Web Site Compliance and Best Practice February 10, 2009

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1 Web Site Compliance and Best Practice February 10, 2009

2 WEBSITE DISCLOSURE REQUIREMENTS KRISTINE EISSING FEBRUARY 10 th, 2009

3 ONLINE COMMUNICATIONS Very timely: 80% of retail investors now have access to the Internet in their homes (SEC) 75% of institutional investors access IR websites weekly or more often (Thomson Reuters) 90% of institutional investors find that a company s website influences their perception of that company (Thomson Reuters) Over 71% of US population was online as of November 2007 Growth in IR Website Traffic, CAGR 23.6% E Normalized using a 2001 baseline Based on Thomson Reuters hosted clients (sample size 2400) Based on information collected by Thomson Reuters 2

4 ONLINE COMMUNICATIONS Corporations are posting more information online: 70% of companies posted their analyst day presentations online 79% posted conference call slides and webcasts online 87% posted earnings call slides and webcasts online 82% posted sell-side presentations online. SEC a strong proponent of online communications XBRL, e-proxy initiatives and electronic shareholder forums continue to encourage companies to develop their websites... so that they can serve as effective information and analytical tools for investors. Enhanced company website presentation of information can benefit investors of all types. 3

5 ebay founded, Amazon launched, Yahoo incorporated EDGAR filings required THE SEC & THE INTERNET Safe Harbor Disclaimer AOL buys Regulation Netscape FD enacted LTCM NASDAQ bailout becomes largest US Regulation electronic ATS stock market AOL, Time Jeff Bezos Warner named merge Time etrade Person of users up the Year 32% since 1991 Dot Com Boom Enron bankruptcy 9/11 e-proxy, Shareholder Choice guidelines 25% announced Sarbanes- Credit crisis begins Oxley 20% enacted Reduced E-Proxy filing implemented deadlines 15% for 10k and Website 10q forms Disclosure discussion launched 10% Web 2.0 term emerges SEC announces Hedge funds gain momentum 21 st Century SEC suggests XBRL use Disclosure 5% plan NYSE requires listed companies to maintain corporate websites 0% Jun-08 Worldwide Internet Users as a Percentage of Global Population,

6 SECTION 16 FILINGS Ruling: Mandates the electronic filing of Section 16 reports (Form 3, 4 & 5) within two business days of the transaction, and requires Web posting by the end of business day following the filing. Compliance Tip: Prominently place a link to Section 16 filings on your SEC Filings page. 5

7 SECTION 16 FILINGS 6

8 COMPANY FILINGS & REG G Ruling: Companies must disclose their website address in annual reports on Form 10-K and state whether their Exchange Act reports are available on their website. Compliance Tip: Provide ongoing website access to all company filings with the SEC. Ruling: A company may disclose non-gaap financial measure and Regulation G required information on its website. Compliance Tip: Post the required reconciliation as supporting materials to the event and archive with the webcast for at least one year. 7

9 COMMITTEE CHARTERS & BOARD MEMBER ATTENDANCE Ruling: A company may provide its audit, nominating or compensation charters on its website as an alternative to providing them in its proxy statement. Compliance Tip: Post your committee charters (in PDF or HTML) to the Corporate Governance section of your site. Ruling: A company may provide information regarding board member attendance at the annual shareholder meeting on its website rather than in its proxy statement. Compliance Tip: Post your current policy regarding director attendance at annual meetings to the Corporate Governance section of your site. 8

10 DIRECTOR INDEPENDENCE & SHAREHOLDER COMMUNICATION Ruling: A company may disclose its definition for determining director independence on its website. Compliance Tip: Post your company s independence standards to the Corporate Governance section of your site. Ruling: A company may disclose its process for shareholder communication with the Board on its on its website as an alternative to providing in its proxy or statement Compliance Tip: Post your company s process for shareholder communication with the Board to the Corporate Governance section of your site. 9

