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Preliminary 2014 Proxy Season Checklist

"At this time, there are relatively few new items that need to be considered for the upcoming proxy and 10-K season." [Editor's note: Article includes an extensive interactive checklist of ongoing issues.]

Pay Ratio Disclosures Made Simple

"The proposed pay ratio disclosure requirements specify that the ratio must be expressed as a ratio in which the median of the annual total compensation of all employees is equal to one, or, alternatively, expressed narratively in terms of the multiple that the [principal executive officer (PEO)] total compensation amount bears to the median of the annual total compensation amount. For example, if the median of the annual total compensation of all employees of a registrant is $45,790,39 and the annual total compensation of a registrant's PEO is $12,260,000,40 then the pay ratio disclosed would be '1 to 268'[.]"

California Superior Court Dismisses Say-on-Pay Case

"The court found: None of the compensation-related information was rendered materially misleading by omission of information about the financial performance of Symantec or the other companies in the peer group. It was not substantially likely that disclosure of the comparative TSR information would have significantly altered the total mix of information available to the Symantec shareholders. The proxy adequately disclosed what the pay targets were based on, as well as the fact that compensation may be above the positioning benchmark based on consideration of factors other than performance." [Gordon v. Symantec, No. 1-12-CV-231541 (Cal. Super. Ct. for Santa Clara Cty. Aug. 2, 2013)]

SEC Provides No-Action Relief on Regulation BTR

"Pfizer argued that the exchange offer would not result in inequitable treatment for those employees subject to a suspension, and hence Regulation BTR should not apply. In other words, this is not Enron. It's why Regulation BTR includes an exception for mergers etc., which should apply here, even if Rule 101(c)(9) does not specifically refer to exchange offers. The SEC granted the no-action request, subject to some conditions."

PCAOB, Auditors and Executive Compensation

"Some commenters objected to the initial proposal on the grounds that auditors might influence the design of compensation programs or require the auditor to substantively judge the executive compensation programs. The [Public Company Accounting Oversight Board] thinks it solved these problems by emphasizing that the purpose of the procedures is to further the auditor's risk assessment of material misstatement rather than to determine the appropriateness of executive compensation."

'Notice of Exempt Solicitation' Causing Trouble for Hewlett-Packard

"[M]aybe [Hewlett-Packard's] real problem is its investors are ticked off. New York City Comptroller John C. Liu filed this notice of exempt solicitation announcing that the New York City Pension Funds will vote against two Hewlett-Packard directors 'because of their failure to protect investors from costly, misguided acquisitions.'"

Examples of Disclosures Regarding Conflict-Free Compensation Advisors

"New S-K Item 407(e)(3)(iv) provides that if any compensation consultant has played a role in determining or recommending the amount or form of executive and director compensation, and the consultant's work has raised any conflict of interest, then disclosure of the nature of the conflict and how the conflict is being addressed is required.... [Although the rule] does not require any disclosure if the compensation consultant's work did not raise any conflict of interest ... a review of 20 proxy statements filed [during January showed that] 12 companies (60%) made disclosures that their compensation consultant had no conflict of interest.... The disclosures also contain interesting discussions of procedures and practices companies are using in this area."

A Checklist for the New NASDAQ Compensation Committee Rules

The linked article is a detailed list of the requirements for establishing a compensation committee and for the independence of its members, as required by NASDAQ rules.

NYSE and NASDAQ Amend Compensation Committee Proposals

"NASDAQ proposes to clarify that a compensation committee is not required to conduct the independence assessment required by proposed Listing Rule 5605(d)(3)(D) with respect to a compensation adviser that acts in a role limited to: consulting on any broad-based plan ... and/or providing [certain] information ... The NYSE has proposed a similar amendment to its proposal, together with amendments addressing transition when smaller reporting companies are no longer eligible for that status."

NASDAQ Amends Compensation Committee Proposal

"While the substance of the proposal did not change too much, the transition requirements did, and became more workable.... In order to allow companies to make necessary adjustments to their boards and committees in the course of their regular annual meeting schedules, NASDAQ proposes that companies comply with the remaining provisions of the amended listing rules, as set forth in proposed NASDAQ Listing Rule 5605(d) and IM-5605-6, by the earlier of: (1) their first annual meeting after January 15, 2014; or (2) October 31, 2014."

