All items from Davis Polk Briefing: Governance

SEC Chair White has spoken about the SEC's interest in reforming the current disclosure regime, which we discuss here. Perhaps foreshadowing the possible benefits of change, the WSJ recently reported on Corp Fin’s role in prowling through securities filings, dubbed the “the world’s most impenetrable prose,” followed by a story on how an outfit that runs the SAT test graded the filings of six large companies for “readability.”  



Posted 4 days 23 hours ago

Rehearing en banc of the conflict minerals case is not warranted because there is no conflict with other court decisions, argues the National Association of Manufacturers, Chamber of Commerce and the Business Roundtable (collectively referred to as “NAM”) in a joint response to the petitions for rehearing en banc submitted by the SEC and Amnesty International (which we previously discussed here.



Posted 1 week 58 min ago

As we previously discussed here, in May, a shareholder challenged the validity of an amendment to Cheniere Energy’s 2011 incentive plan that was voted on at the company’s February 2013 meeting. In the complaint, the plaintiff questioned whether abstentions should have been counted as votes “against” the plan, based on the company’s bylaws. According to the plaintiff, treating abstentions as “no” votes would have meant that the plan was not approved by shareholders.



Posted 1 week 3 days ago

For those who wondered what happened to the rule proposal that the SEC issued in January 2011 requiring that investment managers report their say-on-pay votes at least annually, the staff is working on drafting final rules for the Commission’s consideration “in the near term,” according to Chair White.



Posted 1 week 5 days ago

In the midst of the clamor for disclosure reform that questions whether the current regime requires too much information in public filings, the Council of Institutional Investors (CII) wants companies to provide additional detail about their board evaluation processes.  



Posted 1 week 6 days ago

The SEC staff recently disagreed with Procter & Gamble’s no-action letter, which sought to exclude a shareholder proposal on ordinary business grounds, although a similar proposal sent to Johnson & Johnson was allowed to be kept out of its proxy statement this past February.   



Posted 2 weeks 3 days ago

Amnesty International filed a supplemental brief to its late May petition for rehearing of the conflict minerals case, based on the American Meat decision from late July, which we previously discussed here.



Posted 3 weeks 4 days ago

Facebook is seeking to dismiss a lawsuit challenging the compensation paid to its non-executive directors, which we previously discussed here. 
Although a board’s decision to grant compensation to its members generally falls outside the business judgment rule because board members are deemed personally interested in their compensation levels, if the board’s decision is approved by a majority of independent, disinterested and informed stockholders, then the business judgment rule presumption applies rather than the entire fairness standard.



Posted 3 weeks 6 days ago

The NYTimes Dealbook recently focused on a Proxy Monitor study that found that 70% of shareholder proposals submitted by individuals to Fortune 250 companies in 2014 were sponsored by three people and their family members − John Chevedden, William Steiner and James McRitchie. Over the last nine years, the Cheveddens have filed 232 proposals, with about 19% receiving majority support, while the Steiners made 215 submissions, with 29% passing. According to the report, Evelyn Davis only submitted one proposal in 2014, and none in 2013. Although her success rate for passing proposals is around 1%, the Dealbook article discusses her newsletter that many companies felt compelled to buy and other perks she received.



Posted 4 weeks 3 days ago

ISS has launched a new Equity Plan Data Verification portal to better reflect the most up-to-date data for investors voting on equity plans. While this process is optional for issuers and does not affect whether they receive ISS recommendations, given that issuers frequently criticize the proxy advisory firms for having errors in the voting reports, this portal represents a unique opportunity to ensure those errors are minimized, especially in the complex area of equity plan proposals. Favorable proxy advisory firm recommendations can be crucial to the passage of those plans.



Posted 5 weeks 3 days ago