Shareholder Activism: Current Trends & Tactics

Join us on October 14 for a review and panel discussion of the current state of public company shareholder activism. A panel of some of the country’s leading advisors in shareholder activism will discuss the tactics being deployed by activists, responses by companies and preparations directors and officers should implement today. Directors and officers of public companies of all sizes will learn valuable lessons and better understand the current activist landscape.

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ISS Releases Results of 2014 Policy Survey

ISS recently released the results of its annual global policy survey of institutional investors and corporate issuers. These results will be used by ISS in preparing its policy updates, expected later this year. The survey addressed a range of issues, including board accountability, boardroom diversity, equity plan evaluation, pay for performance and environmental and social issues. Not surprisingly, the survey revealed a difference of opinion among investors and issuers over whether unilateral board action is appropriate to amend bylaws affecting shareholder rights. The survey also revealed a diversity of investor and issuer views on how best to implement ISS new proposed “balanced scorecard” approach to evaluate equity plan proposals. However, it seems clear that ISS will implement this new more holistic approach in some form for the 2015 proxy season.

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Equity Plan Approval - Reminder to Register for ISS Equity Plan Data Verification

Generally, ISS recommends against an equity plan up for shareholder vote if the plan has a high cost or Shareholder Value Transfer (SVT). ISS also recommends against plans with high burn rates, permissive option repricing or other problematic provisions. Despite ISS recommendations against, however, substantially all plans have received shareholder approval in recent years, although the approval margins are not always high. Last month, ISS launched a portal allowing companies to verify information used by ISS when formulating its recommendation. Companies are encouraged to register for the portal, giving them access to ISS data and the ability to request modifications. Data will be available for review approximately 12 days after a company files its definitive proxy statement with the SEC, and companies will then have a two-day window to request a modification. 

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SEC Awards Whistleblower $30 Million

The SEC announced an award of $30 million to a whistleblower living in a foreign country whose information led to a successful enforcement action. This is the largest award to date under the SEC’s program implemented in 2011. According to the SEC, the whistleblower exposed an ongoing fraud that would have been hard to detect otherwise. As noted by the SEC, “Whistleblowers from all over the world should feel similarly incentivized to come forward with credible information about potential violations of the U.S. securities laws.” The whistleblower’s identity and other details that could reveal it must be kept confidential by law. To qualify for an award under the SEC’s Dodd-Frank whistleblower program, a whistleblower must voluntarily provide the SEC with original information that leads to successful enforcement.

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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.