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This paper examines a legal bulletin issued by the staff of the Securities and Exchange Commission (SEC) in November 2017 that provides significant new guidance to SEC-reporting companies on the application of the “ordinary business” and “economic relevance” exceptions in Rule 14a-8 under the Securities Exchange Act of 1934. Rule 14a-8 governs an SEC-reporting company’s obligation to include shareholder proposals in its proxy materials for a shareholder meeting.

This paper provides in-depth analysis of the new interpretive guidance against the background of continuing controversy between companies and shareholder-proponents over the bases on which companies should be permitted to exclude from their proxy materials proposals that proponents believe raise social, ethical or other policy issues that are appropriate for shareholder action.

In acting on a company’s request to exclude a proposal, the SEC staff must make difficult judgments regarding the connection between policy issues reflected in the proposal and the company’s business operations, which the company’s directors and officers seek to conduct free of inappropriate shareholder oversight. In the new guidance, the staff calls for assistance in making these judgments by soliciting greater board-level involvement in the exclusion determination and encouraging the company in its no-action submission to discuss the board’s analysis and decision-making process. Greater board participation should encourage a more probing assessment of the considerations weighed in these determinations.

This paper provides expert guidance on a major new SEC disclosure requirement from experienced securities lawyers.

To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission (SEC) after its four-year comprehensive review of the proxy system.

Discusses briefly the context in which the SEC’s review was conducted; the general themes of the guidance provided; the most notable aspects of the guidance; and the matters that were expected to be, but were not, addressed by the SEC.

The guidance does not go as far in regulating proxy advisory firms as many had anticipated it would. The key obligations specified in the guidance are imposed on the investment advisers who engage the proxy firms. The responsibilities, policies and procedures mandated do not change the fundamental paradigm that has supported the influence of proxy firms – that is, investment advisers continue to be permitted to fulfill their duty to vote client shares in a “conflict-free manner” by voting based on the recommendations of independent third parties, and continue to be exempted from the rules that generally apply to persons who solicit votes or make proxy recommendations.

The SEC staff states in the Bulletin that it expects that proxy firms and investment advisers will conform to the obligations imposed in the Bulletin “promptly, but in any event in advance of [the 2015] proxy season.”

Practical guidance from experienced M&A lawyers.

To explain a series of no-action letters recently released by the SEC’s Division of Corporation Finance that help to clarify the circumstances in which a company may exclude shareholder proposals involving proxy access bylaw provisions from the company’s proxy statement.

Explains the background of competing proxy access bylaw provisions adopted or proposed by companies and proposed by shareholders, the “directly conflicts” test explained in SEC Staff Legal Bulletin 14H, and the “substantially implemented” guidelines implied in a series of no-action letters in February and March 2016. Explains the status of shareholder proxy access proposals as of Spring 2016.

Taken together with an earlier series of no-action letters released in February 2016 and Staff Legal Bulletin No. 14H, published in October 2015, companies considering the adoption of a proxy access bylaw provision now have a clearer understanding of when the Staff of the Division of Corporation Finance is likely to conclude that a company may appropriately exclude a proxy access shareholder proposal in favor of a proxy access provision adopted or proposed by a company.

History shows a repetitive cycle of corporations over‐reaching their boundaries and causing social turmoil. Governments are faced with the task of reining them in by enacting regulations. Investors are faced with the task of preserving their individual assets. Corporate governance remains the core issue in these battles. This paper examines the origins of corporate governance and the events during the twentieth century that have failed to align the interests of management and shareholders.

The purpose of this paper is to investigate whether proxy statement performance graph disclosures are influenced by the firm's governance structure and management concerns about relative performance.

Logistic regression is used to test whether the level of performance graph disclosure decreases with lower relative performance and higher insider director membership on the compensation committee of the board. Also, Z and t‐statistics test whether bias in the selected peer group benchmark is related to insider membership on the committee.

The empirical results suggest that reporting discretion was exercised for management's benefit. The amount of explicit disclosure on cumulative returns in the performance graph decreases as relative performance declines and decreases when insider directors serve on the compensation committee. Moreover, the presence of insider directors on the compensation committee is associated with a biased choice of peer group benchmark return.

The sample for the study consists of 141 large firms. Future research could examine a larger group of firms that vary in size or other disclosures.

These findings support recent actions taken to improve corporate governance. Further public policy steps could be taken. For example, the SEC could require firms to include an explanation for appointing insiders to the compensation committee.

