ON Securities

After all the speculation about effective dates of the new amendments to the proxy disclosure rules, the SEC on Tuesday published a set of Compliance & Disclosure Interpretations that clarifies the effective date of the new amendments . . . . The most important clarification is that companies with a fiscal year ended before December 20, 2009 will not have to comply with the new rules this year. A company with a fiscal year ended on or after December 20, 2009 will be required to comply, unless the definitive proxy materials and the Form 10-K are filed before February 28, 2010. . . . You might review this previous post that includes insights from a recent Deloitte program on compliance with the new rules . . . . [to read more, click on the link above]

As many of you know, the SEC announced yesterday that it will hold an open meeting on Wednesday, December 16 for the purpose of adopting its proposed amendments to the proxy disclosure rules. . . . The two questions on everyone’s mind: When will the rules be effective? And what changes will the SEC make to the proposals? . . . . Assuming the final rules are similar to the proposals, many public companies will be busy over the next few weeks preparing for the new disclosures. . . . . There are some “sleepers” too . . . .[to read more, click on the link above]

At Thanksgiving, our thoughts naturally turn to gluttony of all sorts. So it seems like a fitting time to recognize a few companies for granting awards to their executives that look so ridiculous they practically beg Congress to speed up compensation reform. . . . So pass the cranberry sauce and gravy, here are my nominees for the “Compensation Turkeys of the Year”, all reported by footnoted.org in the past few weeks . . . . Of course, Goldman Sachs makes the list for its announcement that it is setting aside around $17 billion for compensation and bonuses, calculated to be more than $700,000 on average for each of the company’s 31,700 employees. . . . Last week I reported that RiskMetrics Group came out with its 2010 updates to its proxy voting guidelines, summarized here. . . .

Several new reports have been published that provide valuable information about what’s going on in the public company world . . . . Pearl Meyer & Partners released a survey report covering companies’ attitudes toward Say-on-Pay, which is currently required for TARP recipients but will not be required for other public companies until at least 2011 . . . . Frederick W. Cook & Co. released a report of its study of non-employee director compensation at the 100 largest New York Stock Exchange companies and the 100 largest Nasdaq companies . . . . One more update – hot off the presses: I noticed that RiskMetrics today published some of its 2010 policy information, which applies to all shareholder meetings occurring on or after February 1, 2010 . . . . [to read more, click on the link above]

I’ve just finished three and a half very interesting days at the NASPP Annual Conference and the Proxy Disclosure Conference sponsored by CompensationStandards.com in San Francisco. Aside from an unexpectedly big crowd and some great food, attendees encountered some interesting updates. . . . Shelley Parratt, Director of Corporation Finance of the SEC, addressed the group, and there were two main news items. First, she previewed the currently proposed amendments to the proxy disclosure rules. She didn’t address when the amendments would be considered, but stated that the new rules “may well” be in place for the 2010 proxy season . . . . Second, apart from the new rules, Parratt discussed compliance with the proxy disclosure rules adopted in 2007 and indicated that the SEC staff will take a more assertive (aggressive?) posture in its comment process. . . .[to read more, click on the link above]

Early November finds us in a kind of limbo – those of us who advise public companies on governance and compensation matters are waiting for something big to happen. But there’s plenty of smaller stuff to report on – although most of these items present more questions than answers . . . . On November 4, SEC Chairman gave a speech addressing current regulatory developments. She described the proxy disclosure rules but did not address when they would be adopted or considered. . . . Rep. Maxine Waters has proposed an amendment to the Investor Protection Act of 2009 . . . . [to read more, click on the link above]

Mark Borges, the well known compensation consultant with Compensia, gave a very interesting talk this week at a joint meeting of the Society of Corporate Secretaries and Governance Professionals and the Twin Cities Compensation Network. Mark was gracious enough to give me permission to post his presentation, which is full of useful updates on governance and compensation reform and tips on how to get ready. . . . Mark made these points, among many others . . . . [to read more, click on the link above]

Just as lawmakers and regulators are preparing to consider compensation reform once again, a new report has surfaced that’s likely to turn up the heat on the debate. The Wall Street Journal reported that the major financial institutions are on pace to pay their employees around $140 billion this year – a record level. . . . For example, the Journal projects that Goldman Sachs will pay $20 billion in compensation and benefits ($743,000 per employee) this year. . . . At long last, this month there has been a new development worthy of changing the Cheat Sheet. As reported in Bloomberg and elsewhere, the SEC has decided not to take any action on the proposed shareholder access rules this year . . . . [to read more, click on the link above]

There was a fascinating article in the New York Times on Thursday about Merrill Lynch’s 2006 bonus program, which resulted in large payouts to top management even as the company was sold to Bank of America in a distressed sale. The author of the article provides more in-depth analysis in a post in the Times’ DealBook Blog. . . . The Blog post discusses the features of the plan that put a portion of the employees’ bonuses at risk, provided for a partial clawback if return on equity was not adequate, and invested the bonus amounts in stock that was locked up for a year past the three-year term of the plan. . . . I think the Merrill plan had many worthy features that should command the attention of compensation professionals. . . .Here’s a new one – The Corporate Counsel Blog reports that in-house corporate attorneys have joined the blogging world. . . . [to read more, click on the link above]

Compensation consultant Frederic W. Cook & Co. just published a study of recent changes in change in control agreements. . . . Frederic Cook found that, of the companies that use change in control agreements, 57% made changes in the past three years, including a number of changes that make the agreements less “executive-friendly”. . . . Many of the companies modified their excise tax gross-ups . . . . [to read more, click on the link above]