Summary of Dodd-Frank Provisions

Transcription

1 / / September 28, 2010 Summary f Ddd-Frank Prvisins Prxy Access/Directr Nminatin Overview. Sharehlder-nminated directr candidates must be included in the cmpany s prxy materials prvided that certain cnditins are met by the nminating sharehlder r sharehlder grup. Cmpanies may nt pt ut f cmpliance with the prxy access rules r adpt mre restrictive prxy access standards than thse described belw. Effective Dates and Nminatin Deadlines 2011 Prxy Seasn. Sharehlder-nminated directr candidates must be submitted at least 120 days (but nt mre than 150 days) prir t the anniversary f the mailing f the cmpany s previus year s prxy statement. The prxy access rules becme effective Nvember 15, As a result, taking int accunt the deadline fr a sharehlder s submissin f a directr candidate: If a cmpany s 2010 prxy materials were mailed befre March 15, 2010, sharehlders will nt be permitted t nminate any directr candidates. If a cmpany s 2010 prxy materials were mailed n r after March 15, 2010, sharehlders will be permitted t nminate directr candidates. NOTE: Ntwithstanding the abve, if a cmpany determines t mve the date f its 2011 annual meeting by mre than 30 days frm the date f the 2010 meeting, the deadline fr sharehlders t nminate directrs will be a reasnable time befre the cmpany mails its 2011 prxy materials. Related practice areas: Crprate and Business Law Fr mre infrmatin, please cntact any f the individuals listed belw: Warren J. Casey NJ wcasey@daypitney.cm (973) Sctt Warren Gdman sgdman@daypitney.cm (973) Rnald H. Janis NY, NJ rjanis@daypitney.cm (212) (973) Frank E. Lawatsch, Jr. flawatsch@daypitney.cm (212) Aileen C. Meehan NY ameehan@daypitney.cm (212) NY, NJ Randy K. Rutherfrd rrutherfrd@daypitney.cm (973) Clleen R. Diver cdiver@daypitney.cm (973) Achilles B. Kintirglu akintirglu@daypitney.cm (973)

2 Eligibility. Ellen S. Knarr NJ (973) In rder t be eligible t nminate a directr t the cmpany s bard, a sharehlder (r sharehlder grup) must: have investment and vting pwer ver at least 3% f the utstanding shares f the cmpany as f the date that the sharehlder prvides ntice t the cmpany; have held cntinuusly fr three years the amunt f securities that are used fr purpses f satisfying the 3% wnership requirement; and cntinue t hld that amunt f securities thrugh the date f the annual meeting. Shares may be aggregated by a grup f sharehlders t meet the wnership requirement (each sharehlder in the grup must have held the shares used t meet the 3% threshld cntinuusly fr at least three years). Limitatins n Sharehlder Nminatins. The cmpany will nt be required t include in its prxy statement mre than ne sharehlder nminee, r a number f nminees that represents up t 25% f the size f the entire Bard, whichever is greater. If the cmpany has a classified (staggered) Bard, the 25% calculatin is still based n the ttal number f Bard seats. The nminating sharehlder (r grup) with the highest percentage f the cmpany s vting pwer will have its nminees included in the cmpany s prxy materials in the event that there are multiple eligible nminating sharehlders. If the maximum number f sharehlder-nminated directr candidates is already serving n the Bard, the cmpany is nt required t include additinal sharehldernminated directr candidates in the cmpany s prxy materials. Required Sharehlder Disclsures Schedule 14N. The Schedule 14N prepared by the nminating sharehlder (r grup) must be prvided t the cmpany and filed with the SEC at the same time. The Schedule 14N must include disclsure cncerning: The vting pwer f the cmpany s securities entitled t be vted by the nminating sharehlder

3 (r grup) and the length f wnership f thse securities. NOTE: The sharehlder (r grup) must als include a statement f intent t hld the securities thrugh the meeting date and indicate whether the sharehlder intends t cntinue t hld the shares after the meeting. Bigraphical and ther infrmatin abut the nminating sharehlder r grup and the sharehlder nminee r nminees, similar t the disclsure currently required in a cntested electin. NOTE: The sharehlder (r grup) may elect t have a statement in supprt f the sharehlder nminee (up t 500 wrds) included in the cmpany s prxy materials. Whether the nminee meets the bjective independence requirements f the applicable natinal securities exchange. NOTE: A sharehlder-nminee is nt required t satisfy subjective independence standards that may be required by the natinal securities exchange n which the cmpany is listed. Whether the nminee satisfies the cmpany s directr qualificatins, if any (as prvided in the cmpany s gverning dcuments). NOTE: A sharehlder-nminee is nt required t satisfy the cmpany s directr qualificatins. The Schedule 14N must include the fllwing certificatins: The nminating sharehlder (r grup) is nt hlding any f the cmpany s securities with the purpse, r with the effect, f: changing cntrl f the cmpany; r gaining a number f seats n the Bard that exceeds the maximum number f nminees that the cmpany culd be required t include in its prxy statement under the prxy access rules. The nminating sharehlder (r grup) and the sharehlder-nminated directr candidates satisfy the requirements f the prxy access rules. The infrmatin set frth in the Schedule 14N is true, cmplete and crrect.

