On September 1, 2022, new universal proxy rules adopted by the Securities and Exchange Commission (“the SEC”) formally went into effect. These rules mandatorily apply to public company director elections held after August 31, 2022. This post summarizes the key provisions of Rule 14a-19 of the Securities Exchange Act of 1934, as amended (“Rule 14a-19”), and provides recommendations for potential corporate bylaw amendments.
Continue Reading Bylaw Amendments to Address Universal Proxy Rules

On February 10, 2023, the Securities and Exchange Commission (the “SEC”) Staff issued a series of Compliance & Disclosure Interpretations (CD&Is) relating to the final “pay versus performance” disclosure rules.  These CD&Is cover a range of topics, including use of peer groups, valuation, disclosure of financial performance measures, and presentation of footnotes to the pay versus performance table.  As the 2023 proxy season is fast approaching, and calendar-year companies are preparing to finalize initial disclosures, it is important for issuers to review this guidance to ensure no changes need to be made to its draft disclosures.
Continue Reading SEC Staff Issues Interpretations Relating to the Final “Pay Versus Performance” Disclosure Rules

On Thursday, August 25th, 2022, the Securities and Exchange Commission (the “SEC”) adopted amendments that will require registrants to disclose information reflecting the relationship between executive compensation actually paid by a registrant and the registrant’s financial performance.  These rules implement the so-called “pay-versus-performance” disclosure requirements prescribed by Section 953(a) of the Dodd Frank Act. This rule was first proposed in 2015 and the comment period was reopened in January 2022, nearly twelve years after Congress directed the SEC to create such a rule.   This rule is intended to provide shareholders with a more clear and digestible understanding of the relationship between “executive compensation actually paid” (described below) by a company and the company’s overall financial performance.
Continue Reading SEC Releases Final Pay Versus Performance Rules

On Monday, March 21, 2022, the U.S. Securities and Exchange Commission (“SEC”) released its long-awaited proposed rules on climate-risk disclosures. The proposed rules would amend and build upon existing climate-change disclosure rules and guidance (collectively, the “Proposed Rules”). Under the Proposed Rules, publicly traded companies and other issuers of securities that are required to file a registration statement with the SEC (collectively referred to by the SEC as “Registrants”) would be required to make climate-related disclosures to investors in their registration statements (Forms S-1, S-3, F-1, and F-3) and periodic reports (Forms 10-K, 10-Q, and 20-F).

The Proposed Rules aim to enhance and standardize disclosures on climate-related risks that are likely to have a material impact on a company’s business and financial performance over the short-, medium-, and long-term. The release of the Proposed Rules has triggered impassioned debate, illustrating both strong support for, and fervent opposition to, the proposed climate-related disclosure framework. Thus, any final rules adopted following the comment period could vary significantly from the proposals by the SEC discussed herein.Continue Reading The SEC Proposes Enhanced Climate Disclosure Rules

A universal proxy card, listing both company and activist nominees on a single proxy card, will be mandatory for shareholder meetings with contested director elections occurring after August 31, 2022. This will allow shareholders to “split the ticket,” making their own ad hoc selection of board members. By contrast, under the current proxy rules, holders voting by proxy card (rather than in person) must vote for the entire slate proposed by the company or by the activist.
Continue Reading Key Takeaways from New SEC Universal Proxy Card Rules – Major Changes Make Activism Easier, Cheaper and Probably More Chaotic

On July 28, 2021, Securities and Exchange Commission (“SEC”) Chair Gary Gensler, speaking at a webinar titled “Climate and Global Financial Markets,” set forth certain considerations to guide his staff in developing a rule that will require mandatory disclosure on climate risks by the end of 2021.

Up until now, SEC guidelines on climate disclosure were voluntary, resulting in inconsistent disclosure among public companies. In March 2021, the SEC solicited comments from the public on climate change disclosures and, according to Chair Gensler, more than 550 unique comment letters were submitted, three-quarters of which supported mandatory climate disclosure rules. Chair Gensler believes that “consistent, comparable, decision-useful disclosures” would be beneficial to companies and investors alike.Continue Reading SEC Chair Outlines Rulemaking Considerations for Potential New Climate-Related Disclosure Requirement