Posts Tagged ‘proxy disclosure’

Analysis: SEC Adopts Expanded Governance and Executive Compensation Disclosure

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Compensation Policies and Risk. The new rules require disclosure of compensation policies and practices covering all employees (not just executives) if the risks arising from such policies and practices “are reasonably likely to have a material adverse effect on the company.” This is a higher standard than the “may have a material effect on the company” standard in the proposed rule. This disclosure will be separate from the CD&A.

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SEC Considering Rules To Enhance Shareholder Information

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Published in iMarket News December 16, 2009  
At its open meeting Wednesday, the Securities and Exchange Commission said it will vote on a set of proposed rules that will enhance the information made available to shareholders, including: the relationship of a company’s compensation policies and practices to risk management. Below is the full text of the fact sheet provided by the SEC:
The SEC will vote on a set of proposed rules to enhance the information provided to shareholders so they are better able to evaluate the leadership of public companies. The new rules would improve the disclosure available regarding risk, compensation and corporate governance matters when voting decisions are made.

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SEC Approves Proxy Changes

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Published in Human Resource Executive, December 9, 2009 by Anne Freedman
Final rules adopted by the U.S. Securities and Exchange Commission will require HR leaders to work with other company executives to determine whether their organizations’ compensation programs incentivize risky behavior.
Companies have always had to disclose “issues of risk as it relates to discussion of executive officers,” says Charles Tharp, executive vice president for policy of the Center on Executive Compensation in Washington.
The new rules — which require disclosure of compensation that is “reasonably likely to have a material adverse effect” on the company — now encompass employees below the named executive officers who are normally included in the proxy statement, he says.
If there is no such material adverse effect, then disclosure is not required.
The final rule — which was adopted Dec. 16 and goes into effect Feb. 28, 2010 — offers a slightly lower standard than the preliminary proposal issued in July, which required disclosure of compensation that “may have a material effect” on the company.
Scott Olsen, principal in PricewaterhouseCoopers HR Services Practice in New York, says that, regardless of whether disclosure is ultimately required in the proxy, HR leaders will need to create processes to analyze the risk involved in their organizations’ compensation programs.

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Read Our Lips

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Expert Perspective by Grahall’s OmniMedia Editorial Board

expert perspective telescopeCompliance Week summarized a November 9, 2009 speech by Shelly Parratt, deputy director of the SEC’s Division of Corporation Finance, in their November 10, 2009 article SEC on 2009 Proxy Season, Expectations for 2010saying “Note to those tasked with drafting the Compensation Discussion and Analysis [CD&A] section of the proxy: Pay particular attention to your analysis and performance targets disclosures, because the Securities and Exchange Commission staff will.”  The article concludes with a quote from Parratt saying “Read our guidance”.

Essentially, when preparing analysis and performance targets disclosures in the CD&A, Boards are supposed to say why they chose to pay executives in a certain way and provide background on whether the executives did or did not meet goals, supporting that with and description of the company’s goals.  The SEC provides way to dodge some of these requirements
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SEC on 2009 Proxy Season, Expectations for 2010

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Published in Compliance Week November 10, 2009

Note to those tasked with drafting the Compensation Discussion and Analysis section of the proxy: Pay particular attention to your analysis and performance target disclosures, because the Securities and Exchange Commission staff will.
That was one takeaway from a Nov. 9 speech at the 4th Annual Proxy Disclosure Conference, in which Shelley Parratt, deputy director of the SEC’s Division of Corporation Finance, shared her views on the current state of executive compensation disclosure and on what the staff expects to see in the 2010 proxy season.

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Executive Compensation Disclosure: Observations on the 2009 Proxy Season and Expectations for 2010

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Published in Securities and Exchange Commission November 9, 2009 by Shelley Parratt

Thank you, Jesse, for that kind introduction, and good morning. I’m very glad to be here with you today to share my thoughts on the current state of executive compensation disclosure under the Commission’s rules and to talk about what we expect to see in the 2010 proxy season.
First, though, I need to remind you that the views I express today are my own, and do not necessarily represent the views of the Commission or other members of the staff.
Over the last several years, executive compensation has been subject to much debate. It seems that people from Main Street to Wall Street — and everywhere in between — have an intense interest in the topic. And with the ongoing challenges in the economy, there seems to be even more focus on executive compensation and its link to corporate accountability. Nearly every day there is a headline claiming that under-performing companies are overpaying their executives.

