Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The SEC has proposed new rules to implement the provisions of Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which adds Section 10C to the Securities Exchange Act of 1934, or the Exchange Act. Section 10C requires the SEC to direct the national securities exchanges and national securities associations to prohibit the listing of any equity security of an issuer, with certain exemptions, that does not comply with Section 10C’s compensation committee and compensation adviser requirements.

The proposed rules of the SEC and those to be adopted by the exchanges are unlikely to impose significant additional burdens on issuers since many topics are already addressed by listing standards. However, care must be taken to identify a compensation consultant’s conflicts of interest. Given the nuances between the rules of the various exchanges, there will probably be greater confusion as to what one exchange requires versus another. Drawing an analogy to listing requirements established to approve equity compensation plans in the wake of Sarbanes-Oxley, we expect the SEC will push the exchanges to adopt similar rules. That process is likely to take some time.

The SEC ducked a significant hot button question regarding whether it would establish rules regarding compensation consultants that are “competitively neutral.” The SEC left it to the exchanges to sort this one out, if they want to.

The proposed rules do not require a compensation committee to retain independent legal counsel or preclude a compensation committee from retaining non-independent legal counsel or obtaining advice from in-house counsel or outside counsel retained by the issuer or management. However, certain enumerated items must be considered before the compensation committee engages legal counsel.

Other highlights include:

• The rules only apply to issuers with listed equity securities.

• The SEC left it to the exchanges as to whether they should exempt smaller reporting issuers.

• Incremental disclosure requirements are modest.

It is important to recognize the two prongs of the proposed rule. One requires the exchanges to implement certain governance matters. That has one timeline. The second is additional disclosure about compensation consultants and conflicts of interest. That is not dependent on exchange rulemaking and implementation will be set by the SEC.

The SEC is proposing that the exchanges have final rules in place no later than one year after publication of the final SEC rules. As to disclosure regarding whether the issuer’s compensation committee retained or obtained the advice of a compensation consultant and conflict of interest matters, disclosure is not required before the SEC determines its final rules should take effect. The Dodd-Frank Act alludes to a July 21, 2011 deadline for disclosure implementation, but the SEC believes it can extend this deadline by rule.

More specifics are included below.

Compensation Committees

Neither the Dodd-Frank Act nor the Exchange Act defines the term “compensation committee.” The SEC rules do not currently require, and the proposed rules would not mandate, that an issuer establish a compensation committee. However, current exchange listing standards generally require listed issuers either to have a compensation committee or to have independent directors determine, recommend or oversee specified executive compensation matters. Proposed Rule 10C-1(b) would direct the exchanges to adopt listing standards that would be applicable to any committee of the board that oversees executive compensation, whether or not the committee performs multiple functions and/or is formally designated as a “compensation committee.”

Independence

In order to implement the requirements of Section 10C(a)(1) of the Exchange Act, proposed Rule 10C-1(b)(1)(i) would require each member of a listed issuer’s compensation committee to be a member of the issuer’s board of directors and to be independent. As required by Section 10C(a)(1), proposed Rule 10C-1(b)(1)(ii) would direct the exchanges to develop a definition of independence applicable to compensation committee members after considering relevant factors, including, but not limited to, the source of compensation of a director, including any consulting, advisory or other compensatory fee paid by the issuer to such director, and whether the director is affiliated with the issuer, a subsidiary of the issuer, or an affiliate of a subsidiary of the issuer. Other than the factors set out in Section 10C(a)(1), the SEC did not propose to specify any additional factors that the exchanges must consider in determining independence requirements for members of compensation committees.