4 SEC N Actin Prcess. The cmpany may seek a nactin letter frm the SEC with regard t the cmpany s determinatin t exclude a nminee, prvided that the cmpany asserts that a requirement f the prxy access rules has nt been met and has given the nminating sharehlder (r grup) ntice f, and pprtunity t cure, the deficiency. Sharehlders May Nw Seek Mre Permissive Prxy Access Standards. Pursuant t the new rules, sharehlders may file prpsals seeking that the cmpany establish mre permissive prxy access standards than thse described abve, prvided such sharehlders cmply with the traditinal SEC sharehlder prpsal rules. Say n Pay Under Sectin 951(a) f the Ddd-Frank Act, at least nce every three years, public cmpanies are required t cnduct a nnbinding sharehlder advisry vte n their executive cmpensatin prgrams as disclsed in their annual meeting prxy statements. At least nce every six years, public cmpanies must als cnduct a separate nnbinding sharehlder vte n the frequency f the say n pay vte t determine whether the vte will ccur annually, biennially r triennially. Bth the say n pay and frequency vtes are required t be included in a cmpany s prxy statement fr its first annual r ther meeting f sharehlders ccurring n r after January 21, Accrding t its recently annunced tentative rulemaking schedule, the SEC currently anticipates issuing prpsed rules regarding say n pay in Octber December 2010 and final rules in January March Glden Parachute Cmpensatin Under Sectin 951(b) f the Ddd-Frank Act, any prxy r cnsent slicitatin material fr a sharehlder meeting at which sharehlders are asked t apprve a merger r ther business cmbinatin transactin must include clear and simple disclsure f: any cmpensatin arrangements with named executive fficers that are based n r therwise relate t the transactin (including any cnditins t payment); and the aggregate ttal f all such cmpensatin that may be paid under these arrangements.

5 The prxy materials must als include a nnbinding advisry sharehlder vte n these cmpensatin arrangements (unless these arrangements have already been the subject f a sharehlder say n pay vte at a prir sharehlder meeting). These rules apply fr any sharehlder meeting that ccurs n r after January 21, 2011, at which sharehlders will be asked t apprve a merger r ther business cmbinatin transactin. Accrding t its recently annunced tentative rulemaking schedule, the SEC currently anticipates issuing prpsed rules regarding glden parachute say n pay in Octber December 2010 and final rules in January March Clawback Plicy Under Sectin 954 f the Ddd-Frank Act, a cmpany listed n a natinal securities exchange will be required t adpt and disclse a clawback plicy. The plicy must require that, in the event the cmpany is required t restate its financial statements due t material nncmpliance with financial reprting requirements, the cmpany will recver incentive cmpensatin (including stck ptins) received by any current r frmer executive fficer during the last three years that was in excess f what that executive fficer wuld have received had the awards been based n the restated financials. Accrding t its recently annunced tentative rulemaking schedule, the SEC currently anticipates issuing prpsed rules regarding clawback plicies in April July 2011, s these rules will nt be in effect fr the 2011 prxy seasn. CEO Cmpensatin Rati Calculatin Sectin 953(b) f the Ddd-Frank Act requires disclsure f: the annual ttal cmpensatin f the cmpany s CEO; the median f the annual ttal cmpensatin f all emplyees f the cmpany, excluding the CEO; and the rati f the median annual ttal cmpensatin t the CEO s annual ttal cmpensatin. The Act prvides that annual ttal cmpensatin shuld be calculated using the same rules that apply fr determining ttal cmpensatin in the Summary Cmpensatin Table (Regulatin S-K Item 402(c)(2)(x)). Accrding t its recently annunced tentative rulemaking schedule, the SEC currently anticipates issuing prpsed rules regarding CEO/emplyee pay rati disclsure in April July 2011, s this disclsure requirement will nt be in effect fr the 2011 prxy seasn.

6 Bar Admissins: New Jersey NJ New Yrk NY This is prvided fr educatinal and infrmatinal purpses nly and is nt intended and shuld nt be cnstrued as legal advice. This publicatin may be deemed advertising under applicable state laws. If yu have any questins, fr the purpse f the attrney advertising rules, please cntact Day Pitney LLP at 7 Times Square, New Yrk, NY 10036, T: (212) , Day Pitney LLP 7 Times Square New Yrk NY 10036