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Ahead of the Curve

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Expert Perspective by Grahall’s OmniMedia Editorial Board

It was likely with some relief that public companies heard on October 2, 2009 that the SEC would delay the implementation of Proxy Access Rule changes.  According to an article in Law360: “U.S. Securities and Exchange Commission Chairwoman Mary Schapiro said… that proposed changes to proxy access rules would not be finalized until 2010 at the earliest, following a deluge of comments to the regulator.” That’s one major issue set aside for now, but there are many more proxy changes poised for approval before the 2010 Proxy Season arrives. 
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SEC Hangs Tough on CEO Pay…But Makes Nice Overseas

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Published in The Boardmember by Peter Galuszka

Companies apparently still aren’t getting it right when it comes to disclosing executive compensation. The Securities and Exchange Commission has gone through two rounds of criticizing the way businesses explain in their annual reports and proxies why, among other things, they pay CEOs the sums they do. It may now go for round three. “This proxy season, companies will be held to a substantially higher standard of disclosure. Don’t think that if you didn’t get a letter [from the SEC, complaining about your lack of transparency], you’re off the hook,” says James D. C. Barrall, who heads the benefits and compensation practice in the Los Angeles office of law firm Latham & Watkins.

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Where you stand is based on where you sit

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expert perspective telescopeExpert Perspective by Grahall’s OmniMedia Editorial Board

In July 2009 the SEC released proposed changes to Proxy Disclosure rules  to, (in addition to other goals) “enhance the compensation and corporate governance disclosures registrants are required to make about… potential conflicts of interest of compensation consultants that advise companies.” 

The SEC invited public comment with a deadline for submission of mid-September, 2009. Well over 100 comments have been surfaced on the SEC’s web site to date among them, of course, are letters from consulting firms: Watson Wyatt, Towers Perrin, Pearl Meyer, Deloitte Consulting, Buck Consultants, and Grahall, among many others.  (To peruse the list and read the letters click here.)  For a summary of Grahall’s letter to the SEC click here

Without a doubt, the issue of conflict of interest is of paramount concern to consulting firms, and particularly to multi-service firms such as Watson Wyatt, Towers Perrin, Mercer and Hewitt (the “Big 4”, if you will, of that genre).  In its September 15, 2009 letter to the SEC (click here to read), Watson Wyatt has outlined a clever way to minimize the perceived impact of conflict of interest and “joins with three other multi-service human resources consulting firms (Towers Perrin, Mercer and Hewitt Associates) in making this recommendation”.  
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Grahall Comments on SEC’s Proposed Proxy Disclosure Rules

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business-strategy-chess-41In July 2009 the SEC released proposed changes to Proxy Disclosure rules “to enhance the compensation and corporate governance disclosures registrants are required to make about: their overall compensation policies and their impact on risk taking; stock and option awards of executives and directors; director and nominee qualifications and legal proceedings; company leadership structure; the board’s role in the risk management process; and potential conflicts of interest of compensation consultants that advise companies.” 

The SEC invited public comment with a deadline for submission of mid-September, 2009. Not surprisingly, many commented. Well over 100 comments have been surfaced on the SEC’s web site to date.  (To read them click here.)

Grahall, too, commented on these proposed rule changes, with comments broken down into four general subject areas:
I. enhanced risk disclosure (as it directly relates to compensation),
II. proposed changes to the summary compensation table,
III. enhanced disclosure of director qualifications to serve on the Board,
IV. concerns regarding potential conflicts of interest with respect to executive compensation consultants who provide both compensation advice and other services to the same clients.
Continue reading “Grahall Comments on SEC’s Proposed Proxy Disclosure Rules” »

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