Authority to Engage Compensation Advisers

Section 10C(c)(1) of the Exchange Act provides that the compensation committee of a listed issuer may, in its sole discretion, retain or obtain the advice of a “compensation consultant,” and Section 10C(d)(1) extends this authority to “independent legal counsel and other advisers” (collectively, “compensation advisers”). Both sections also provide that the compensation committee shall be directly responsible for the appointment, compensation, and oversight of the work of compensation advisers. Sections 10C(c)(1)(C) and 10C(d)(3) provide that the compensation committee’s authority to retain, and responsibility for overseeing the work of, compensation advisers may not be construed to require the compensation committee to implement or act consistently with the advice or recommendations of a compensation adviser or to affect the ability or obligation of the compensation committee to exercise its own judgment in fulfillment of its duties. To ensure that the listed issuer’s compensation committee has the necessary funds to pay for such advisers, Section 10C(e) provides that a listed issuer shall provide “appropriate funding,” as determined by the compensation committee, for payment of “reasonable compensation” to compensation consultants, independent legal counsel and other advisers to the compensation committee.

Proposed Rule 10C-1(b)(2) implements Sections 10C(c)(1) and (d)(1) of the Dodd-Frank Act by repeating the provisions set forth in those sections regarding the compensation committee’s authority to retain or obtain a compensation adviser, its direct responsibility for the appointment, compensation and oversight of the work of any compensation adviser, and the related rules of construction. In addition, proposed Rule 10C-1(b)(3) implements Section 10C(e) by repeating the provisions set forth in that section regarding the requirement that listed issuers provide for appropriate funding for payment of reasonable compensation to compensation advisers.

The SEC noted that while the statute provides that compensation committees of listed issuers shall have the express authority to hire “independent legal counsel,” the statute does not require that they do so. Similar to the SEC’s interpretation of Section 10A(m) of the Exchange Act, which gave the audit committee authority to engage “independent legal counsel,” the SEC does not construe the requirements related to independent legal counsel and other advisers as set forth in Section 10C(d)(1) of the Exchange Act as requiring a compensation committee to retain independent legal counsel or as precluding a compensation committee from retaining non-independent legal counsel or obtaining advice from in-house counsel or outside counsel retained by the issuer or management.

Independence Factors

Section 10C(b) of the Exchange Act provides that the compensation committee may select a compensation adviser only after taking into consideration the factors identified by the SEC. In accordance with Section 10C(b), these factors would apply not only to the selection of compensation consultants, but also to the selection of legal counsel and other advisers to the committee. The statute does not require a compensation adviser to be independent, only that the compensation committee consider the enumerated independence factors before selecting a compensation adviser. Section 10C(b) specifies that the independence factors identified by the SEC must be competitively neutral and include, at minimum:

• The provision of other services to the issuer by the person that employs the compensation consultant, legal counsel or other adviser;

• The amount of fees received from the issuer by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel, or other adviser;

• The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;

• Any business or personal relationship of the compensation consultant, legal counsel, or other adviser with a member of the compensation committee; and

• Any stock of the issuer owned by the compensation consultant, legal counsel or other adviser.

Because Exchange Act Section 10C does not require compensation advisers to be independent – only that the compensation committee consider factors that may bear upon independence – the SEC does not believe that this provision contemplates that the SEC would necessarily establish materiality or bright-line numerical thresholds that would determine whether or when the factors listed in Section 10C of the Exchange Act, or any other factors added by the SEC or by the exchanges, must be considered germane by a compensation committee. Therefore, proposed Rule 10C-1(b)(4) would require the listing standards developed by the exchanges to include the independence factors set forth in the statute and incorporated into the rule without any materiality or bright-line thresholds or cut-offs.

Disclosure

Section 10C(c)(2) of the Exchange Act requires that, in any proxy or consent solicitation material for an annual meeting (or a special meeting in lieu of the annual meeting), each issuer must disclose, in accordance with regulations of the SEC, whether:

• the compensation committee has retained or obtained the advice of a compensation consultant; and

• the work of the compensation consultant has raised any conflict of interest and, if so, the nature of the conflict and how the conflict is being addressed.