The results are consistent with managers using discretion over information disclosures and suggest that compensation committees with insider members play a less active role in providing information that is helpful to shareholders.

The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) Regulatory Notices issued from October to December 2007 and a sample of disciplinary actions during that period. In July 2007, FINRA Regulatory Notices replaced NASD Notices to Members.

Provides excerpts from FINRA Reg Notice 07‐54, Fairness Opinions; Reg Notice 07‐57, Representation of Parties in Arbitration and Mediation; Reg Notice 07‐59, Supervision of Electronic Communications; Reg Notice 07‐61, Trade Reporting and Compliance Engine (TRACE), and Reg Notice 07‐65, Amendments to NYSE Rule 409(f).

The paper finds useful information in each of these Notices.

These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends. The FINRA staff is aware of this summary but has neither reviewed nor edited it. For further detail and FINRA contacts for each notice, as well as other notices and useful information, the reader is directed to www.finra.org

The efforts to improve on the stewardship role of corporate governance have mainly emanated from external forces, such as pressure from shareholder groups, regulators, organized exchanges and courthouses. However, past research and field evidence, not the least being the Enron's scandal, have demonstrated that the independent structure of the board is far from being a guarantee to its optimum performance. Building on survey results administered to individuals with significant boardroom experience, it is argued in this paper that the quest for complete autonomy in the boardroom should be extended beyond the structural configuration to also include the psychological independence dimension.

In a privately owned company, the owner rules the roost and controls the decision‐making process. Flotation changes all that. Going public diffuses ownership among a wide range of shareholders who paradoxically become peripheral figures as far as power and control are concerned. Control shifts to the hands of executives responsible for the assets of the shareholder. Fundamentally, the role of management is to make decisions that help to maximize profits for these investors.

This study examines the director labor market to better understand which director attributes are important for board service.

Director level data, which includes proxies for both human and social capital, is analyzed to determine which characteristics increase the likelihood of gaining additional board appointments.

We find that general skills and director connections are valued in the marketplace. Among specific director characteristics, financial expertise, holding an MBA degree, and S&P 500 experience are positively associated with gaining new board appointments. Moreover, regardless of the director’s level of expertise, highly connected individuals are more likely to obtain new appointments. Finally, from a range of characteristics, only director connections mitigate the negative consequences of serving on the boards of firms that restate their financials.

While most research has analyzed the effectiveness of boards of directors as a whole, this study examines the value of individual director characteristics within the context of the labor market.

This paper aims to clarify the relationship between the voting and engagement behaviour of institutional investors, i.e. institutional investor stewardship behaviour, and the enactment of stewardship by corporate boards. In doing so, this paper contributes to the evaluation of contemporary corporate governance systems and provides recommendations for the redesign of these systems.

This paper is based on a qualitative exploratory descriptive research study into assumed, prescribed and the actual behaviour of institutional investors. Their behaviour is explored through a survey and in-depth interviews with global institutional investors.

The prescription of institutional investor stewardship behaviour and the exploration of actual behaviour from an investors’ perspective led to the conclusion that assumed institutional investor stewardship exists variously as either “in form” (i.e. measured by compliance to the relevant corporate governance code) or “in substance” (i.e. the actual behaviour from the investors and investee companies’ perspective). The results suggest that that institutional investors’ actual stewardship behaviour as global investors requires a nuanced conclusion about the existence of institutional investor stewardship.

Although the number of semi-structured interviews with institutional investors was limited to just 14, these interviewees represent the majority share in terms of market capitalisation of Dutch listed companies. Additional research could clarify the perspective of other investors, such as pension funds and private investors.

The outcome of this research can serve as input for corporate governance reforms in the preambles of governance codes and the prescribed principles and best practice provisions of corporate governance and stewardship codes. This research identifies opportunities for further academic research to enrich the understanding of the role of institutional investors in enacting corporate stewardship.

This paper contributes to furthering the understanding of the mechanisms by which institutional investors, through their behaviour, contribute to enacting stewardship through their corporate boards. This is an important part of the corporate social responsibility of institutional investors. It also triggers a dialogue about the social and environmental impacts of stock listed companies.

This paper fulfils an identified need to develop knowledge about new paradigms and offers a more integrated approach to corporate governance reforms in terms of the role of institutional shareholders in the promotion of good corporate governance.