A number of rule revisions by the SEC will require public companies and management investment companies to make new or enhanced disclosures in their proxy statements and other public filings beginning in 2010. The most significant of these changes, Proxy Disclosure Enhancements (Releases Nos. 33-9089, 34-61175, IC-29092 (Dec. 16, 2009), was adopted by a 4-1 vote of the SEC on December 16, 2009, and amends Regulation S-K, Item 401 (Directors, Executive Officers, Promoters and Control Persons), Item 402 (Executive Compensation) and Item 407 (Corporate Governance) effective as of February 28, 2010 (the “Disclosure Enhancements”).
When coupled with additional recent rule changes and SEC staff guidance, the Disclosure Enhancements and other changes will require some advance planning by public companies to smooth the transition to the new disclosures and procedures. Set forth below are key items and suggested actions that should be considered as the 2010 proxy season gets underway.
Effective Date of Disclosure Enhancements
Following some initial confusion over the announced February 28, 2010 effective date, the SEC’s Division of Corporation Finance (“Division”) promptly published a number of Compliance and Disclosure Interpretations to clarify the transition to the new disclosure rules.
In this regard, a company with a 2009 fiscal year that ends before December 20, 2009 will not be required to comply with the new disclosure requirements until the filing of its Form 10-K for fiscal year 2010. A company whose 2009 fiscal year ends on or after December 20, 2009 does not need to comply with the new disclosure requirement if its Form 10-K and definitive proxy statement are filed before February 28, 2010, but must comply if these documents are filed on or after that date. If such a company is required to file a preliminary proxy statement, but expects to file its definitive proxy statement on or after February 28, 2010, then the preliminary proxy statement must comply with the new proxy disclosure requirements.
A company is required to comply with the new requirement to report the results of a shareholder vote on Form 8-K if the annual meeting of shareholders to which such vote relates takes place on or after February 28, 2010, regardless of the date on which the proxy statement for the meeting is mailed to shareholders.
Finally, according to the Division, if a company is not required to comply with the new disclosure requirements for its 2009 Form 10-K and related proxy statement, it may still voluntarily comply with some or all of the requirements. A company may not voluntarily comply with the Summary Compensation Table and Director Compensation Table amendments, however, without also complying with all the other new disclosure requirements applicable to that form.
Corporate Governance Disclosures
The Disclosure Enhancements expand the required disclosures regarding director and director nominees, including requiring additional biographical and background information, call for a discussion of the chosen leadership structure of the company and expand the period for reporting legal proceedings involving directors, director nominees and officers. Although not originally proposed, a discussion about the role of diversity in director selection is also required to be included.
Enhanced Director and Nominee Disclosures. In an effort to deepen transparency and provide investors with more detailed information regarding directors and director nominees, the Disclosure Enhancements require companies to disclose each person’s particular experience, qualifications, attributes or skills that led the board to conclude that such individual should serve as a director of the company in light of its business and structure. Although the new rules do not specify the particular information that must be disclosed, if certain skills (e.g., financial reporting expertise) were an integral part of the board’s decision, such information must be disclosed. This expanded disclosure is required for all director nominees and current directors, including those not up for reelection.
The new rules also expand the required disclosure of service on the boards of other public companies or registered investment companies. Presently, companies are only required to disclose current directorships held by directors or nominees. The SEC has expanded this requirement to include all directorships held during the past five years, including directorships no longer held.
Also included in the new rules is an increased look-back period for certain legal proceedings involving directors, nominees and executive officers. The current five-year period has been lengthened to ten years, and its scope has been increased to include (i) proceedings resulting from involvement in mail or wire fraud, (ii) proceedings based on violations of securities, commodities, banking or insurance laws and (iii) sanctions imposed by self-regulatory organizations (e.g., stock or commodities exchanges).
Leadership Structure. The new rules also require disclosure of a company’s board leadership structure and a discussion of why such structure is appropriate given the company’s particular needs. The company must disclose whether and why the principal executive officer position has been combined with the board chair position and, if such combination is present, whether and why a lead independent director has been designated, as well as what specific role such lead independent director plays in the leadership of the company.
