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ISS has issued its preliminary US post-season report, which is full of useful statistics about the 2011 proxy season for the data hound.  Broc notes some of the key highlights in TheCorporateCounsel.net blog. The report also provides a possible hint on the question of what level of dissent for say-on-pay votes, beyond failed votes, could cause additional ISS scrutiny.  Based on the text in the report as noted below, it appears that companies that received below 70% approval may be targeted, though what "greater attention" means in this context is unclear: "While investors will have different thresholds for which firms they will scrutinize more closely, it appears likely that issuers with greater than 30 percent opposition this year will receive greater attention in 2012.   According to ISS data, 168 companies, or about 6 percent of the total, received more than 30 percent dissent this proxy season." Contact Ning Chiu. Contact Kyoko Takahashi Lin.
5 years 7 months ago
ISS has issued its preliminary US post-season report, which is full of useful statistics about the 2011 proxy season for the data hound.  Broc notes some of the key highlights in TheCorporateCounsel.net blog. The report also provides a possible hint on the question of what level of dissent for say-on-pay votes, beyond failed votes, could cause additional ISS scrutiny.  Based on the text in the report as noted below, it appears that companies that received below 70% approval may be targeted, though what "greater attention" means in this context is unclear: "While investors will have different thresholds for which firms they will scrutinize more closely, it appears likely that issuers with greater than 30 percent opposition this year will receive greater attention in 2012.   According to ISS data, 168 companies, or about 6 percent of the total, received more than 30 percent dissent this proxy season."
5 years 7 months ago
ISS has issued its preliminary US post-season report, which is full of useful statistics about the 2011 proxy season for the data hound.  Broc notes some of the key highlights in TheCorporateCounsel.net blog. The report also provides a possible hint on the question of what level of dissent for say-on-pay votes, beyond failed votes, could cause additional ISS scrutiny.  Based on the text in the report as noted below, it appears that companies that received below 70% approval may be targeted, though what "greater attention" means in this context is unclear: "While investors will have different thresholds for which firms they will scrutinize more closely, it appears likely that issuers with greater than 30 percent opposition this year will receive greater attention in 2012.   According to ISS data, 168 companies, or about 6 percent of the total, received more than 30 percent dissent this proxy season." Contact Ning Chiu. Contact Kyoko Takahashi Lin.
5 years 7 months ago
The SEC website contains a schedule of Dodd-Frank rulemaking, which has been helpful but at times confusing when the schedule is updated with little notice.  Currently, the schedule for the next five months of August - December includes: Final rules:  (a) disclosure by institutional investor managers on how they voted on executive compensation; (b) listing standards on compensation committee independence and compensation advisers; (c) disclosure on conflict minerals, mine safety and by resource extraction issuers; and (d) end-user exception to mandatory clearing of security-based swaps. Proposed rules:  (a) disclosure of pay-for-performance, pay ratios; and hedging by employees and directors and (b) recovery of executive compensation. 
5 years 7 months ago
The SEC website contains a schedule of Dodd-Frank rulemaking, which has been helpful but at times confusing when the schedule is updated with little notice.  Currently, the schedule for the next five months of August - December includes: Final rules:  (a) disclosure by institutional investor managers on how they voted on executive compensation; (b) listing standards on compensation committee independence and compensation advisers; (c) disclosure on conflict minerals, mine safety and by resource extraction issuers; and (d) end-user exception to mandatory clearing of security-based swaps. Proposed rules:  (a) disclosure of pay-for-performance, pay ratios; and hedging by employees and directors and (b) recovery of executive compensation. 
