Recent SEC rulemaking has made shareholder access the rallying cry of activist investors this proxy season. After weighing the issue of shareholder access to director nomination for much of last year following a controversial ruling by the Second Circuit Court of Appeals in American Federation of State, County, and Municipal Employees v. American International Group, Inc., the SEC chose to jettison a formal proxy access rule, instead choosing to clarify their existing stance on the exclusion of shareholders proposals relating to director election. The decision to once again postpone a shareholder nomination rule has evoked a strong reaction from activist investors, led by AFSCME, who seek to once again push the issue to the Court of Appeals.

According to SEC Currents, "As the escalating battle between corporate boards and shareholder activist groups over the corporate ballot, corporate counsel should remain watchful of how the controversial proxy access issue plays out this proxy season, in corporate proxy filings, at the SEC, and perhaps even in the courts." In this light, practitioners should prepare their issuer clients to best handle shareholder proposals to better mitigate potential crisis.

Listed below are two in-depth examinations from SEC Currents regarding shareholder proposals. In addition, GSI has compiled a list of related search statements addressing shareholder proposals and the nomination of directors in the proxy solicitation process.

  • SEC Proposed Rule - Shareholder Proxy Access
  • SEC Proposed Rule - Shareholder Access
  • Exclusion Of Proposal – Rule 14a-8(i)(3)
  • S&P 500 Proxy - Proposal to amend By-laws
  • SSR - Correspondences Related to Rule 14a8
  • Staff Legal Bulletin No. 14c Shareholder Proposals
  • AFSCME v. AIG - Comment on 2nd Circuit Ruling
  • No-Act - Shareholder Eligibility Requirements
  • E-Proxy Consent Language
  • Electronic Access to Proxy Material
  • SSR - Proxy Proposals
  • Opposition Statement To Shareholder Proposal
  • Revision of Proposal
  • SEC Press Releases - Codify Election Procedures

Early Proxy Season Sees Onslaught of Proxy Access Resolutions
The American Federation of State, County, and Municipal Employees (AFSCME) has once again taken the lead in driving shareholder access initiatives this proxy season. AFSCME's early shareholder submissions have already equaled the sum of all shareholder access proposals submitted in the 2007 proxy season. The increased prominence of proposals advocating shareholder access to director nomination indicates that this issue will be at the forefront of corporate governance this proxy season. This SEC Currents feature highlights proxy access proposals and the contrasting efforts of Boards of Directors to omit the proposals from the corporate proxy. Read more

Shareholder Proposals Pursue Alternate Route to Board Elections
This proxy season the American Federation of State, County and Municipal Employees (AFSCME) is spiriting a multi-pronged attack on the status quo for shareholder director nominations. AFSCME is submitting a new volley of shareholder proposals aimed squarely at recouping the costs of nominating directors outside of the corporate proxy process, in addition to submissions of traditional proxy access proposals. This newest end run on shareholder access provides another example of activists increased resolve to impart a significant change in the corporate election process. This SEC Currents analysis explores the dynamics of AFSCME's reimbursement proposal for its impact on issuer's election processes and greater corporate governance policies. Read more

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As the first round of the Securities and Exchange Commission's review of issuer proxy statements nears a close, practitioners should prepare to address a number of executive compensation disclosure issues to conform to the SEC Staff's latest issuer correspondences. A recent SEC Currents study suggests that the impact of the Commission's review will shape both the form and function of future Compensation Discussion and Analysis sections in proxy statements and annual filings. Keeping this in mind, the SEC Currents Staff advises practitioners carefully to consider the Commission's comments when assisting their clients in designing future compensation plans. Issuers would be wise to attempt overcoming these compliance challenges today to avoid falling prey to potential regulatory review next year.

Below GSI has compiled a list of search statements addressing executive compensation. To launch your search, simply click on any link of interest.

COMPENSATION – COMPENSATION DISCUSSION & ANALYSIS

  • CD&A - 10-K Item 11 Executive Compensation
  • CD&A - 8-K Item 5.02 - Changes to Plans
  • SCD&A - No-Action Letter Discussion
  • CD&A - Proxy - Elements of Compensation Discussion
  • CD&A - Proxy - Change-In-Control Payments
  • CD&A - Proxy - Performance Measures
  • CD&A - Proxy - Grants of Plan-Based Awards
  • CD&A - Proxy - Tax Reimbursement

COMPENSATION - CLAWBACK

  • Compensation Comm Report - Clawback Discussion
  • Employment Contracts - Clawback Clause
  • Golden Parachute Clawback Discussion
  • Hewlett Packard - Shareholder Proposal – Clawback
  • Microsoft Corp - Clawback Policy
  • SEC Pronouncements - Clawback Policies
  • Shareholder Proposal - Clawback Policy
  • Employment Contracts - Clawback Clause

Commission Staff Spots Lacking Disclosures as Exec. Comp. Review Nears a Close
Ranking representatives from the Securities and Exchange Commission have informed SEC Currents that the Division of Corporation Finance officially has closed 30-percent (over 100 companies) of their executive compensation disclosure reviews submitted in issuers' proxy statements. Upwards of 70-percent of the original 350 companies receiving letters now have received a second round of comments from the SEC. Sources tell SEC Currents that the Commission's primary objectives with the second round are to achieve clarity on issues addressing performance targets and competitive harm. Read more

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GSI, a division of West, is located at 1100 Thirteenth St. NW, Suite 200, Washington, DC 20005, and has been in the business of providing information services to legal and financial professionals since 1988.

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