After listening to SEC Commissioner Luis A. Aguilar speak during Wednesday’s open meeting where the commission in a 5-0 vote approved proposed rules for exchange listing standards related to compensation committees and compensation consultants as well as new disclosures, I was left wondering whether or not such rules will be effective.
I’m not saying the issue of independence and conflicts of interest regarding compensation committees and consultants should not be addressed by various exchanges (i.e. NYSE EuroNext, Nasdaq OMX). In fact, I’m wondering why the SEC didn’t follow the audit committee model in the Sarbanes-Oxley Act. Title III of SOX (Corporate Responsibility) made it mandatory for public companies to have audit committees while the SEC’s proposed Rule 10C-1 under the Dodd-Frank Act doesn’t go that far with compensation committees. Read the rest of this entry »
Nearly a decade after the Sarbanes-Oxley Act was signed into law, the internal audit (IA) function is facing new challenges as to what additional roles it should play and its interaction with the board.
R. William (Bill) Ide, chair of The Conference Board Governance Center Advisory Board, has seen this transition first-hand as a director on several boards and as governance counsel for public companies.
William Ide, Chair of The Conference Board Governance Center Advisory Board
“IA has worked hard to build controls and a capacity to minimize potential financial fraud, following the implementation of Sarbanes-Oxley,” Ide said. “Initially the focus was on increased resources and more independence from management. We are now at a phase of evolution where IA is being asked not only to play the police role on assuring adequate controls and adherence, but also consulting as to how things can work better.” Read the rest of this entry »
As the proxy season gets into full swing, the issue of the amount of power and influence held by proxy advisory firms – specifically ISS and Glass Lewis – is front and center thanks to the so-called Proxy Plumbing concept release issued by the SEC last year.
While it has been no secret that many public company board members have a personal aversion to many of the proxy advisory firms, those same firms have been put on the defensive as many of the public comments to the concept release have been disclosed. Many letter writers are calling for strict regulation of third parties that have no economic interest in a company either giving advice to powerful institutional investors or voting shares for those investors. Read the rest of this entry »
The recent Delaware Court of Chancery Air Products v. Airgas decision and the spate of poison pill adoptions in recent months lends credence to the theory that the anti-takeover shareholder rights plans are alive and well.
A Director Notes report entitled Poison Pills in 2011 released by The Conference Board Governance Center yesterday addresses the issue of poison pills and offers some recommendations for corporate boards to avoid becoming a hostile takeover target. The report, co-authored by Andrew L. Bab (a partner) and Sean P. Neenan (an associate) of Debevoise & Plimpton, states that while the shareholder rights agreement is no longer prevalent, recent case law shows that properly structured poison pills can be valuable anti-takeover devices.
Among the four recommendations in the report [Read March 17 press release], Bab and Neenan write that boards should: Read the rest of this entry »