5 years 7 months ago
The SEC website contains a schedule of Dodd-Frank rulemaking, which has been helpful but at times confusing when the schedule is updated with little notice.  Currently, the schedule for the next five months of August - December includes: Final rules:  (a) disclosure by institutional investor managers on how they voted on executive compensation; (b) listing standards on compensation committee independence and compensation advisers; (c) disclosure on conflict minerals, mine safety and by resource extraction issuers; and (d) end-user exception to mandatory clearing of security-based swaps. Proposed rules:  (a) disclosure of pay-for-performance, pay ratios; and hedging by employees and directors and (b) recovery of executive compensation.  The SEC calendar currently indicates it plans to adopt final rules on these executive compensation disclosures and clawback policy in the January - June 2012 time period.  In addition, during this period the SEC also intends to adopt rules (jointly with others) on the disclosure and prohibition of executive compensation structure and arrangements for financial institutions.
5 years 7 months ago
The Country is Saved. We Won't Default. We Won't Need the EU to Bail US Out! Hooray!!!As I noted in a Tweet, if the U.S. defaulted and ended up in Bankruptcy, who would be the Trustee, the guardian of creditors like China? Luxembourg???The entire situation is ridiculous. But, it wasn't so far-fetched (a default). Everyone was buying gold and platinum and silver and... As posted here earlier "How Many Grams of Fat Are There In An Ounce of Gold?", the idea being that gold is only worth what someone will trade for it. Well, we will not have to worry about that anymore. The Congress, meaning the Democrats, Republicans, and Tea Partyists, in both the House of Representatives and in the Senate, and the President have come up with the master-plan to avoid not being able to borrow. The amount the United States can borrow will be increased.Foolish as it appeared (because of all of the 2012 election campaigning and "holier than thou" Tea Party drinkers; I mean why have a Tea Party and drink coffee? But they did forget the crumpets!), there was exposed a huge problem with our financial system.Some basics and answers to questions:1. How could we run out of money to pay bills? Well, we already have. We have used the equivalent of an home equity loan to get money for all of our annual needs. The difference is that we "sell" Treasury Bonds.
5 years 7 months ago
As of July 2010, 43% of S&P 500 companies have separate CEO and chairman positions, but only about half of those companies have an independent chair.  The debate about the value of having an independent chair continues, including through shareholder proposals.  Only a small percentage of the proposals submitted to vote succeed, and usually by narrow margins.  In 2001, only 4 (about 17% of the total) passed, none of the 45 proposals in 2010 received sufficient majority support, and 4 in 2009 (about 10% of the total) and about 5% of the over 160 proposals from 2005 to 2008, won shareholder approval.  In the instances where the proposals pass, companies generally respond promptly.  Looking at 2009 results, Bank of America lost an unusual binding bylaw proposal and appointed a new independent chair.  Weyerhaeuser also elected an independent chair at its annual meeting. 
5 years 7 months ago
The DC Circuit's vacating of the SEC's proxy access rule has wider applications for the possible challenge of regulations under the Dodd Frank Act on the grounds that they fail to analyze the economic impact.  Even though we all know that the DC circuit is especially hard on the SEC,  other agencies could also find themselves in a similar position given the fact that the speed of deadlines under the Dodd Frank Act has essentially forced a very minimal economic review of hundreds of regulations.  The court's view that the SEC  "inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters" is a warning shot across the bow of Dodd Frank implementation. Contact Margaret Tahyar.
5 years 7 months ago
A unanimous D.C. Circuit panel this morning invalidated Rule 14a-11 as "arbitrary and capricious", ruling that the SEC had failed to consider the potential costs and other impacts of the rule.  This outcome was fairly predictable given the composition of the panel that decided the case, but even so the scathing and dismissive tone of the opinion is remarkable.  The panel essentially swallowed the Business Roundtable and Chamber of Commerce arguments hook, line and sinker, even to the point of second guessing which academic studies the Commission should have relied upon and which it should have disregarded. Where do we go from here?  Barring intervention from the Supreme Court, the decision sends the SEC back to square one: a dispiriting prospect, given that the subtext of the opinion is that this panel at least would have thrown out pretty much anything that the SEC might have put forth.  It's also hard to imagine the current Congress coming up with a statutory solution.  This means that the initiative on this subject may be back with companies and shareholders, where it arguably should have been all along. Contact Bill Kelly.