Given the similarities between the disclosure required by Section 10C(c)(2) and the disclosure required by Item 407 of Regulation S-K for registrants subject to SEC proxy rules, the SEC proposes to integrate Section 10C(c)(2)’s disclosure requirements with the existing disclosure rule, rather than simply “tacking on” the new requirements to the existing ones.

The trigger for disclosure about compensation consultants under Section 10C(c)(2) of the Exchange Act is worded differently from the trigger for disclosure under the amendments to Item 407 that the SEC adopted in 2009. Specifically, Section 10C(c)(2) states that the issuer must disclose whether the “compensation committee retained or obtained the advice of a compensation consultant.” By contrast, the current rule refers to whether compensation consultants played “any role” in the registrant’s process for determining or recommending the amount or form of executive or director compensation. Once disclosure is required, the specifics of what must be disclosed are also different. With regard to conflicts of interest, the current rule requires detailed disclosure about fees in certain circumstances in which there may be a conflict of interest, whereas Section 10C(c)(2) is more open-ended and requires disclosure of any conflict of interest, the nature of the conflict and how the conflict is being addressed, which existing rules do not require.

As proposed, revised Item 407(e)(3)(iii) would have a disclosure trigger that is consistent with the statutory language and would, therefore, require the registrant to disclose whether the compensation committee has “retained or obtained” the advice of a compensation consultant during the registrant’s last completed fiscal year. The practical effect of the proposed change is minimal.

Consistent with Section 10C(c)(2) of the Exchange Act, disclosure of whether the compensation committee obtained or retained the advice of a compensation consultant during the registrant’s last completed fiscal year and whether the consultant’s work raised any conflict of interest and, if so, the nature of the conflict and how it is being addressed, would be required without regard to the existing exceptions in Item 407(e)(3). For example, disclosure about the compensation consultant would be required even if the consultant provides only advice on broad-based plans or provides only non-customized benchmark data. In this regard, the proposed rules broaden the scope of disclosure currently required by Item 407(e)(3)(iii).

The other existing disclosure requirements of Item 407(e)(3) would remain the same, aside from amending the fee disclosure requirements to link the disclosure of fees to the compensation committee “retaining or obtaining the advice of a compensation consultant” and to management “retaining or obtaining the advice of a compensation consultant.”

To provide guidance to issuers as to whether the compensation committee or management has “obtained the advice” of a compensation consultant, the SEC is proposing an instruction to clarify the statutory language. This instruction would provide that the phrase “obtained the advice” relates to whether a compensation committee or management has requested or received advice from a compensation consultant, regardless of whether there is a formal engagement of the consultant or a client relationship between the compensation consultant and the compensation committee or management or any payment of fees to the consultant for its advice.

Conflicts of Interest

Currently, Item 407(e)(3) focuses on the conflicts of interest that may arise from a compensation consultant also providing other non-executive compensation consulting services to an issuer, which may lead the consultant to provide executive compensation advice favored by management in order to obtain or retain such other assignments. Section 10C(c)(2) of the Exchange Act is more open-ended about conflicts of interest in that it requires issuers to disclose whether the work of a compensation consultant raised “any conflict of interest” and, if so, the nature of the conflict and how the conflict is being addressed. The term “conflict of interest” is not defined in Section 10C(c)(2), and the proposed rules do not supply a definition.

In light of the link between the requirement that the compensation committees of listed issuers consider independence factors before retaining compensation advisers and the disclosure requirements about compensation consultants and their conflicts of interest, the SEC believes it would be appropriate to provide some guidance to issuers as to the factors that should be considered in determining whether there is a conflict of interest that would trigger disclosure under the proposed amendments. Therefore, the SEC proposes to include an instruction that identifies the factors set forth in proposed Rule 10C-1(b)(4)(i) through (v) as among the factors that issuers should consider in determining whether there is a conflict of interest that may need to be disclosed in response to proposed amendments to Item 407(e)(3)(iii).

The SEC has not concluded that the presence or absence of any of these individual factors indicates that a compensation consultant has a conflict of interest that would require disclosure under the proposed amendments, nor has the SEC concluded that there are no other circumstances or factors that might present a conflict of interest for a compensation consultant retained by a compensation committee.