11 CODE OF CONDUCT Ruling: Companies must disclose whether they have adopted a Code of Conduct and gives Web site posting as a disclosure option. A company may also disclose a material amendment or waiver of a provision of its close of ethics, by posting information on its website rather than filing a Form 8-K. Compliance Tip: Post your Code of Conduct (PDF or HTML) to the Corporate Governance section of your Web site. 10

12 CORPORATE GOVERNANCE 11

13 NOTICE AND ACCESS Ruling: Companies must make all proxy materials available online. The materials must be posted to a non-edgar Web site and in formats that are conducive to viewing online, searching and printing. If companies only make these available online, they must also provide a toll-free number, e- mail address and URL for investors who would like to request hard copies. Compliance Tip: Establish a Web page dedicated to proxy materials, and post interactive, HTML and PDF versions of all of your proxy materials. Ensure that the site on which the proxy materials are posted does not infringe on the anonymity of those accessing it. Shareholder addresses obtained for distributing proxy materials should be used solely for such purpose. Also offer investors a way to order hard copy materials via your IR Web site and toll-free number. 12

14 NOTICE AND ACCESS 13

15 REGULATION AB Ruling: Requires that issuers of asset-backed securities provide their historical static pool and current securitized pool data on the Web. Compliance Tip: Post your prospectus and static pool information on your corporate or IR Web site. 14

16 REGULATION AB 15

17 INTERACTIVE DATA (XBRL) Ruling: Companies must provide their financial statements to the Commission and on their corporate Web sites in interactive data format using the extensible Business Reporting Language (XBRL). The interactive data would be provided as an exhibit to periodic reports and registration statements, as well as to transition reports for a change in fiscal year. Compliance Tip: Post the XBRL version on the SEC Filings page of your IR Website. 16

18 INTERACTIVE DATA (XBRL) 17

19 REGULATION FD Ruling: The SEC now states that If investors recognize the website as a key source of corporate news If company takes active steps to push news posted on the website out to the broader market then a company can satisfy the three tenets of Regulation FD Determining whether investors recognize the website as a key source of corporate news is difficult 18

20 REGULATION FD: RECOMMENDATIONS 1. Confirm your website s current reach 2. Confirm that your website can handle a considerable amount of traffic 3. Make your website a recognized channel of distribution 4. Promote your website as the main source investor information 5. Consider issuing an advisory release 19

21 For more information: Kristine Eissing kristine.eissing@thomsonreuters.com

22 Presentation to the Philadelphia Chapter of the National Investor Relations Institute Guidelines for Using Company Websites Yelena Barychev, Esq. February 10, 2009

23 SEC Guidance on the Use of Company Websites SEC recognizes company websites as a significant vehicle for the dissemination of important company information. In 2008, SEC provided guidance on the application of federal securities laws to information presented on company websites: use of company website for Regulation FD purposes liability for information posted on company website 22

24 Public Disclosure Is the Cornerstone of Regulation FD A company selectively discloses material nonpublic information the company must make public disclosure of such information: Intentional selective disclosure simultaneous public disclosure. Non-intentional selective disclosure prompt public disclosure. Public disclosure followed by selective disclosure no violation of Regulation FD. 23

25 How Can Public Disclosure Be Achieved? SEC in 2000 SEC in 2008 Filing of a Form 8-K. Another method providing broad, non-exclusionary distribution of the information to the public (e.g. press release) Posting information on a company website is not by itself a sufficient method of public disclosure, but rather an important component of effective public disclosure. Posting information on a company website, in and of itself, may be a sufficient method of public disclosure. 24

26 Beware!! It is the company s responsibility to evaluate whether posting of information on a website is reasonably designed to provide broad, nonexclusionary distribution of information to the public. SEC does not provide any bright-line rules, only broad principles, as to when the information posted on the website will be considered public for Regulation FD purposes. 25

27 Is Information Posted on Your Company s Website Public? Website is a Recognized Channel of Distribution Website Effectively Disseminates Information to Investors Market awareness of your website disclosure practices Investors use of your website Manner in which information is posted on the website Timely accessibility of information to investors 26

