1. The SEC adopted final say-on-pay rules, here. Recall that Dodd-Frank requires a say on pay at any meeting held on or after January 21, 2011; the SEC rule amendments, however, aren't effective until April 2011, later for smaller reporting companies. The final rules don't deviate in any interesting way from the proposed rules, but there are a few notable differences:
- Final rules allow exclusion of a shareholder say-on-pay proposal if the company's policy was approved by a majority, rather than a plurality as proposed, of the shares voted.
- Final rules require disclosure in a Form 8-K, rather than in a Form 10-K or 10-Q, regarding the company's decision to adopt a policy on the frequency of say-on-pay votes following a shareholder advisory vote on frequency, and new disclosure in the next proxy statement about the frequency of the vote and when the next vote will occur. Final rules clarify when a company can vote signed but uninstructed proxies for its frequency recommendation.
2. Meanwhile, CompensationStandards.com reports that, as of last week, the split of company say-on-pay frequency recommendations was:
- Triennial vote: 127 (58%)
- Annual vote: 66 (30%)
- Biennial: 13 (6%)
- No recommendation: 12 (6%)
CompensationStandards.com also suggests that early trends show shareholder support of annual votes irrespective of company recommendations (see, e.g., here and here), a trend fueled, perhaps, by the statement from a group of 39 institutional investors, here, voicing a preference for an annual vote.
3. In early returns, shareholders at two companies have said "no" to the company's executive compensation (see here and here). This may have some worried that the shareholder vote won't be the rubber stamp hoped for (recall that there were only three "no" votes last year).
4. The CFA Institute published a Compensation Disclosure and Analysis Template, here, "as a first step toward making compensation communications clearer and more relevant to investors." Among other things, the template includes an index with links to "good" CD&A disclosure.
The SEC extended the time to comment on Dodd-Frank required rules about Disclosure of Payments by Resource Extraction Issuers, here, Mine Safety Disclosure,here, and Conflict Minerals, here, and pushed back its implementation timeline for disclosure rules regarding:
- Pay-for-performance (how compensation is related to financial performance).
- Pay ratios (ratio of CEO pay to average employee pay).
- Clawback policies (clawback of the compensation of current and former officers upon financial restatement).
- Hedging policies (whether the company has a policy regarding hedging company stock positions by directors and employees).
As noted on its scorecard on implementing Dodd-Frank, here, the SEC also:
- Adopted rules regarding the use of representations and warranties in the asset-backed securities market (here).
- Adopted rules regarding asset-backed securities' issuers' responsibilities to conduct and disclose a review of the assets (here).
- Adopted streamlined procedural rules regarding filings by self-regulatory organizations (here).
- Issued a report to Congress regarding the need for enhanced resources for investment adviser examinations and enforcement (here).
- Completed its study of ways to improve investor access to information about investment advisers and broker-dealers (here).
- Issued a report to Congress regarding the study of the obligations of brokers, dealers and investment advisers (here).
- Proposed rules relating to the use of security ratings by credit rating agencies in SEC rules and forms (here).
- Proposed rules regarding the registration and regulation of security-based swap execution facilities (here).
- Proposed joint rules with CFTC regarding reporting by investment advisers to private funds and certain commodity pool operators and commodity trading advisers (here).
- Proposed rules for the timely acknowledgment and verification of security-based swap transactions (here).
- Proposed rules regarding suspension of reporting obligations for certain classes of asset-backed securities (here).
6. The SEC also proposed rules, here, to change the regulatory definition of "accredited investor" to match the statutory change made by Dodd-Frank, eliminating the value of a primary residence from the calculation of net worth.
7. For those who love the details, the University of Denver Sturm College of Law has collected, here, the briefs filed about the legality of the SEC's proxy access rules, including the SEC's own brief of the issues.
8. The Financial Crisis Inquiry Commission's 633-page report about reasons for the financial crisis is here. Despite using pithy phrasing like "collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis" and "failures of credit rating agencies were essential cogs in the wheel of financial destruction," the report has garnered criticism from some for being uninteresting, political and, well, bad. See, e.g., here, here, and here.
9. A slew of federal agencies, including the SEC, released proposed rules, here, under Section 956 of Dodd-Frank that require disclosure by a "covered financial institution" of incentive compensation arrangements that could result in excessive compensation or big losses to the financial institution.
10. The Federal Trade Commission raised the HSR pre-merger notification threshold to $66.0 million for 2011, a 4% increase from 2010 levels. See here.
11. Finally, two reminders:
- Delaware franchise tax is due March 1.
- Schedules 13G are due February 14, Valentine's Day. Nothing says "I own more than 5% of a public company's stock" like a Schedule 13G.