If a compensation committee determines that there is a conflict of interest with the compensation consultant based on the relevant facts and circumstances, the issuer would be required to provide a clear, concise and understandable description of the specific conflict and how the issuer has addressed it. A general description of an issuer’s policies and procedures to address conflicts of interest or the appearance of conflicts of interest would not suffice.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

The Office of the Comptroller of the Currency, Treasury (OCC), Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), U.S. Securities and Exchange Commission (SEC), Federal Housing Finance Agency (FHFA); and Department of Housing and Urban Development (HUD) (the “Agencies”) are in the process of proposing credit risk retention rules that are required as set forth in Section 15G of the Exchange Act as amended by Section 941 of the Dodd-Frank Act.  Section 15G generally requires the securitizer of asset-backed securities to retain not less than five percent of the credit risk of the assets collateralizing the asset-backed securities. Section 15G includes a variety of exemptions from these requirements, including an exemption for asset-backed securities that are collateralized exclusively by residential mortgages that qualify as “qualified residential mortgages,” or QRMs, as such term is defined by the Agencies by rule. 

Options For Risk Retention

 

Section 15G of the Exchange Act expressly provides the Agencies the authority to determine the permissible forms through which the required amount of risk retention must be held.  Consistent with this flexibility, Subpart B of the proposed rules would provide sponsors with multiple options to satisfy the risk retention requirements of Section 15G. The options in the proposed rules are designed to take into account the heterogeneity of securitization markets and practices, and to reduce the potential for the proposed rules to negatively affect the availability and costs of credit to consumers and businesses. However, importantly, each of the permitted forms of risk retention included in the proposed rules is subject to terms and conditions that are intended to help ensure that the sponsor (or other eligible entity) retains an economic exposure equivalent to at least five percent of the credit risk of the securitized assets. Thus, the forms of risk retention would help to ensure that the purposes of Section 15G are fulfilled.

 The proposed rules would prohibit a sponsor from transferring, selling or hedging the risk that the sponsor is required to retain, thereby preventing sponsors from circumventing the requirements of the rules by selling or transferring the risk after the securitization transaction has been completed. The proposed rules also include disclosure requirements that are an integral part of and specifically tailored to each of the permissible forms of risk retention.  The disclosure requirements are integral to the proposed rules because they would provide investors with material information concerning the sponsor’s retained interests in a securitization transaction, such as the amount and form of interest retained by sponsors, and the assumptions used in determining the aggregate value of asset backed securities, or ABS, to be issued (which generally affects the amount of risk required to be retained).  Further, the disclosures are also integral to the rule because they would provide investors and the Agencies with an efficient mechanism to monitor compliance with the risk retention requirements of the proposed rules.

Qualified Residential Mortgages

 Section 15G of the Exchange Act provides that the risk retention requirements shall not apply to an issuance of ABS if all of the assets that collateralize the ABS are QRMs.  Section 15G also directs all of the Agencies to define jointly what constitutes a QRM, taking into consideration underwriting and product features that historical loan performance data indicate result in a lower risk of default.   Moreover, Section 15G requires that the definition of a QRM be “no broader than” the definition of a “qualified mortgage” (QM), as the term is defined under section 129C(b)(2) of the Truth in Lending Act, or TILA, as amended by the Dodd-Frank Act, and regulations adopted thereunder.

