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Public Banks and Proxy Advisors

July 3, 2017

Authors

Robert Klingler

Public Banks and Proxy Advisors

July 3, 2017

by: Robert Klingler

the-bank-accountOn the latest episode of The Bank Account, Jonathan and I were joined by our colleague, Kevin Strachan, to discuss the role and importance of the various proxy advisory services.  Corporate governance continues to be a hot topic in the industry, and the proxy advisory services have a significant sway in determining what provisions are deemed “acceptable” by many institutional investors.

Within the podcast, we look at the two primary proxy advisory services, Institutional Shareholder Services (ISS, not to be confused with ISIS, although we have them pronounced identically by some frustrated boards) and Glass Lewis.  We look at the differences between the two services, where they’ve historically focused, and ways in which they sometimes have diminished power

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The Financial CHOICE Act and Shareholder Engagement

June 15, 2017

Authors

Steven Poplawski

The Financial CHOICE Act and Shareholder Engagement

June 15, 2017

by: Steven Poplawski

The Financial CHOICE Act introduced in the House this spring has largely garnered attention because of its rollback of Dodd-Frank, but the bill would also significantly change the rules governing shareholder resolutions for public companies. Currently, the restrictions are relatively modest, requiring that investors have at least $2,000 in stock or one percent of the stock at a company in order to be eligible to file resolutions. In contrast, the CHOICE Act would limit eligibility for proposing shareholder resolutions to investors that have held at least one percent of the company’s stock for a minimum of three years. This change would drastically limit who can file resolutions, given that one percent of the shares of larger companies could translate to millions or billions of dollars.

The timing of the proposed change potentially

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SEC Adopts Pay Ratio Rule

October 13, 2015

Authors

Bryan Cave

SEC Adopts Pay Ratio Rule

October 13, 2015

by: Bryan Cave

On August 5, 2015, in a 3-2 vote, the SEC adopted the rule implementing the controversial pay ratio requirement pursuant to the Dodd-Frank Act. The rule requires companies to disclose:

  • the median of the annual total compensation of all employees, excluding the principal executive officer, or CEO;
  • the annual total compensation of the CEO (which is already required to be disclosed); and
  • the ratio of  these two amounts.

The new rule applies to companies required to provide executive compensation disclosure under Item 402(c)(2)(x) of Regulation S-K in proxy statements or annual reports on Form 10-K, as well as registration statements or other filings. Most companies are required to report the pay ratio disclosure for their first fiscal year beginning on or after January 1, 2017.

View Bryan Cave’s Client Alert on the Pay Ratio Rule.

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SEC Adopts Rules Allowing Shareholder Access to Company Proxy Materials

August 30, 2010

Authors

Bryan Cave

SEC Adopts Rules Allowing Shareholder Access to Company Proxy Materials

August 30, 2010

by: Bryan Cave

On August 25, 2010, the Securities and Exchange Commission voted to adopt new rules that will require companies to include in their proxy materials nominations for election as directors submitted by eligible shareholders, subject to certain conditions. The proposal was adopted by a divided 3-2 vote at an SEC open meeting. Commissioners Casey and Paredes dissented, viewing the rules as intruding on substantive corporate affairs traditionally regulated by state law.

The new rules will apply to all companies subject to SEC proxy rules, including investment companies and controlled companies, except:

  • Companies subject to such rules solely due to debt registered under Section 12 of the Securities Exchange Act of 1934; and
  • Where state or foreign law or governing documents prohibit shareholders from nominating a candidate for director.

Foreign private issuers are not covered, as they are exempt from SEC proxy rules.

The new rules will be effective 60

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SEC Issues Proposed Rule Implementing TARP Say on Pay

July 6, 2009

Authors

Robert Klingler

SEC Issues Proposed Rule Implementing TARP Say on Pay

July 6, 2009

by: Robert Klingler

On July 1, 2009, the SEC proposed a rule to implement the “Say-on-Pay” provisions contained in the TARP executive compensation restrictions.

The proposal would add a new Exchange Act Rule 14a-20, which would require TARP recipient to provide a separate shareholder vote to approve the compensation of their executives, as disclosed under Item 402 of Regulation S-K, in their proxy solicitations for an annual meeting at which directors are to be elected.  In addition, a TARP recipient would be required to explain the general effect of the vote, such as whether the vote is non-binding.

The SEC is not dictating the specific language, form of resolution, or proxy disclosure that a TARP recipient must use to provide shareholders with a “Say-on-Pay.”  However, footnote 14 to the Proposing Release contains an important caveat:

“However, as stated in Section 111(e)(1) of the EESA, the vote must be to approve “the compensation

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OTC Bulletin Board and TARP Capital

December 10, 2008

Authors

Robert Klingler

OTC Bulletin Board and TARP Capital

December 10, 2008

by: Robert Klingler

The Treasury’s fourth round of completed TARP Capital infusions added four more public companies that are traded on the Over-The-Counter Bulletin Board (OTCBB): Blue Valley Ban Corp., Coastal Banking Company, Inc., Manhattan Bancorp, and Oak Valley Bancorp.  As a result, it seems clear that the Treasury is willing to allow public reporting companies that are traded over the OTCBB participate in the TARP Capital program under the public company terms.

As we’ve previously noted, the definition provided by the Treasury of a publicly traded company is “a company (1) whose securities are traded on a national securities exchange and (2) required to file, under the federal securities laws, periodic reports such as the annual (Form 10-K) and quarterly (Form 10-Q) reports with either the Securities and Exchange Commission or its primary federal bank regulator.”  While the Treasury has not defined what constitutes a national securities

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New Proxy Statement Guidance

November 25, 2008

Authors

Robert Klingler

New Proxy Statement Guidance

November 25, 2008

by: Robert Klingler

On November 24, 2008, the SEC and RiskMetrics Group (previously ISS) each published new guidance for public companies seeking authorization of blank check preferred stock.

SEC Guidance

The SEC Guidance is based on the staff’s review of a number of preliminary proxy statements filed by institutions seeking to participate in the TARP Capital program.  (We have provided a list of a number of such proxy statements.)  The SEC guidance is designed to aid financial institutions in preparing proxy statements and provides actual comments the staff has issued in its filing reviews.  For those that have not yet filed, a close review of these comments may reduce the risk of comments in the preliminary proxy process.

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TARP Capital Decliners and Proxy Statements

November 5, 2008

Authors

Robert Klingler

TARP Capital Decliners and Proxy Statements

November 5, 2008

by: Robert Klingler

We have added two new pages to the site for banks looking to see how other bankers are handling certain TARP Capital issues.  (We’ve always found bankers prefer to listen to other bankers rather than lawyers.)

For examples of press releases of banks that have decided to publicly announce that they will not be participating in the TARP Capital program, see our TARP Capital Decliners.

For examples of proxy statements where banks have decided to seek shareholder approval to put in blank check preferred stock, see our TARP Capital Proxies.

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