Board Diversity. Citing the utility of understanding how a board considers and addresses diversity, the Disclosure Enhancements require a discussion of whether and how a company’s nominating committee considers diversity in selecting board nominees. If the committee has a policy regarding the consideration of diversity, the disclosure must include a discussion of how the policy is implemented and how its efficacy is assessed. Recognizing that the term “diversity” may be defined in varying ways, the SEC declined to include a definition in the rules, leaving it open to each company’s interpretation.
Action Items. To ensure compliance with the SEC’s new corporate governance rules, public companies should consider taking the following actions:
- Evaluate and summarize the current board leadership structure, with an emphasis on why such structure is appropriate for the company’s business. Review the reasons for combining or separating the roles of chairman of the board and principal executive officer, and also review the role, if any, of the lead independent director.
- Review the composition of the board as a whole, including the balance of independence, business specialization, technical skills, diversity and other desired qualities that the directors bring to the board.
- The nominating committee should meet and discuss individual director qualifications and diversity considerations in particular and, if appropriate, institute a new process for assessment of directors and analysis of potential director candidates.
- Redraft biographical information for all directors to add disclosure on the particular experience, skills and qualifications of each director or director nominee.
- Revise director and officer questionnaires to collect new required information about directors and director nominees (see below).
- Allow board members additional time for review of the draft proxy statement with its added disclosures.
Compensation Risk Assessment
The SEC, concerned that certain compensation structures could drive excessive risk-taking in companies, has enhanced its disclosure requirements regarding how compensation practices relate to a company’s risk management. The Disclosure Enhancements require a company to disclose compensation policies or practices as to any employee (not just the named executive officers) if those policies or practices are “reasonably likely to have a material adverse effect” on the company. If there is such a likelihood, a company must discuss its policies and practices of compensating its employees as the polices relate to risk-management practices and risk-taking incentives. Companies need not, however, affirmatively state that they have determined that risks arising from their compensation practices are not reasonably likely to have a material effect on the company.
The final rule designates a new proxy statement section (rather than part of the CD&A section as was proposed) for this all-employee compensation risk assessment. The rule also provides examples of compensation policies and practices that could be more likely to present a likelihood of adverse effect and should be considered as part of the assessment. Smaller reporting companies will not be required to provide the new compensation risk disclosures.
Action Items. Companies should consider the following to comply with the new compensation risk assessment disclosure requirement:
- Conduct a review and evaluation (including detailed discussions with the compensation committee, where appropriate) of the risks the company faces and what potential material adverse effects compensation policies may have on these risks.
- Ensure that incentive compensation arrangements are backed by a strong corporate governance process, including active and effective oversight by the board of directors and/or compensation committee and creation of a record supporting compensation decisions.
- Review compensation policies to check that employees are not being rewarded for excessive risk-taking.
- Assess whether directors are getting the information they need to understand the company’s risks, as well as getting management’s assessment of those risks.
- The board or the responsible committee should periodically review with management the adequacy of the company’s risk management practices, particularly with respect to whether the risk management processes appropriately identify, assess and manage the company’s risks.
Equity-Based Award Reporting
Another goal of the SEC was to help investors better understand the value of equity awards granted to executives and directors, which are reported in the Summary Compensation Table and Director Compensation Table. Previously, stock and option awards were disclosed in the amount recognized for fiscal year financial statement reporting purposes. The Disclosure Enhancements are intended to better reflect the impact of a compensation committee’s decisions by requiring disclosure of the aggregate fair value of the awards as of the grant date of those awards in the Summary Compensation Table as part of “Total Compensation.”
The SEC also added an instruction to clarify the valuation of equity awards that are contingent upon future performance: a registrant must disclose an estimate of its compensation cost to be recognized over the period of performance, in light of the probability that the performance conditions will be met. In most cases, a footnote will also need to be included that reports the maximum value of such a contingent equity award, assuming that all performance conditions will be satisfied.
To facilitate year-to-year comparisons, companies providing Summary Compensation Table disclosure for a fiscal year ending on or after December 20, 2009, will be required to recalculate the grant date fair value of stock awards and option awards and update the total compensation column for all named executive officers for each fiscal year required to be included in the table. Companies need not re-determine named executive officers for any preceding year based on total compensation for those years recomputed pursuant to the new rules.
Action Items. The new framework for reporting stock and option awards will require revised compensation numbers as follows:
- Calculate the grant date fair value of stock and option awards granted during fiscal 2009, 2008 and 2007, and recalculate total compensation for fiscal 2008 and 2007 for the Summary Compensation Table.