The underwriting and product features established by the Agencies for QRMs include standards related to the borrower’s ability and willingness to repay the mortgage (as measured by the borrower’s debt-to-income (DTI) ratio); the borrower’s credit history; the borrower’s down payment amount and sources; the loan-to-value (LTV) ratio for the loan; the form of valuation used in underwriting the loan; the type of mortgage involved; and the owner-occupancy status of the property securing the mortgage.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

To promote financial stability, Section 165(d) of the Dodd-Frank Act requires each nonbank financial company supervised by the Federal Reserve Board, or Board, and each bank holding company with total consolidated assets of $50 billion or more to periodically submit to the Board, or FDIC, and the Financial Stability Oversight Council, or FSOC, a plan for such company’s rapid and orderly resolution in the event of material financial distress or failure, and a report on the nature and extent of credit exposures of such company to significant bank holding companies and significant nonbank financial companies and the nature and extent of credit exposures of significant bank holding companies and significant nonbank financial companies to such company.  The proposed rule would implement the resolution plan and credit exposure reporting requirements set forth in section 165(d) of the Dodd-Frank Act.

Section 165(d) provides regulators with the ability to conduct advance resolution planning for a covered company.  As demonstrated by the FDIC’s experience in failed bank resolutions, as well as the Board’s and the FDIC’s experience in the recent crisis, advance planning is critical for an efficient resolution of a company subject to the proposed rule.  Advance planning has long been a component of resiliency and recovery planning by financial companies. The Dodd-Frank Act requires that certain financial companies incorporate resolution planning into their overall business planning processes. In preparing for an orderly liquidation under Title II of the Dodd-Frank Act of a financial company, the FDIC will have access to the information included in such company’s resolution plan.  Advance knowledge of and access to this information will be a vital element in the FDIC’s resolution planning for such a company.  The resolution plan will help regulators to better understand a firm’s business and how that entity may be resolved, and will also enhance the regulators’ understanding of foreign operations in an effort to develop a comprehensive and coordinated resolution strategy for a cross border firm.

Resolution Plan

The Dodd-Frank Act requires each company covered by the proposed rule to produce a resolution plan, or “living will,” that includes information regarding:

  • the manner and extent to which any insured depository institution affiliated with the company is adequately protected from risks arising from the activities of any nonbank subsidiaries of the company;
  • full descriptions of the ownership structure, assets, liabilities, and contractual obligations of the company;
  • identification of the cross-guarantees tied to different securities;
  • identification of major counterparties;
  • a process for determining to whom the collateral of the company is pledged; and
  • any other information that the Board and the FDIC jointly require by rule or order.

 The proposed rule would require a strategic analysis by the covered company of how it can be resolved under the US Bankruptcy Code in a way that would not pose systemic risk to the financial system.  In doing so, the company must:

  •         map its business lines to material legal entities and provide integrated analyses of its corporate structure;
  •         credit and other exposures;
  •         funding, capital and cash flows;
  •          the domestic and foreign jurisdictions in which it operates;
  •         supporting information systems for core business lines; and
  •         critical operations.

The proposed rule specifies the minimum content of a resolution plan. The Board and the FDIC recognize that plans will vary by company and, in their evaluation of plans, will take into account variances among companies in their core business lines, critical operations, foreign operations, capital structure, risk, complexity, financial activities (including the financial activities of their subsidiaries), size and other relevant factors.

The board of directors of the covered company would be required to approve the initial and each annual resolution plan filed. A delegee of the board of directors of the covered company, rather than the board of directors of the covered company, may approve updates to a resolution plan.

After the initial resolution plan is submitted, each covered company would be required to submit a new resolution plan no later than 90 days after the end of each calendar year.

A covered company would be required to file an updated resolution plan within a time period specified by the Board and the FDIC, but no later than 45 days after any event, occurrence, change in conditions or circumstances or change which results in, or could reasonably be foreseen to have, a material effect on the resolution plan of the covered company. An update should describe the event, any material effects that the event may have on the resolution plan and any actions the covered company has taken or will take to address such material effects.