ISS Publishes FAQs on New Peer Group Selection Method

"ISS has published a series of frequently asked questions on its new peer group selection method. The FAQs explain the new policies. The new procedures give weight in some circumstances to an issuer's self-selected peers. The FAQS therefore provide issuers with an opportunity to advise ISS of any changes in its peer group for consideration by ISS."

ISS Releases 2013 Policy Updates

"Acknowledging the comments received during ISS' 2012 comment period, ISS will be taking a case-by-case approach in determining whether pledging rises to a level of serious concern for shareholders. Also in response to comments, ISS is including significant pledging of company stock as a failure of risk oversight and thus considered a governance failure whereby directors should be held accountable.... Realizable pay is being added to the research report for large capitalization companies."

Health Blog: Obama Aims to Help Patients Wipe Away Medical Debts

Excerpt: Barack Obama wants to make it easier for patients facing bankruptcy because of medical bills to eliminate those debts. A bullet point within his economic agenda says: 'Obama and Biden will create an exemption in bankruptcy law for individuals who can prove they filed for bankruptcy because of medical expenses. This exemption will create a process that forgives the debt and lets the individuals get back on their feet.'

Health Blog - Big Employers Cover Contraceptives But Not Weight-Loss Meds

Excerpt: Some 77% of large employers provide drug coverage for contraceptives without limits on quantity or cost, but the number falls to 33% when it comes to coverage of emergency contraceptives, according to a survey out from Mercer, one of the big human-resource consulting shops.

Health Blog: Genetic Crystal Balls Arrive on Internet

Excerpt: Tests that assess broad panels of genetic markers to predict a person's risk of illness and death are becoming as simple as sending a sample of saliva to a lab and logging on via the Web for the results.

Health Blog: American Express Cancels Health Savings Account Cards

Excerpt: AmericanExpress, one of several financial institutions to develop an HSA product, introduced 'HealthPay Plus,' a debit card linked to HSAs that customers could use to pay for health care. Insurance giants WellPoint and Cigna had signed onto the program, according to American Medical News. But that wasn't enough to save the plan, which American Express will discontinue by the end of the year, citing high costs and low uptake among consumers.

Subprime Litigation Wave Hits State Street

Excerpt: The specific legal basis of Prudential's claim is that State Street and its investment arm violated [ERISA]. The complaint alleges that the defendants 'radically altered' the investment strategies of two bond funds, the Intermediate Bond Fund and the Government Credit Bond Fund. The complaint alleges that the funds 'took undisclosed, highly leveraged positions in mortgage-related financial derivatives' and thereby 'exposed' the funds to 'an inappropriate level of risk' that during the summer of 2007 'produced catastrophic results.'

Wall Street Collapse = ERISA Stock Drop Litigation

Excerpt: I have written abut this type of stock drop litigation before. The issues at the forefront are how ERISA is overtaking securities law as the litigation vehicle of choice by plaintiffs who suffer stock losses and how these cases almost never make it to trial because the firms being sued are forced to settle if certification of the class is granted by the court.

Book Review of 'Pension Dumping: The Reasons, the Wreckage, the Stakes for Wall Street'

Excerpt: [The author] Ms. Hawthorne has turned her attention to an important issue that in today's economy isn't going [away] anytime soon, pension plan terminations. In her new book, ... Ms. Hawthorne takes an in-depth look on what happens when financially troubled companies terminate their defined benefit pension plans through bankruptcy.

Text of EBSA Amendments to Class Prohibited Transaction Exemptions to Remove Credit Ratings Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act

71 pages. "This document amends six class exemptions from prohibited transaction rules ... The amended exemptions are [PTEs] 75-1, 80-83, 81-8, 95-60, 97-41 and 2006-16. The amendments relate to the use of credit ratings as conditions in these class exemptions. Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Department to remove any references to or requirements of reliance on credit ratings from its class exemptions and to substitute standards of creditworthiness as the Department determines to be appropriate."