28 To Do List... Include disclosure of the website in all SEC filings and press releases: for ex., For important information about ABC, Inc., see and OR The company timely posts all important investor information on its website on a regular basis. See Routinely post important information on the website. 27

29 To Do List... Design the website to lead investors efficiently to information addressed to investors: for ex., link Investor Relations on the home page of the website. Check whether information posted on the website is regularly picked up by the market and further distributed by the media. 28

30 To Do List... Use push technology: for ex., alerts to investors and RSS feeds. Keep the website current and accurate. Provide simultaneous or advanced notice of the particular posting, including date and time of the future posting. 29

31 Is Information Posted on Your Website Public? Can You Start Making Selective Disclosures? Magic Formula: Recognized Channel of Distribution Effective Dissemination of Information + Reasonable Waiting Period Public Disclosure Give investors reasonable waiting period to react to information posted on web site. 30

32 Is the Waiting Period Reasonable? Consider the following factors: size of the company market following the company extent to which investor information is regularly accessed on the company web site level of complexity of the information 31

33 Is the Waiting Period Reasonable? Historically, two business days sufficed. Since the Internet has increased the speed with which the market absorbs information, one business day may be sufficient, especially for larger companies. 32

34 Is the Company Liable for Misstatements or Omissions on Its Website? Yes, antifraud provisions of the federal securities laws apply to information posted on, or hyperlinked to, the company website: Exchange Act Section 10(b) Rule 10b-5 33

35 To Avoid Liability... You should monitor: previously posted information hyperlinks to third-party information summary information content of interactive website features 34

36 Previously Posted Information Risk: Outdated information may be viewed as republished. To avoid investor confusion: regularly monitor and update website content segregate historical information date all previously posted information 35

37 Hyperlinks to Third-Party Information Risk: Your company may have adopted materially false or misleading third-party information: directly / indirectly prepared the information endorsed the information 36

38 To Avoid Liability... Monitor content of hyperlinked websites. Avoid hyperlinking to websites that show a biased or one-sided perspective. Use exit notices or intermediate screens however, such disclaimers alone may not shield your company from liability. 37

39 Summary or Overview Information Risk: Investors may base their decisions on incomplete information. To avoid investor confusion: use headings to indicate it is a summary provide explanatory language about the summary information provide link to more detailed information (SEC suggests a layered / tiered format) 38

40 Interactive Website Features Antifraud provisions apply to blogs and electronic shareholder forums. Put controls in place to monitor statements made by or on behalf of the company. Companies may not ask investors to waive protections of federal securities laws. 39

41 Disclosure Controls and Procedures CEO and CFO must certify they evaluated the effectiveness of disclosure controls and procedures at the end of every quarter and attach such certifications to quarterly / annual reports filed with SEC. This evaluation should include website disclosures that serve as an alternative to providing the required information in an Exchange Act report or proxy statement. Revise internal certifications to cover alternative website disclosures. Regularly monitor the website content used as an alternative disclosure vehicle. 40

42 USE OF COMPANY WEBSITE [1] Exhibit A SEC Rules and Regulations Recommended Action Items Status Use of Company Website for Regulation FD Purposes Under Regulation FD, if a company or any person acting on its behalf makes a selective disclosure of material nonpublic information regarding the company or its securities, then the company must also make public disclosure of such information. Selective disclosure of such material information that is already public does not violate Regulation FD. Include disclosure of the company website in all SEC filings and press releases. Include Investor Relations link on the Home page of the company website. Routinely post important information on the company website. Provide simultaneous or advance notice of the particular website posting, including date and time of future postings. Check whether information posted on the company website is regularly picked up by the market and further distributed by the media. Use push technology: alerts to investors and RSS feeds. Designate a specific member of the company s securities compliance team to: post information timely on the website; make sure the information is accurate and current; update website content; and identify outdated information. [1] See Commission Guidance on the Use of Company Web Sites, Release No (eff. August 7, 2008). 41