5 years 7 months ago
As a result of targeted activism in the last few years, more than half of the S&P 500 companies now allow shareholders to call special meetings.  The number of shareholder proposals relating to special meetings declined this year, to 28 in 2011 from 54 in 2009.  The decline can be attributed in part to companies submitting management proposals in order to exclude the shareholder proposals from their proxy statements.   Shareholder proposals generally seek the ability of 10% or more shareholders to call special meetings, but if companies include a management proposal giving shareholders the same right, but at a different ownership level (for example, 40% for EMC and 25% for Weyerhaeuser), then the SEC staff permits the shareholder proposal to be excluded from a company's proxy statement on the basis that the company is submitting a conflicting proposal under Rule 14a-8(i)(9).
5 years 7 months ago
The other day, I responded to a comment on Twitter from a knowledgeable mortgage financing friend regarding the current housing situation vis a vis foreclosures. His view is that the "market should find its own level" ; that the Federal Government should not interfere with modification programs, the EHLP program etc.After some thought, I must agree with him. If the pace of foreclosures returns to normal (once the robo-whatever is done and docs are corrected) and evictions follow promptly, there will be plenty of Housing For The Homeless. There will be no need to build new shelters. Mortgagees can just allow cities to house "The Homeless" in these abandoned/emptied OREO properties. The cities would pay but only by not taxing the mortgagee/foreclosing entity. If the mortgagee does not incur this liability by recording a deed, then more properties will be formally owned by the entity which won the foreclosure sale bid.Now, one might ask,"Why should the homeless get to live in someone else's house when the someone else just got evicted and became HOMELESS?" Answer: "Well, that's the market finding its level!!!". Further, the new homeless family can move into another "victim's" house as he/they get thrown out!
5 years 7 months ago
As is their customary timing, on Friday afternoon the SEC issued several updated CD&I interpretations of particular interest to the governance community:   –Information About Non-Continuing Directors.  The SEC clarified a previous CD&I regarding disclosure of certain biographical information, under Item 401(a) and Item 401(e), about directors whose terms of office will not continue after the annual meeting.  Both requirements may be omitted so long as a company provides its Part III of Form 10-K information by incorporating from the proxy statement, and the company files its proxy statement within 120 days after its fiscal year-end.  This means most public companies would not have to provide this disclosure.  (116.10 of the Regulation S-K CD&Is)   –Use of Non-GAAP Information in Proxy Statements.  The SEC indicated that non-GAAP financial information that does not relate to pay target levels, but is included in the CD&A or other parts of the proxy statement, are subject to the non-GAAP rules under Regulation G and Item 10(e).  The rules provide a specific exemption for disclosure of target levels that are non-GAAP financial measures.  As part of the increased effort to demonstrate the connection between pay and performance, companies are more frequently referring to corporate financial data, including non-GAAP financial information, in their discussion of executive compensation.  
5 years 7 months ago
With the vast majority of this year’s annual shareholder meetings for U.S. public companies behind us (at least for those with calendar-year fiscal years), we wanted to update the findings that we shared in our last post on the subject.  As of the end of last week, 1,193 large accelerated filers had reported the voting results from their shareholder meetings. Regarding approval of “say-on-pay”: Large Accelerated Filers bySay-on-Pay Vote(as of July 1, 2011) 90-100% Approval 791 80-89% Approval 195 70-79% Approval 97 60-69% Approval 55 50-59% Approval 29 40-49% Approval 16 30-39% Approval 9 20-29% Approval 1 0-19% Approval 0 Total 1,193                          Generally, approval for say-on-pay votes has remained high as the season has progressed, and the average say-on-pay result for all large accelerated filers is 89%.  Similar to what we reported at the height of the proxy season, less than 18% of large accelerated filers reported say-on-pay results below the 80% approval level, and less than 10% reported results below the 70% approval level.