- For awards subject to performance conditions, calculate the grant date fair value based on the probable outcome of the performance conditions, and calculate the maximum value payable assuming the highest level of performance for purposes of the required footnote disclosure.
- Determine the named executive officers for the Summary Compensation Table to be included in the 2010 proxy materials using the recalculation of total compensation under the new rules.
Board Role in Risk Oversight
Currently, there is no requirement for a company to discuss the involvement of its board in the risk management process. The Disclosure Enhancements change that by requiring disclosure regarding the board’s role in risk oversight, in order to improve shareholder and investor understanding of the role of the board in an organization’s risk management practices.
Companies face a variety of risks, including credit risk, liquidity risk, operational risk, and the risk of violating legal and regulatory requirements. New disclosure now must describe the relationship between the board and senior management in managing such risks. The disclosure requirement allows flexibility in the mechanisms of risk oversight. The SEC suggests, for example, that companies may want to address whether the individuals who supervise the day-to-day risk management responsibilities report directly to the board as a whole or to a board committee, or how the board or committee otherwise receives information from these individuals.
In this regard, Dykema has established a program to provide a review and assessment of corporate compliance programs, which provides the Board with analysis of the effectiveness of corporate compliance activities. More information about the program can be found at www.dykema.com/corporatecompliance.
Action Items. In light of the heightened scrutiny that risk management will receive under the Disclosure Enhancements, companies may wish to take such steps as the following:
- Examine management’s approach to identifying the enterprise’s risks, prioritizing those risks and coordinating management of them.
- Ensure that the board or a designated committee of the board receives regular reports about management’s approach to risk.
- With respect to the risk of violating a legal or regulatory requirement, ensure that a corporate compliance program is in place and that the board receives regular reports about its effectiveness.
- Consider whether a specialized risk committee may be necessary or advisable to oversee the management of risk in general or specific areas of risk .
Compensation Discussion and Analysis
The CD&A is designed to allow companies to tell their stories about how they made compensation decisions and set compensation policies. As it was last year, the SEC is particularly focused on the risks to the enterprise presented by the company’s performance-based incentive compensation. To the extent that these considerations are a material part of a company’s compensation policies or decisions, they are required to be discussed in the CD&A. Moreover, in light of the current economic environment, companies and compensation committees should review their executive compensation programs to address the dramatic market shifts and uncertainties and be prepared to disclose the effect these times have had on their business and executive compensation practices.
Senior SEC officials, however, have continued to criticize CD&A disclosures as containing lots of boilerplate language and discussion about processes and procedures rather than analysis as to why certain decisions are made. The staff cautioned that, in view of the many sources of its CD&A guidance including comment letters, any company that waits until it receives staff comments to comply with the disclosure requirements should be prepared to amend its filings rather than just address the comments in future filings.
Action Items. Companies should review their CD&A disclosure in light of the guidance provided by the SEC over the past years, including the following:
- Focus on the explanation of why compensation decisions are made, not just on a description of the actions taken.
- Highlight important policies on compensation issues that show a commitment to aligning management’s interests with those of shareholders, such as share ownership guidelines, antihedging policies, holding periods, or clawback and recovery policies. The SEC staff expects the company’s disclosure to explain the rationale and analysis behind its compensation policies and decisions.
- If a material element of compensation is based on the achievement of performance targets, the disclosure must include specific disclosure of the targets and the actual achievement level against the targets, or be prepared to explain, with specificity, how disclosure of material performance targets would cause competitive harm to the company.
- If performance targets are omitted due to competitive harm, “meaningful” disclosure of the degree of difficulty of achieving such targets must be included.
- Consider recasting individual performance targets simply as subjective adjustment factors taken into account by the compensation committee while exercising its usual discretion.
- The names of any peer-group companies used for benchmarking purposes and how they were chosen must be disclosed, along with where the actual amounts or awards fell relative to the benchmark group.
Management’s Discussion and Analysis
The MD&A section has three general objectives: (i) to provide a narrative explanation of a company’s financial statements through the eyes of management; (ii) to enhance the overall financial disclosure and provide the context within which financial information should be analyzed; and (iii) to provide information about the quality of, and potential variability of, a company’s earnings and cash flow, so that investors can ascertain the likelihood that past performance is indicative of future results. In the litany of SEC disclosure requirements, however, the MD&A is distinctive because it requires disclosure of not only historical data but also trends affecting the business.