43 USE OF COMPANY WEBSITE SEC Rules and Regulations Recommended Action Items Status Liability for Information Posted on Company Website Antifraud provisions of the federal securities laws, including Exchange Act Section 10(b) and Rule 10b-5 promulgated under the Exchange Act, generally prohibit making material misstatements and omitting material facts in connection with the purchase or sale of securities. Such provisions apply to information posted on, or hyperlinked to, the company website. Review website content at least once per quarter to ensure all historical information has been properly identified and dated. Post all historical investor information in a separate section of the website specifically designated for such purpose. If posting third-party links, designate a person within the company to select and monitor hyperlinked information. Provide exit notices, and intermediate screens, to disclaim liability for third-party information. When providing summaries of information, specifically explain that such information is a summary as well as provide a link to more detailed information on the subject. 42

44 USE OF COMPANY WEBSITE SEC Rules and Regulations Recommended Action Items Status Disclosure Controls and Procedures The company s principal executive officer and principal financial officer must certify that they have evaluated the effectiveness of the disclosure controls and procedures as of the end of every fiscal quarter. These disclosure controls and procedures cover information disclosed on the company website as an alternative to disclosing it in an Exchange Act report. Review company elections to use website disclosure instead of Exchange Act report or proxy statement disclosure. Put specific controls in place to ensure postings are maintained for the required periods and to avoid the inadvertent deletion of these materials from the company website. Revise internal certifications to cover alternative website disclosures. 43

45 Exhibit B CHECKLIST OF WEBSITE DISCLOSURES SEC Rules and Regulations Recommended Action Items Status Company Filings with the SEC Regulation S-K requires a large accelerated filer or an accelerated filer to disclose in the description of business in its Form 10-K the following: the company s website address; and whether the company makes available free of charge on, or through, its website periodic reports on Form 10-K and 10-Q and currents reports on Form 8-K and amendments to these reports as soon as reasonably practical after their electronic filing. Note that if such company does not provide access to the reports on its website, the company must disclose in its Form 10-K: the reasons why the company does not provide such access; and whether the company voluntarily will provide electronic or paper copies of the reports free of charge upon request. Provide ongoing website access to all company filings with the SEC. At a minimum, keep each filing accessible on the company website for at least a 12- month period. Make the filings available on the company website on the same day as filing with the SEC. Provide access to all exhibits and supplemental schedules filed with the SEC. 44

46 CHECKLIST OF WEBSITE DISCLOSURES SEC Rules and Regulations Recommended Action Items Status Section 16 Forms Regulation G The company must post on the company s website, by the end of the business day after filing, any Form 3, 4 or 5 (Section 16 forms) filed with the SEC by the company s offices, directors and more than 10% stockholders. If the company publicly discloses material information that includes a non-gaap financial measure, the company must accompany that non-gaap financial measure with a presentation of, and reconciliation to, the most comparable GAAP measure. If the non-gaap information is released by webcast, or by similar means, the company may provide the foregoing information required by Regulation G by: posting it on the company website; and disclosing the website address and availability of such information on the website during the presentation. Keep a Section 16 form accessible on the company website for at least a 12-month period after posting on the website. Provide a link to Section 16 forms that is separate from the link to other documents filed with the SEC. Provide ongoing website access to this information. At a minimum, keep non-gaap financial information posted on the company website for at least 12 months. 45

47 CHECKLIST OF WEBSITE DISCLOSURES SEC Rules and Regulations Recommended Action Items Status Results of Operations or Financial Condition In the case of a webcast, presentation or other similar disclosure of material non-public information about the company s results of operations or financial condition for a completed fiscal year or quarter, the company does not have to file a Form 8-K if the financial and other statistical information contained in the presentation is provided on the company website, together with any information required by Regulation G. Make this presentation complementary to, and within 48 hours after, the related written disclosure previously furnished on Form 8-K. Make this presentation broadly accessible to the public by dial-in conference call, by web cast, by broadcast or by similar means. Announce the presentation by a widely disseminated press release that provided the company s website address and gave instructions as to when and how to access the presentation on the website. 46

