PART I

EXECUTIVE COMPENSATION

Chapter 1

AN OVERVIEW OF THE EXECUTIVE COMPENSATION DISCLOSURE RULES

by Mark A. Borges and Sinead M. Kelly

§ 1.01 Introduction

§ 1.02 Current Rules

§ 1.03 Impact on Compensation Committee Process

§ 1.04 Impact on Executive Compensation Programs

§ 1.05 Directors’ Compensation

§ 1.06 Evolving Compensation Landscape

Chapter 2

PREPARING THE EXECUTIVE COMPENSATION TABLES

by Thomas Asmar and Mark A. Borges

§ 2.01 Introduction

§ 2.02 Applicability of the Rules

§ 2.03 Specific Requirements

§ 2.04 The Exhibits

Exhibit 1 Required Disclosure by Type of Compensation or Plan Exhibit 2 Annotated Tabular Disclosure

Exhibit 3 Key Definitions

Chapter 3

COMPENSATION DISCUSSION AND ANALYSIS

by Robert M. Hayward, Robert E. Goedert, and Matthew R. Jones

§ 3.01 Overview

§ 3.02 Gathering the Facts

§ 3.03 Preparing a Draft Compensation Discussion and Analysis

§ 3.04 SEC Staff Guidance

§ 3.05 Disclosure Requirements Regarding Compensation Consultants and Risk Management and Executive Compensation

§ 3.06 Impact of the Dodd-Frank Act

§ 3.07 Why You Should Care

Chapter 4

SAY-ON-PAY REQUIREMENTS AND CONSIDERATIONS

by Sean C. Feller

§ 4.01 Say-on-Pay

§ 4.02 Say-on-Frequency

§ 4.03 Say-on-Golden Parachutes

Chapter 5

PAY RATIO DISCLOSURES

by Krista P. Hanvey and Lilias Lee

§ 5.01 General Pay Ratio Disclosure Requirements

§ 5.02 Pay Ratio Calculation

§ 5.03 Disclosure Considerations

Chapter 6

RULES APPLICABLE TO NONQUALIFIED DEFERRED COMPENSATION

by Michael J. Collins

§ 6.01 Background

§ 6.02 What Is Deferred Compensation?

§ 6.03 What Rules Apply to Deferred Compensation Under Section 409A?

§ 6.04 Special Rules for Equity Compensation

§ 6.05 Consequences of Violating Code Section 409A

§ 6.06 IRS Correction Programs

Chapter 7

SPECIAL CONSIDERATIONS IN ADOPTING AND AMENDING EMPLOYEE STOCK PLANS

by Renata J. Ferrari and Craig E. Marcus

§ 7.01 Introduction

§ 7.02 Adopting and Amending Plans

§ 7.03 Additional Disclosure Concerning Equity Compensation

§ 7.04 Listing Requirements

§ 7.05 Institutional Shareholders

§ 7.06 Conclusion

Chapter 8

ACCOUNTING FOR STOCK-BASED COMPENSATION

by Sandie Kim Kulick and Michael S. Kesner

§ 8.01 Overview

§ 8.02 Summary of ASC 718, Stock Compensation

Exhibit 1 Illustration of Accounting for Stock-Based Compensation

PART II 

PROXY RULES

Chapter 9

AN OVERVIEW OF THE PROXY SOLICITATION RULES

by Laurie L. Green and Grant J. Levine

§ 9.01 Introduction

§ 9.02 Overview of the Proxy Solicitation Process

§ 9.03 Shareholder Access

§ 9.04 E-Proxy

§ 9.05 Shareholder Lists

§ 9.06 Bona Fide Nominee Rule and Short Slates

§ 9.07 Unbundling of Related Proposals

§ 9.08 SLB No. 14: Rule 14a-8 Interpretations

§ 9.09 Exempt Solicitations and Shareholder Communications

§ 9.10 Shareholder Activism

Chapter 10

THE SHAREHOLDER COMMUNICATIONS PROXY RULES AND THEIR PRACTICAL EFFECT ON SHAREHOLDER ACTIVISM AND PROXY CONTESTS

by Steven A. Rosenblum and Sabastian V. Niles

§ 10.01 Introduction

§ 10.02 The Shareholder Communications Proxy Rules and Subsequent Reforms and Proposals

§ 10.03 Proxy Contests and Shareholder Activism

§ 10.04 Recommendations

§ 10.05 Conclusion

Exhibit 1 Model Bylaws for Advance Notice of Stockholder Business and Nominations 

Chapter 11

“STREET NAME” REGISTRATION & THE PROXY SOLICITATION PROCESS

by John C. Wilcox , John J. Purcell, Hye-Won Choi, and Niels C. Holch

§ 11.01 Introduction

§ 11.02 “Legal” vs. “Beneficial” Ownership of Stock

§ 11.03 Assertion of “Legal” Rights by “Beneficial” Owners

§ 11.04 Tabulation Issues

§ 11.05 Post-Record Date Sales and Share Lending

§ 11.06 Conclusion

Exhibit 1 Custodial Ownership Chart

Exhibit 2 Sample DTC Participant Request for Stocklist Demand Letter—Delaware Corporation