Item 303(a)(3) of Regulation S-K requires that the MD&A identify any “known trends or uncertainties that the registrant reasonably expects will have a material impact on net sales or revenues or income from continuing operations…” The SEC has indicated that this disclosure requirement turns on: (1) whether a known trend or uncertainty is likely to occur, and (2) if so, whether a material effect on the company’s financial condition or its results is likely to occur. It is this emphasis on the future that makes the MD&A so ripe for afterthe- fact scrutiny. The first indications of a trend always become clearer in hindsight.
In support of these objectives, the SEC has provided formal and informal guidance identifying those recurring areas of MD&A disclosure in need of improvement, including most recently during a preeminent annual securities law conference in New York City. In their presentations at the conference, senior SEC officials, including Chairman Mary Schapiro, noted particular areas of concern that will be under a microscope this year with a special focus on disclosures included in the MD&A section.
Action Items. As a result of the expected focus of the SEC staff on MD&A disclosures, public companies should consider the following:
- The staff will be looking for specific MD&A disclosures explaining what the heightened business and financial risks may be as a consequence of recent economic and market declines, such as short-term funding problems; credit rating downgrades; and risks of impairment of non-financial assets like goodwill, deferred taxes and patents.
- Provide clear and concise disclosure of the company’s ability to generate cash and to meet existing and known or reasonably likely future cash needs. The staff warns that it is insufficient merely to state that a company has adequate resources to meet its short-terms and/or long-term cash requirements.
- The staff suggests the necessity of a discussion and analysis of material covenants relating to outstanding debt, as well as guarantees and other contingent obligations. Discuss any uncertainty or trends surrounding future compliance with financial covenants and material implications of a breach.
- Confirm that the company’s MD&A disclosures are consistent with the information and messages being conveyed by the company to investors and analysts. The staff will review companion public information for consistency with MD&A disclosures, and they remarked that they often find inconsistent and sometimes conflicting information.
- Eliminate immaterial, redundant or outdated information. Identify only the most important matters on which executives focus in evaluating the financial condition and operating performance. The staff recommends the use of more tables and tabular comparisons of results in different periods.
- Is the audit committee satisfied that material risks and other exposures have been factored into the discussion of liquidity?
To address its concerns regarding potential conflicts of interest when compensation consultants receive fees for other services to a company, after February 28, 2010, disclosure may be required with respect to an executive compensation consultant retained by a company’s board of directors (or by management, if the board of directors has not retained its own consultant), to the extent that the consultant or its affiliate provides other non-executive compensation consulting services to the company, including employee benefits administration, human resources consulting, or actuarial services. Companies previously have not been required to disclose the fees paid to such consultants or their affiliates or to describe any services that are not related to executive or director compensation. Subject to the exceptions noted below, disclosure will be required of the fees paid to compensation consultants (including both the aggregate fees for additional services and the aggregate fees paid for work determining or recommending the amount or form of executive and director compensation) if those consultants or their affiliates also provide other services to the company as follows:
- If the board or compensation committee has engaged its own compensation consultant and the consultant or its affiliates provides other non-compensation consulting services in excess of $120,000 during the fiscal year, then the company must disclose:
- The aggregate fees paid with respect to executive compensation-related services and the aggregate fees paid for other services (but not the nature and extent of those additional services);
- Whether management recommended or decided to engage the consultant for services not related to executive compensation; and
- Whether the board or compensation committee approved the other services, if applicable.
- If the board or compensation committee has not engaged its own consultant, but management has engaged a consultant to provide executive compensation-related services and other services, and fees for such other services exceed $120,000, the company must disclose the aggregate fees paid with respect to executive compensation-related services and the aggregate fees paid for such other services.
- Fees and related disclosure for consultants that work with management is not required if the board has its own, separate consultant, regardless of whether the fees paid exceed $120,000.
The disclosure rules above do not apply to services relating to broad-based plans that do not discriminate in favor of executive officers or directors, such as 401(k) or health insurance plans, or providing only information that is not customized for a particular company, such as general market surveys.
Action Items. Because the type of disclosure required by amended Item 407 was not previously required, new procedures may need to be implemented:
- Review the engagement of the company’s compensation consultant and understand the nature and extent of any additional services provided by the consultant and any of its affiliates.
