On August 5, 2015, the SEC approved a rule to implement the DoddFrank Act mandate that public companies disclose the ratio of median pay of all employees to the principal executive officer (typically the CEO) total compensation. While the final rule offers some important flexibility for companies required to comply, it remains controversial as a burdensome requirement that fails to balance compliance costs with potential benefits.
A recent Delaware Supreme Court ruling suggests that companies should review their advance notice bylaw provisions and assess whether they are in line with best practices. In Hill International, Inc. v. Opportunity Partners L.P., the company’s disclosure in the prior year’s proxy statement that the next annual meeting would be held “on or about” a given date did not trigger its advance notice bylaw provision.
Not surprisingly, the effectiveness of a company’s ethics and compliance programs depends on leadership. A recent report by LRN, an ethics and compliance advisory services company, revealed that programs headed by individuals serving a dual role of general counsel and chief compliance officer (CCO) are more effective on average than those led by a dedicated CCO.
In the last few years, the SEC has been pursuing most of its enforcement actions through administrative proceedings, rather than filing charges in federal district court. The U.S. Chamber of Commerce recently criticized the practice and called for reform.
The Ticker shares recent developments in SEC compliance, capital markets, corporate governance, executive compensation and other matters important to public companies and their officers and directors. It is published by Fredrikson & Byron’s Public Companies Group.