5 years 7 months ago
Proposals to elect directors by a majority vote fared well this season, averaging 56.6% at 31 companies as of early June.  This was the topic with the most number of submissions, as Carpenters, CalPERS and other proponents sent over 80 shareholder proposals to companies, almost twice as many as in 2010.  Activists were angered by the fact that the requirement for all public companies to adopt majority voting was dropped from the final version of the Dodd-Frank Act.  Many companies decided to proceed with implementation and negotiate for withdrawal of the proposal rather than putting it to a shareholder vote.
5 years 7 months ago
This is the first of a series of posts to discuss key shareholder proposals during proxy season 2011.  While ISS reports that 39% of S&P 500 companies continue to have staggered boards, shareholder proposals requesting that the board of directors be elected annually continue to receive the highest level of support of any shareholder proposals.  As of early June, 39 proposals received more than majority support, averaging 73%, while only 5 failed.  Many proposals never reach shareholder vote as companies, recognizing the likelihood of strong support for the proposal, negotiate for withdrawal by agreeing to take action.  For example, eBay agreed to conduct a review of declassification within 6 months. 
5 years 8 months ago
Some shareholders are using lawsuits as a new tactic to fight what they perceive as an escalation in executive compensation. Shareholders are likely to find these suits difficult to push through the courts on their merits, but the suits can cost subject companies time and money, not to mention reputational harm brought on by negative media attention. Contact Kyoko Takahashi Lin. Contact Gillian Emmett Moldowan.
5 years 8 months ago
Earlier this month, the SEC readopted rules to ensure that its current definition of "beneficial ownership" would continue to apply to persons who purchase or sell security-based swaps ("SBS") on and after July 16, 2011.  The reproposal was prompted by Dodd-Frank's addition of Section 13(o) to the Exchange Act, which would have otherwise excluded security-based swaps from the disclosure and short-swing profit rules.  The SEC did not give any guidance as to when SBS constitute beneficial ownership for Section 13.  However, the SEC staff is evaluating possible changes to the Section 13 reporting requirements but the outcome and timing of that evaluation remains uncertain.  Here's a copy of the Davis Polk memo describing the new rule. Contact Phillip Mills.
5 years 8 months ago
The Dodd-Frank frequency vote is of course "nonbinding", but companies that have "lost" the vote for triennial frequency have almost without exception decided that the better part of valor is to follow the shareholders' expressed will for an annual vote. With more than 60% of large accelerated filers having announced their decisions, only two companies have bucked the trend. Annaly Capital Management just filed an amended Form 8-K declaring that its board has determined that future say-on-pay votes will be submitted to shareholders every three years, even though annual say-on-pay received majority approval. Annaly Capital Management is the first large accelerated filer to follow the example previously set by American Reprogaphics Company, a small company, to conduct triennial votes. The vote wasn't close in either case; each company had received 70% or more shareholder support for an annual vote.
5 years 8 months ago
There used to be a TV show, weekly, called appropriately "THAT WAS THE WEEK THAT WAS". It provided a satirical review of the weeks happenings - especially politics. Kind of like a fast paced, hit-a-run version of John Stewart. Actually, "The Daily Show" is a modern day iteration. This Is The Month That Was:FORECLOSURES1. Foreclosures still moving at a brisk pace. Some slowing but due to paperwork issues. The mortgage servicers, led by the Mortgage Backed Security Investors, want to foreclose, and actually do so, even when they do not have the legal rights. IT GOES LIKE THIS :a. You get a loan from the "We Saw You Coming Mortgage Company"b. The mortgage company has already sold the loan to a large bankc. The holder of the mortgage only (not the note, the I.O.U.) is company called MERS, short for Mortgage Electronic Registration System. This is mortgage industry registry to avoid recording mortgage transfersd. The loan is "sold" into a Pool of 3000 other loans paying the Bank for its investment in your mortgage.
5 years 8 months ago