Current Posts

October 21, 2014 | Ning Chiu

According to Proxy Voting Analytics by The Conference Board, hedge funds submitted 39 shareholder proposals, an increase from 24 last year, and accounted for slightly more than 5% of the total. The main recipients of proposals were health technology companies and those in the financial sector. Most topics related to business strategies, such as requests to break up a company, divest it of noncore assets, engage advisers to evaluate a business combination, issue dividends or return capital to shareholders.  

The number of actual campaigns focused on shareholder meetings at Russell 3000 companies declined, to 101 from 113 in the prior year, even while announcements of activism campaigns increased to 176 compared to 155 in 2013. For The Conference Board, this represents a growing number of activists seeking to publicize their views of a company’s business strategy or performance,... Read More

October 20, 2014 | Betty M. Huber

Anadarko Petroleum Corporation and EOG Resources, Inc. agreed with the New York State Attorney General earlier this month to provide additional disclosure regarding hydraulic fracturing risks in, and outside of, their SEC filings. These agreements, available here and here, effectively set forth disclosure checklists for the companies’ annual reports on Form 10-K for any material financial effects of current and future hydraulic fracturing regulation, litigation and impacts to drinking water, air and the environment resulting from hydraulic fracturing, including disclosure of each company’s management of these matters. In addition, Anadarko and EOG agreed to publicly disclose (outside of their SEC filings) detailed information regarding hydraulic fracturing risk mitigation techniques, chemical and... Read More

October 17, 2014 | Ning Chiu

For companies considering a review of the audit committee disclosure in proxy statements, the recent review by EY's Center for Board Matters provides several insights on some of the additional information that Fortune 100 companies included in 2014. We previously discussed some of the background related to the increased disclosure here

The increased disclosures focus on three areas of audit-related matters: the audit... Read More

October 15, 2014 | Ning Chiu

ISS has published its draft 2015 voting policies for public comment, which are due on October 29. The final release is expected around November 7 and any new updates will apply for meetings taking place on or after February 1, 2015. 

The biggest news may be what is not being covered for the U.S. market. After a fairly extensive policy survey, which we previously discussed here, the draft does not address some of the key issues asked in the survey regarding unilateral board adoption of bylaws, failures of risk oversight (such as major cybersecurity breaches), pay for performance and CEO pay limits. Instead, the draft policy covers two narrow, though critical, matters as described below. We note, however, that ISS has in the past... Read More

October 15, 2014 | Ning Chiu

Last Wednesday, an 8-K from Icahn Enterprises L.P. reported that its chairman, Carl Icahn, intends to use Tumblr, Facebook, Twitter and a particular website (www. to communicate about the company and “other issues.” The 8-K acknowledges that it is possible that the information he posts could be deemed to be material information, and therefore the company encourages investors, the media and other interested parties to review this information along with traditional investor relations communications channels such as its own website, SEC filings and press releases.  

The 8-K notes the SEC staff guidance issued in April on the appropriate use of social media in different circumstances, which we previously discussed ... Read More

October 14, 2014 | Betty M. Huber

The European Council adopted on September 29, 2014, a Directive requiring large public interest entities with more than 500 employees to disclose in their annual reports “relevant, useful information” necessary for an understanding of such companies’ environmental, social, employee, human rights, anti-corruption and bribery matters. These companies will also be required to disclose board diversity matters. The disclosure would focus on the companies’ governing policies, related risks and the management of such risks. The Directive will become law 20 days after it is published in the European Union Official Journal (which is expected in due course). Member states will have two years to transpose the Directive into national legislation. Companies will need to begin reporting as of their financial year 2017.  

What will become market practice?  As a... Read More

October 13, 2014 | Ning Chiu

SEC Chair White signaled that the proposed rules on CEO pay ratio would be adopted before the end of the year at a Senate Banking Committee hearing last month, or at least that was her “hope and expectation.” Senator Menéndez, Congressional author of the rule under the Dodd-Frank Act, responded that he wanted “more expectation and less hope” for meeting that timetable, indicating that the proposal in its current form reflects the “legislative intent.” 

Chair White had also cautioned that the SEC staff was still working through 128,000 comment letters received on the topic. Since the hearing, the Center on Executive Compensation submitted a set of follow-up comments, in part responding to letters from other organizations, namely the AFL-CIO, Calvert Investments and Trillium Asset Management, that... Read More

October 7, 2014 | Ning Chiu

Since some companies have made significant changes to the presentation of their proxy statements, Keith Higgins, Director of the SEC’s Division of Corporation Finance, is encouraging companies to make “similar strides” with their periodic reports, such as experimenting with layout, reducing duplication and eliminating stale information. The SEC staff is willing to discuss potential changes with companies, although they will not pre-clear specific disclosures.  

The possibility of companies taking their own initiative toward revising their periodic reports was one idea noted in his recent speech on the SEC’s disclosure effectiveness project. The Division’s goal is to ultimately recommend rule changes, principally on Regulation S-K and Regulation S-X, to the Commission. 

Perhaps in response to concern among some constituents that disclosure changes correlate to less disclosure, Higgins was careful to point out that the objective is not to reduce the volume of disclosure... Read More

October 6, 2014 | Ning Chiu

91% of big companies disclose the existence of anti-hedging policies and 66% mention anti-pledging policies, according to the Meridian 2014 Governance and Design Survey, which examined the 250 largest public companies by revenue and market capitalization.  Anti-pledging policies generally prohibit all pledging of company shares, although 18% allow some pledging with approval by the board or management.

Other notable governance structure developments include:

  • Majority voting and classified boards.  89% use majority voting standards for director elections, but only 79% of those companies accompany that with  mandatory resignation policies.  While there has been a movement toward annual elections,  21% continue to have a classified board. 
  • Chairman and CEO roles.  Slightly less than half disclose a mandatory retirement age for... Read More
October 1, 2014 | Ning Chiu

The Center for Political Accountability has published the 2014 CPA-Zicklin Index, which rates 300 companies in the S&P 500 on their disclosure of corporate political spending. Nearly half provide some information about direct payments to state candidate, parties and committees, 527 groups (such as national governors’ associations) and trade associations. 

According to the 2014 Index, 64% of companies provided full disclosure publicly, while 28% gave brief policy statements. Noble Energy and CSX Corporation received the highest overall scores. 20 companies placed in the top five rankings for disclosure.

Direct contributions.  44% of companies disclose information on their direct contribution to candidates, parties and committees, while 17% said it is their policy not to make direct contributions. 

National 527 groups and trade associations.  About 43%... Read More