Institutional Shareholder Services (ISS) and Glass Lewis, two leading proxy advisory firms, recently published their 2015 proxy voting guidelines for US companies, which include several updates applicable to the 2015 proxy season. 

Institutional Shareholder Services 

Two significant updates included in ISS’s 2015 proxy voting guidelines (the proposals of which were discussed previously in Corporate & Financial Weekly Digest) are as follows: 

Equity Plan Scorecard: ISS adopted a “scorecard” model for evaluating equity plan proposals whereby voting recommendations will largely be based on a combination of factors, both positive and negative, related to (1) plan cost, (2) plan features, and (3) grant practices. Under the new scorecard approach, for S&P 500 and Russell 3000 companies, cost will be weighted 45 percent, grant practices 35 percent and plan features 20 percent, with roughly a dozen individual factors within each of these three areas. The scorecard approach replaces the series of “pass/fail” tests (focused on cost and certain egregious practices) previously used by ISS to determine whether to recommend voting “against” an equity plan.
Continue Reading Proxy Advisory Firms Release Policy Updates for 2015

On September 29, Institutional Shareholder Services (ISS), a leading proxy advisory firm, published the results of its 2014–2015 global voting policy survey. The survey, which, according to ISS, received more than 370 responses from a combination of institutional investors, corporate issuers and other corporate governance stakeholders, is an important component in ISS’ voting policy formulation process.
Continue Reading ISS Publishes Results of Annual Global Voting Policy Survey

The Council of Institutional Investors (CII), an advocacy group for corporate governance and shareholder rights, has published a report that highlights two approaches to disclosure regarding a board’s process of self-evaluation that CII’s members (employee benefit funds, endowments and foundations, among others) consider “best-in-class.” According to the report, CII’s members want to better understand the process by which a board seeks to assess and improve its performance. In-depth disclosure regarding the board evaluation process is not, however, a common practice in the United States, where proxy disclosure regarding the self-assessment process is typically limited to statements that such a process exists. Comparatively robust disclosure of the evaluation process is more common in non-US jurisdictions, including Canada, the United Kingdom, Europe and Australia, where companies often detail what the evaluation process entails. According to CII, its members “are eager for details about the board evaluation process at U.S. companies.”
Continue Reading Council of Institutional Investors Issues Report on Board Evaluation Disclosure

On June 30, the Securities and Exchange Commission’s Division of Investment Management and Division of Corporation Finance published Staff Legal Bulletin No. 20 (SLB 20), which offers guidance regarding investment advisers’ responsibilities in voting proxies and retaining proxy advisory firms, as well as the availability of two exemptions from federal proxy rules often relied upon by proxy advisory firms.
Continue Reading SEC Publishes Guidance for Investment Advisers and Proxy Advisory Firms Regarding Proxy Voting and Solicitation

On April 21, the Securities and Exchange Commission’s Division of Corporation Finance issued new Compliance and Disclosure Interpretations (C&DIs) regarding the use of social media in the context of securities offerings, business combination transactions and other similar transactions, providing guidance to issuers seeking to use social media in compliance with certain SEC rules, including rules requiring the inclusion of legends in various public communications. 
Continue Reading SEC Division of Corporation Finance Issues New C&DIs Relating to Social Media Use

On December 18, the Securities and Exchange Commission voted to propose new rules that would expand the exemption from registration under the Securities Act of 1933 provided by Regulation A to include an exemption for up to $50 million of securities sold during a 12-month period in accordance with the proposed rules. This proposed new exemption is sometimes referred to as “Regulation A+.” Reliance upon Regulation A is, and reliance upon so-called Regulation A+ would be, subject to compliance with various requirements and conditions. 
Continue Reading SEC Proposes Rules for “Regulation A+” Offerings

On October 23, the Securities and Exchange Commission voted unanimously to propose new rules that would permit companies to offer and sell securities through “crowdfunding.” Title III of the Jumpstart Our Business Startups Act requires the SEC to adopt rules implementing the exemption from registration under the Securities Act of 1933 (Securities Act) provided by Section 4(a)(6) of the Securities Act (Crowdfunding Exemption) for offers and sales of securities through online crowdfunding platforms. Generally speaking, the Crowdfunding Exemption is intended to facilitate capital formation by startups and small businesses by allowing certain companies to raise up to $1 million in any 12-month period through online crowdfunding “portals” in exchange for securities. 
Continue Reading SEC Proposes New Rules for Crowdfunding Exemption

On July 10, the Securities and Exchange Commission adopted certain new rules and proposed others applicable to certain securities offerings that are exempt from registration under the Securities Act of 1933 (Securities Act).  The SEC voted to adopt final rules (i) lifting the decades-old ban on general solicitation and general advertising in connection with private securities offerings conducted in reliance upon the exemptions from registration provided by Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act (Final General Solicitation Rules), and (ii) disqualifying issuers from relying on Rule 506 for securities offerings involving certain felons and other so-called “bad actors” (Final Bad Actor Rule). The SEC also proposed several new rules related to private securities offerings, including rules that would impact Form D filings and written general solicitation materials (Proposed Rules). 
Continue Reading SEC Adopts and Proposes New Rules, Including Easing the Prohibition on General Solicitation