Material changes may include, but are not limited to, any of the following:

  •         A significant acquisition, or series of such acquisitions, by the covered company;
  •         A significant sale, other divestiture, or series of such transactions, by the covered company;
  •         A discontinuation of the business of, or dissipation of the assets of the covered company, a material entity, core business line or critical operation;
  •         The bankruptcy or insolvency of a material entity;
  •         A material reorganization of the covered company;
  •         The loss of a material servicing subsidiary or material servicing contract;
  •         The unavailability or loss of a significant correspondent or counterparty relationship, source of funding or liquidity utilized by the covered company, a material entity, a core business line or critical        operation;
  •         The transfer or relocation of 5 percent or more of the total consolidated United States (domestic) assets of the covered company to a location(s) outside of the United States;
  •         A reduction in the market capitalization or book value of the consolidated capital of 5 percent or more of the Covered Company as of the end of the previous calendar yearend; or
  •         The transfer, termination, suspension or revocation of any material license or other regulatory authorization required to conduct a core business line or critical operation.

Credit Exposure Reports

Each credit exposure report is required to set forth the nature and extent of credit exposures of such company to significant bank holding companies and significant nonbank financial companies as well as the credit exposures of significant bank holding companies and significant nonbank financial companies to such company.  The proposed rule specifies the credit exposures to be reported.

Credit exposure reports must be submitted to the Board and the FDIC no later than 30 days after the end of each calendar quarter.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

The Federal Reserve Board has adopted two rules that would expand the coverage of consumer protection regulations to credit transactions and leases of higher dollar amounts.

The final rules amend Regulation Z, Truth in Lending, and Regulation M, Consumer Leasing, to implement a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Effective July 21, 2011, the Dodd-Frank Act requires that the protections of the Truth in Lending Act, or TILA, and the Consumer Leasing Act, or CLA, apply to consumer credit transactions and consumer leases up to $50,000, compared with $25,000 currently. This amount will be adjusted annually to reflect any increase in the consumer price index.

TILA requires creditors to disclose key terms of consumer loans and prohibits creditors from engaging in certain practices with respect to those loans. Currently, consumer loans of more than $25,000 are generally exempt from TILA. However, private education loans and loans secured by real property (such as mortgages) are subject to TILA regardless of the amount of the loan.

The CLA requires lessors to provide consumers with disclosures regarding the cost and other terms of personal property leases. An automobile lease is the most common type of consumer lease covered by the CLA. Currently, a lease is exempt from the CLA if the consumer’s total obligation exceeds $25,000.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

A mandate in the Credit Card Accountability Responsibility and Disclosure Act of 2009 required the Government Accountability Office, or GAO, to conduct a study of the terms, conditions, and marketing of debt protection products and credit insurance for credit cards and the value they provide to consumers.  The GAO has recently completed the study.

The GAO recommended that the CFPB take the following two actions:

  • factor into its oversight and regulation of credit card debt protection products, including its rulemaking and examination processes, a consideration of the financial benefits and costs to consumers, and
  • incorporate in its consumer financial education efforts ways to improve consumers’ understanding of credit card debt protection products and their ability to assess whether or not the products represent a good choice for them.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

Both Disney and HP filed materials with the SEC strongly condemning ISS’s no recommendation on say-on-pay and other matters.  Disney ultimately changed course and received support on its advisory vote on executive compensation, while HP did not.  Why the differences in strategy?  We do not know because we were not involved, but perhaps a few clues can be ascertained.

ISS apparently had two issues with Disney’s proxy statement.  ISS objected to tax gross-ups in executive employment agreements.  ISS also recommended voting for a shareholder proposal regarding performance tests for restricted stock unit awards.

Disney ultimately eliminated the tax gross-ups from the executive employment contracts prior to the meeting.  Perhaps after engaging with a few key shareholders, it determined that absent such action its rational set forth in response to ISS’s recommendation was not going to carry the day.  The key here however was there was something Disney could do, given the cooperation of its executives.  By taking that action, it avoided the embarrassment of a failed vote and having to spend board resources to deal with the issue in the upcoming year.  Perhaps Disney also reasoned that by removing that institutional irritant it was more likely institutions would not be persuaded by what appeared to be ISS’s weak recommendation with respect to the shareholder proposal on restricted stock units.