- Determine whether management was involved in the engagement of the compensation consultant for services in addition to those related to an executive’s or director’s compensation.
- Review the amount of fees paid to the compensation consultants over the past year for executive and director compensation consulting, and separately for any additional services.
- Modify disclosure controls and procedures to track consultant fees potentially subject to the disclosure rules.
- Consider implementing compensation committee procedures, similar to procedures used by audit committees for approval of non-audit services, for pre-approving any additional services provided by compensation consultants.
Update Director and Officer Questionnaires
The Disclosure Enhancements will require most companies to gather additional information regarding their directors, director nominees and officers for disclosure in proxy statements and annual reports beginning on or after February 28, 2010. The new disclosures must include each director nominee and continuing director’s particular experience, qualifications, attributes and skills that qualify each to serve as a director of the company.
Although there have been no changes to the NYSE Listed Company Manual or to the Nasdaq Qualitative Maintenance Standards that would require changes to the questionnaire since last year’s questionnaires were distributed, companies should reexamine their questionnaire form annually against applicable SEC rules and listing requirements to ensure compliance with at least the minimum information requirements. Companies should also consider whether it would be prudent to gather information beyond that which is strictly required. For example, it may be prudent to solicit information regarding legal proceedings, bankruptcies, convictions, etc., without a specific time limit, so that those preparing the proxy materials can assess for themselves whether there is material information that is not strictly required but might need to be disclosed in order to comply with SEC Rule 14a-9, which requires disclosure of material information necessary in order to make the statements therein not false or misleading.
Action Items. Current director and officer questionnaires need to be revised to collect new information as follows:
- Disclosure of public company directorships held by a director or director nominee must cover the past five years (in addition to those held currently).
- Include questions designed to elicit a broad array of information about a director or director nominee’s background, qualifications, skills and experience that qualify such person to serve on the company’s board, including particular areas of expertise such as risk assessment skills or financial reporting expertise.
- Disclosure of legal proceedings involving directors, director nominees or executive officers must now cover ten years and include proceedings involving mail or wire fraud; federal or state securities, commodities, banking or insurance laws including settlements; and disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange.
Elimination of Broker Discretionary Voting in Uncontested Elections
As noted in our July 6, 2009, Public Company Alert, the SEC approved a change to New York Stock Exchange Rule 452 that will prohibit brokers from voting shares they hold for their retail customers in all elections of directors unless the customers provide instructions as to how to vote the shares. The rule change became effective for shareholder meetings held after January 1, 2010, and applies to all public companies regardless of where they are listed for trading.
Ordinarily, only a fraction of retail customers provide instructions to their brokers. Brokers typically voted uninstructed shares for incumbent nominees and management proposals, increasing the total number of shares voted at the meeting and the number of shares voted in favor of incumbent nominees. As a result of the change to Rule 452, it is likely that fewer retail shares will be voted at shareholder meetings. This outcome may mean a decrease in the total number of shares voted at shareholder meetings, jeopardizing the company’s ability to meet its quorum requirements. That effect is likely to be enhanced if the company is using the notice and access method of distributing proxy materials, which has tended to cause shareholder vote counts to be lower (particularly among retail holders) than when the traditional full-set delivery method is used. In addition, the result of fewer retail shares voted will likely mean an increase in the relative voting power of institutional shareholders and the power of firms (such as Risk Metrics Group) who advise institutional shareholders how to vote. The decrease in retail voting for directors will also increase the risk that directors who are subject to a majority voting standard will not be reelected.
Action Items. As a result of the changes to Rule 452 and its impact on vote tallying, public companies should consider the following:
- Take action to improve the chances of satisfying the quorum requirement by including some other “routine” item on the meeting agenda – such as ratification of the appointment of the outside auditors – on which brokers may still vote discretionarily.
- Reconsider whether to use the e-proxy notice and access model for proxy delivery or devise a plan for monitoring voting results and making follow-up mailings to ensure that the quorum requirement will be satisfied. 3. Review the standard proxy statement discussion of vote requirements and broker non-votes.
- Consider modifying provisions of the company charter or bylaws requiring a majority vote for the election of directors in uncontested elections, or reconsider any pending move to such a standard.
