Corporate Governance

Planned Initiatives for Division of Corporation Finance: Rocky Mountain Securities Conference

By Scott James

The second panel addressed important corporate governance issues such as executive compensation and shareholder access. Jeffrey Sherman of Holland & Hart moderated this panel including Acting Director of the Division of Corporation Finance Shelley Parratt, Holland & Hart partner Scott Berdan, and Jones & Keller partner Reid Godbolt.

Ms. Parratt discussed the SOX review mandate as the Commission's first priority, explaining that the SEC reviewed more than 5,000 companies last year. Parratt echoed Chairman Shapiro's commentary regarding the need for shareholder access under Rule 14a-8. As we have discussed in prior posts, 14a-8(i)8 currently allows a board of directors to exclude a shareholder proposal if it:

• Relates to election: If the proposal relates to an election for membership on the company's board of directors or analogous governing body

Access is coming; and soon according to Shapiro in her April 29, 2009 speech:

•  The Commission will be considering a proposal next month to remove the barriers that make it costly and difficult for a company's owners to nominate directors. I believe such proxy access is in no small measure about making boards more accountable for the risks undertaken by the companies they manage.

Executive compensation appears to be another area of priority. Parratt expressed that the Commission will also pursue a rule that expands disclosure beyond the top five highest paid executives. This rule will likely include disclosure of the process and policies used by companies in determining compensation.

The next post discusses the panel on counseling boards in the current crisis.

Full post as published by The Race to the Bottom on May 12, 2009 (boomark / email).