Like Disney, ISS had two issues with HP.  One appeared to center on the employment arrangements in connection with its new CEO.  The other was a concern regarding its CEO’s participation in indentifying director candidates.

While HP may have found ISS’s recommendation on say-on-pay offensive, it devoted scant attention to supporting its pay-for-performance philosophy in its additional materials.  Only a single paragraph at the end of three pages of text addressed that issue.  But unlike Disney, there was no immediate action HP could take to correct the situation before the shareholder vote.  We assume that asking its new CEO to return his signing bonus and renegotiate his employment package was not an option.  So HP stayed the course.

It is also likely that HP’s primary concern was ISS’s recommendation against the reelection of three directors as a result of the nominating process.  HP has a majority voting standard.  If a director fails to receive a majority of votes for reelection, it triggers a process where the director must submit his or her resignation to the governance committee for consideration.  That process would have put HP governance back in the spotlight.  As pointed out by Martin Lipton, ISS’s logic was tenuous, if not unsupportable.  So it is not a surprise HPs materials centered on this point.

Why did Tyco International succeed with an approach similar to HP while HP failed?  We suspect it is because Tyco’s materials were much more precise and informative as to why a pay-for-performance link existed and therefore persuasive to institutional investors.  HP’s arguments were general and vague in comparison.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

The Appraisal Subcommittee, or ASC, of the Federal Financial Institutions Examination Council has issued a bulletin to State appraiser regulatory officials to provide information on compliance with certain provisions in the Dodd-Frank Act. The Dodd-Frank Act amended several sections of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.  The bulletin addresses the following provisions:

  • Reciprocity
  • Qualification requirements for state licensed appraisers
  • Minimum requirements for trainee appraisers and supervisory appraisers
  • Course approval program of the Appraisal Foundation’s Appraiser Qualifications Board
  • ASC monitoring of funding and staff resources available to state appraiser regulatory programs

The bulletin outlines changes to the ASC’s process for monitoring state programs, the requirements that states must implement, with statutory references, as well as the effective dates  for compliance.  Recognizing states may need to amend their rules and/or regulations, or revise their operating procedures, the ASC is providing states with a two-year implementation period for certain of the above the provisions. As part of its state compliance review process, the ASC will continue to evaluate state programs for compliance with FIRREA Title XI and the ASC Policy Statements, including those that cover topics addressed in the Dodd-Frank Act.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

After announcing its “vehement disagreement” with ISS, HP held its shareholder meeting.  The inspector of elections announced his report would show that only 48% of the votes cast voted in favor of executive compensation.  ISS also urged withholding votes against certain directors related to the CEOs involvement in the nominating process.  Here the inspector of elections announced his report would show that each director received at least a majority of the votes cast.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

 

Each of Fed Chairman Ben Bernanke and FDIC Chairman Sheila Bair each delivered remarks to the Independent Community Bankers of America National Convention. 

Bernanke stated “it is worth emphasizing that the changes we will be seeing in the financial regulatory architecture are principally directed at our largest and most complex financial firms.”  Bernanke went on to discuss stronger capital and leverage ratios, checks on acquisitions and the Volcker rule.

Bair stated Dodd-Frank “is a good law and one which I think will strengthen, not weaken, community banks.”  Bair went on to discuss increased deposit insurance limits and fairer assessments for deposit insurance coverage, enhanced FDIC resolution authority and more robust capital cushions.

We’re not sure all community banks agree.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

 

Disney initially filed these additional soliciting materials in response to a “no recommendation” by ISS.

Disney later announced that it had removed tax gross-ups from its executive employment agreements.

Based on preliminary results announced at the shareholders meeting, 76% of shares voted to approve executive compensation under the say-on-pay vote.  81% of the shares voted to approve an annual say-on-pay vote.

Although Glass Lewis & Co. did not endorse the reelection of Steve Jobs because of his lack of attendance at director meetings, 85% of the votes cast were in favor of the reelection of each director.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.