On January 11, the Securities and Exchange Commission approved final amendments to listing standards submitted by NYSE Regulation, Inc. and NASDAQ Stock Market LLC with regard to the independence of compensation committees and the authority to retain and independence of, compensation consultants and other compensation advisers. The adoption of these listing standards was mandated by Rule 10C-1 under the Securities Exchange Act of 1934.Continue Reading SEC Approves NYSE and NASDAQ New Compensation Committee and Adviser Listing Standards

On November 28 the Council of Institutional Investors (CII), an association of public, corporate and union pension funds and other employee benefit plans, submitted a letter to Securities and Exchange Commission Chairman Elisse Walter requesting that the SEC consider pursuing interpretive guidance or amendments to Rule 10b5-1 under the Securities Exchange Act of 1934 that would require Rule 10b5-1 plans to adopt protocols and guidelines as follows:

  1. Companies and company insiders should only be permitted to adopt Rule 10b5-1 plans during open “trading windows;”
  2. Companies and company insiders should be prohibited from adopting multiple, overlapping Rule 10b5-1 plans;
  3. Such plans should be subject to a mandatory delay, preferably of three months or more, between the adoption of a Rule 10b5-1 plan and the execution of the first trade pursuant to such plan; and
  4. Companies and company insiders should not be allowed to make “frequent” modifications or cancellations of Rule 10b5-1 plans.

Continue Reading CII Submits Rule 10b5-1 Rulemaking Petition to the SEC

Co-authored by Jonathan D. Weiner.

On December 20, Institutional Shareholder Services (ISS) published updated FAQs regarding its proxy voting policies and procedures. The updated FAQs address, among other things, ISS’ policies for evaluating executive compensation, including ISS’ methodology for assessing pay for performance, its view that hedging and pledging of stock by executives and directors constitute problematic pay practices and its policies related to advisory votes on so-called “golden parachute” payments.Continue Reading ISS Publishes Updated FAQs for its Proxy Voting Policies

On December 17, Securities and Exchange Commission Chairman Elisse Walter named Lona Nallengara as Acting Director of the Division of Corporation Finance to replace Meredith Cross, who has announced that she will leave the SEC at the end of this year. Mr. Nallengara served as Deputy Director for Legal and Regulatory Policy of Corp. Fin.

In its fiscal year 2012 Agency Financial Report released last week, the Securities and Exchange Commission published its rulemaking agenda for 2013 under both the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the Jumpstart Our Business Startups Act (JOBS Act) as follows:

  • Propose and adopt rules to implement four executive compensation related provisions of the Dodd-Frank Act: new listing standards relating to specified “clawback” policies; disclosure requirements regarding performance-related executive compensation; executive pay ratios; and employee and director hedging. These rulemaking mandates did not have a statutory deadline under the Dodd-Frank Act;
  • Finalize rules that disqualify securities offerings involving “bad actors” from relying on the safe harbor from registration provided by Rule 506 of Regulation D under the Securities Act of 1933 (the ‘33 Act); and
  • Adopt rules to require many of the entities that the SEC regulates to establish programs to detect and respond to indications of identity thefts.

Continue Reading SEC Sets Rulemaking Agenda for 2013

On November 28, the Securities and Exchange Commission published a list of rules to be reviewed pursuant to the Regulatory Flexibility Act (RFA). The RFA requires federal agencies to review rules that have a significant impact on a substantial number of small entities within 10 years of the publication of such rules as final rules. The purpose of the review is to determine whether the rules should be continued without change or amended or rescinded in light of the continued need for the rule, the nature of comments received concerning the rule, the complexity of the rule and the extent to which the rule overlaps, duplicates or conflicts with other federal or state rules. Among the rules listed for review by the Staff of the SEC during the next 12 months is Rule 155 adopted under the Securities Act of 1933.Continue Reading SEC Publishes List of Rules to Be Reviewed Over Next 12 Months

On November 8, the Securities and Exchange Commission denied a motion to stay the effective date of the recently enacted resource extraction disclosure rules. These rules, adopted by the SEC on August 22, require public companies that are engaged in the development of oil, natural gas or minerals to publicly disclose each payment of more than $100,000 made to any foreign government or the US federal government for each “project” related to extractive industries. Various trade associations and the Chamber of Commerce of the United States of America filed the motion to stay on October 25 in connection with their lawsuit challenging the resource extraction disclosure rules, which they filed on October 10. Click here to view a Katten Corporate & Financial Weekly Digest article discussing the resource extraction disclosure rules, and here to view a Katten Corporate & Financial Weekly Digest article discussing the lawsuit.
Continue Reading SEC Rejects Motion to Stay Resource Extraction Disclosure Rules