48 CHECKLIST OF WEBSITE DISCLOSURES SEC Rules and Regulations Recommended Action Items Status Code of Ethics Under Regulation S-K, the company must disclose in its Form 10-K whether the company has adopted the code of ethics applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The company must: file the code of ethics as an exhibit to the Form 10-K, post the code of ethics on the company website and disclose in the Form 10-K the fact that it has posted such code and the address of the company website where the code of ethics is posted; or undertake in its Form 10-K to provide the code of ethics to any person, upon request, without charge. The company must also disclose an amendment to, or a waiver from, a provision of the code of ethics within 4 business days after the date of the amendment or waiver by either: posting such information on the company s website; or filing Form 8-K. If the company intends to post amendments to, or waivers from, the code of ethics on its website, then the company should disclose such intention and its website address in the most recently filed Form 10-K. Keep the code of ethics, including all amendments, if any, publicly accessible on the website for as long as the company is subject to requirements of Item 406 of Regulation S-K and chooses to comply with them by posting the code of ethics on the company website. Keep information required by the Form 8-K regarding amendments to, or waivers from, the code of ethics available on the website for at least a 12-month period. Following the 12-month period, retain such Form 8-K information for a period of not less than five years. 47

49 CHECKLIST OF WEBSITE DISCLOSURES SEC Rules and Regulations Recommended Action Items Status Director Independence Charters of Board Committees Under Regulation S-K, if the company uses its own definitions for determining whether its directors and nominees for director, and members of specific committees of the board of directors, are independent, disclose whether these definitions are available on the company website. If so, provide the company website address. If not, the company should include a copy of these policies as an appendix to the company s proxy statement at least once every three fiscal years or if the policies have been materially amended since the beginning of the company s last fiscal year. Regulation S-K requires the company to include in its proxy statement disclosures about the nominating committee, audit committee, and compensation committee of the board of directors. If such committees have a charter, the company must disclose in the proxy statement whether current copies of such charters are available on the company website and, if so, provide the company website address Provide ongoing access to the company s independence standards (if different from the applicable stock exchange independence requirements) on the company website. Provide ongoing access to current copies of committee charters on the company website. If a current copy of the charter is not available on the company website, the company should include a copy of the charter as an appendix to the proxy statement at least once every three fiscal years or if the charter has been materially amended since the beginning of the company s last fiscal year. 48

50 CHECKLIST OF WEBSITE DISCLOSURES SEC Rules and Regulations Recommended Action Items Status Process for Shareholder Communicati ons with Board of Directors Policy Regarding Director Attendance at Annual Meetings Under Regulation S-K, if the company has a process for shareholders to send communications to the board of directors, the company may state information about such process on its website, in lieu of providing such information in the proxy statement. In such case, the company should state in the proxy statement the company website address where such information appears. Under Regulation S-K, if the company has a policy regarding board members attendance at annual meetings of shareholders, the company may state information regarding such policy and the number of board members who attended the prior year s annual meeting on its website, in lieu of providing such information in the proxy statement. In such case, the company should state in the proxy statement the company website address where such information appears. Provide ongoing access to the current process for shareholder communications with the Board of Directors on the company website. Provide ongoing access to the company s current policy regarding director attendance of annual meetings on the company website. 49

51 For Further Information... Yelena M. Barychev at Blank Rome LLP One Logan Sq, 130 N 18th St. Philadelphia, PA (215) Barychev@BlankRome.com Storero and Barychev, Corporate Governance Feature: Guidelines for Using the Company Web Site for Regulation FD Compliance, M&A Lawyer, November/December

52 For Further Information... Selective Disclosure and Insider Trading, Exchange Act Release No (eff. October 23, 2000). Commission Guidance on the Use of Company Web Sites, Release No (eff. August 7, 2008). 51