- Determine the likely impact on the vote at the upcoming annual meeting by reviewing the number of broker non-votes at prior meetings and assessing the amount of retail ownership compared to institutional ownership of the company’s voting shares.
- Determine the likelihood of a significant institutional vote against director nominees, by assessing the company’s compliance with published governance guidelines of institutional shareholder advisory firms.
NYSE Corporate Governance Listing Standards
On November 25, 2009, the SEC approved a number of amendments to the NYSE’s corporate governance listing standards set forth in Section 303A of the listed company manual. In general, the amendments did not effect substantive changes to the listing standards but rather were intended to align the NYSE’s disclosure requirements better with the related SEC requirements. The amendments also codify certain NYSE interpretations. The additional rules took effect on January 1, 2010 and include:
- Notification: The NYSE expanded Section 303A.12(b) to require notification of any non-compliance with NYSE corporate governance listing requirements of which an executive officer becomes aware. The previous rule restricted this notice requirement to material non-conformance.
- Director Independence Disclosure: Director independence disclosure required by the NYSE will now mirror that required by Regulation S-K, Item 407(a), doing away with required categorical standards.
- Meetings of Independent Directors: Meetings of independent directors, not just non-management directors as under the previous rule, will satisfy the requirement to hold regular executive sessions. Additionally, the rule clarifies that all interested parties, not simply shareholders, must be allowed to communicate with the non-management or independent directors.
- Disclosure on Company Website: The NYSE will now allow the following categories of disclosure to be made through the listed company’s website rather than in its proxy statement: certain contributions to tax-exempt entities, the director chosen to preside over non-management directors meetings, the method for interested parties to communicate directly with the nonmanagement or independent directors and determinations related to audit committee members serving on multiple audit committees. In this regard, the proxy statement must contain a statement that the information is contained on the website and include the web address. Additionally, listed companies are no longer required to agree to provide paper copies of corporate codes, committee charters and other documents that are available on a company’s website.
- Controlled Company Definition: The new NYSE rules clarify that in order to qualify for the controlled company exemption, a company must have over 50% of its voting power for the election of directors controlled by an individual, a group of investors or another company.
- Code of Ethics Waiver Disclosure: Listed companies disclosing a waiver of their code of ethics now have four business days to disclose the waiver, aligning the disclosure requirement timing with Form 8-K timing rules.
Action Items. Companies should consider the following actions to implement the revised listing standards:
- Inform executive officers of their new responsibility to notify of all non-compliance with NYSE listing rules.
- Make corporate codes, certificates and other documents available on the company website and disclose this in the annual proxy statement.
Form 8-K: Reporting of Voting Results
In an effort to accelerate reporting of shareholder voting results, the SEC added to Form 8-K new Item 5.07, which requires disclosure of the results (preliminary or final) of a shareholder vote within four business days of the end of the meeting at which the shareholder vote was held. This new item on Form 8-K eliminates the previous requirement for disclosure of shareholder voting results on the Form 10-Q for the quarter in which the shareholder meeting was held (or the Form 10-K if the meeting was held in the fourth quarter).
Recognizing that companies may not have final voting results within four business days of the end of the meeting (e.g., in the case of a contested election), the new rule requires companies to disclose preliminary voting results on Form 8-K within four business days of the end of the shareholder meeting at which the vote was held and final voting results on an amended Form 8-K within four business days after the final voting results are known. Item 5.07 does not require disclosure of preliminary voting results if final voting results are disclosed within four business days of the end of the meeting.
In the adopting release, the SEC suggests that when disclosing preliminary voting results, companies concerned about investor confusion may wish to provide additional disclosure to put the preliminary voting results in context. The SEC also notes that the Form 8-K amendments are not intended to preclude a company from announcing preliminary voting results at the shareholder meeting at which the vote was taken and before filing the Form 8-K, without regard to whether to whether the company webcast the meeting.
Action Items. As a result of the changes to Form 8-K and its impact on vote reporting, public companies should consider doing the following
- Add the required Item 5.07 Form 8-K filing to your annual meeting “to do” list.
- Ensure that those responsible for providing election results (including any third-party proxy service providers) understand that you will need preliminary or final election results within four business days of the end of the shareholder meeting.
- Use the updated forms of Form 10-Q and Form 10-K, which will no longer include Item 4 (Submission of Matters to a Vote of Security Holders) in Part II of Form 10-Q and Item 4 in Form 10-K.