lawyers Print Newsletter
This July-August issue of the Deal Lawyers print newsletter includes articles on:
- Threshold Issues in Cross-Border Merger-of-Equals Transactions
- The Role of the Board in Turbulent Times: How to Avoid Shareholder Activism
- Private Equity in 2009: "Back to Basics" Practice Tips: Part II
- A "Sleeper": Delaware Court Stresses Importance of Employment/Non-Competition Agreements with Target Employees
If you're not yet a subscriber, try a "half-price for rest of '09" no-risk trial to get a non-blurred version of this issue for free.
20 | More on "The Mentor Blog"
We continue to post new items daily on our new blog - "The Mentor Blog" - for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
- How to Be a Director: Yahoo's CEO Speaks Frankly
- Conference Notes: Hot Topics in Corporate Governance
- The Basics: Insider Trading Penalties
- Advancing Legal Fees: Bank of America Ponies Up
- How to Obtain CLE While in Transition
- Corporate Governance Ratings: Any Future?
- Presenting New Ideas at a Board Meeting
- Sifting Through Job Databases for Lawyers
- What Should I Do With My Life?
- Outside Counsel Take Note: In-House Lawyers Want Predictability
21 | People: Who's Doing What and Where
At the SEC, Ron Crawford was selected as the SEC's first Chief Counsel for Diversity and Policy Initiatives. OCIE Director Lori Richards announced that she is leaving the SEC. OCIE Associate Director-Chief Counsel John Walsh will serve as OCIE's Acting Director. Lorin Reisner will join the Enforcement Division as Deputy Director.
In Corp Fin, Ellie Bavaria was selected as Special Counsel in the Office of International Corporate Finance. John Robinson has joined Corp Fin as an Academic Accounting Fellow.
At the PCAOB, Daniel Goelzer was named Acting Chair, effective August 1.
22 | TheCorporateCounsel.net Conference Calendar
23 | What's New on TheCorporateCounsel.net and sister sites
Please let us know what you like - and don't like - so we can tailor TheCorporateCounsel.net to be more of a hands-on resource for you and your colleagues.
Because we view TheCorporateCounsel.net as a "community" site, let us know if you would like to contribute content to our site. E-mail comments, suggestions and other input to broc.romanek@thecorporatecounsel.net.
(c) 2009 Executive Press.
This email newsletter is provided for informational purposes only and does not constitute legal advice. Executive Press is not engaged in rendering legal or other professional services. Publication of this newsletter is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. Do not act or rely upon the information and advice given in this publication without seeking the services of competent professional counsel. You may decline to receive further email solicitations from us by sending an email to info@thecorporatecounsel.net or contacting us at Executive Press, PO Box 21639, Concord, CA 94521-0639
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Coming Soon: Lynn, Borges & Romanek's "2010 Executive Compensation Disclosure Treatise and Reporting Guide"
The SEC's proposals and the Treasury's legislation will force you to radically change your executive compensation disclosures and practices before next proxy season. The 2010 version of Lynn, Borges & Romanek's "Executive Compensation Disclosure Treatise and Reporting Guide," will deliver to "Executive Compensation Annual Service" subscribers by early October.
To obtain this hard-copy '10 Treatise when its printed in October (as well as get online access to the '09 version right now on CompensationDisclosure.com, as well as the valuable quarterly "Proxy Disclosure Updates"), you need to try a no-risk trial to the Lynn, Borges & Romanek's "Executive Compensation Annual Service" now. If you order now, you can take advantage of a $100 or more discount.
RR Donnelley's reference publications provide additional guidance to help you comply with SEC regulation.
Click here to download publications
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As of March 16, 2009, the SEC requires all companies or funds filing a Form D notice or an amendment to submit the form electronically.
To learn more about Form D compliance, please click here.
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