Exhibit 3 Sample DTC Stocklist Demand Letter—Delaware Corporation

Exhibit 4 TIAA-CREF Securities Lending Policy

Chapter 12

THE SHAREHOLDER PROPOSAL PROCESS

by Courtney C. Haseley and Elizabeth A. Ising

§ 12.01 Introduction

§ 12.02 History of the Shareholder Proposal Rule

§ 12.03 Procedural Elements of the Shareholder Proposal Process

§ 12.04 Binding Bylaw Amendments

§ 12.05 Proposals Contrary to the Proxy Rules and Regulations

§ 12.06 The Ordinary Business Exclusion

§ 12.07 Proposals Relating to the Election of Directors

§ 12.08 Substantial Implementation

§ 12.09 Other Bases for Exclusion

§ 12.10 Advance Notice Bylaws, Proposals from the Floor, and Discretionary Voting Authority

Exhibit 1 Staff Legal Bulletin No. 14 (July 13, 2001) 

Exhibit 2 Staff Legal Bulletin No. 14A (July 12, 2002)

Exhibit 3 Staff Legal Bulletin No. 14B (September 15, 2004) 

Exhibit 4 Staff Legal Bulletin No. 14C (June 28, 2005) 

Exhibit 5 Staff Legal Bulletin No. 14D (November 7, 2008) 

Exhibit 6 Staff Legal Bulletin No. 14E (October 27, 2009) 

Exhibit 7 Staff Legal Bulletin No. 14F (October 18, 2011) 

Exhibit 8 Staff Legal Bulletin No. 14G (October 16, 2012) 

Exhibit 9 Staff Legal Bulletin No. 14H (October 22, 2015) 

Exhibit 10 Staff Legal Bulletin No. 14I (November 1, 2017)

Chapter 13

E-PROXY, ELECTRONIC COMMUNICATIONS, AND VOTING

by Keir D. Gumbs and Andrew Brady

§ 13.01 Introduction

§ 13.02 Electronic Delivery of Proxy Materials Under Rule 14a-16

§ 13.03 Electronic Delivery Outside of Rule 14a-16

§ 13.04 Electronic Voting

§ 13.05 Electronic Stockholders’ Meetings

Chapter 14

AUDIT COMMITTEE DISCLOSURE AND RELATED REQUIREMENTS

by Lisa A. Fontenot, Michael J. Scanlon, and Michael A. Titera

§ 14.01 Introduction

§ 14.02 Audit Committee Report

§ 14.03 Other Audit Committee Disclosures

§ 14.04 Disclosures Relating to the Outside Auditor

§ 14.05 Audit Committee Charter Disclosure Requirements

§ 14.06 JOBS Act Provisions Relevant for Audit Committees

§ 14.07 SEC 2015 Concept Release on Enhanced Audit Committee Disclosures

§ 14.08 Audit Committee Samples: Pre-approval Policies, Questionnaires, Charters, and Checklist

Chapter 15

DIRECTOR QUALIFICATIONS; BOARD LEADERSHIP; DIVERSITY AND RISK OVERSIGHT

by Lori Zyskowski

§ 15.01 Overview

§ 15.02 Selected Proxy Statement Disclosure Examples

§ 15.03 Conclusions and Recommended Practices

Chapter 16

DIRECTOR INDEPENDENCE REQUIREMENTS

by Anne G. Plimpton

§ 16.01 Introduction

§ 16.02 Director Independence and Related Requirements

§ 16.03 IPO Phase-In

§ 16.04 Exceptions

§ 16.05 Ability to Cure

§ 16.06 Working with the Various Definitions

Exhibit 1 Trading Markets, Securities, and Tax Standards (as of June 1, 2018)

Exhibit 2 Other Independence Standards (as of June 1, 2018)

Chapter 17

DISCLOSURE OF RELATED PERSON TRANSACTIONS

by Anne G. Plimpton

§ 17.01 Introduction

§ 17.02 Key Definitions and Parameters

§ 17.03 Exclusions and Exceptions

§ 17.04 Policies and Procedures for Review, Approval, or Ratification of Transactions

§ 17.05 Independence Determinations

§ 17.06 Action Items

Chapter 18

PROXY DISCLOSURE EFFECTIVENESS

by Aaron Briggs and Irving S. Gomez

§ 18.01 Proxy Statement as Communication

§ 18.02 Why Should You Care About Disclosure Effectiveness?

§ 18.03 How to Think About the Content

§ 18.04 Taking the “Look and Feel” of Your Document to a New Level

§ 18.05 Legal Considerations When Revamping Your Disclosures

§ 18.06 Practical Considerations When Revamping Your Disclosures 

Exhibit 1 Selected Performance and Strategy Disclosure Examples

Exhibit 2 Selected Investor Outreach Disclosure Examples 

Exhibit 3 Selected Succession Planning Disclosure Examples 

Exhibit 4 Selected Board Operations Disclosure Examples 

Exhibit 5 Selected Director Qualifications/Experience Disclosure Examples

Exhibit 6 Selected Board Diversity Disclosure Examples 

Exhibit 7 Selected Board Refreshment Disclosure Examples 

Exhibit 8 Selected Investor Alignment Examples

Exhibit 9 Selected Sustainability Highlight Examples 

Exhibit 10 Selected Dedicated Sustainability Discussion

Exhibit 11 Selected Examples of Effective Human Capital Disclosures 

Exhibit 12 Selected Examples of Effective Use of Pictures

Exhibit 13 Selected Examples of Effective Use of Color

APPENDICES

Appendix A SEC Executive Compensation and Corporate Governance Disclosure Rules and Securities Listing Standards—Regulation S-K Items 401 Through 407 and Listing Standards Related to Audit and Compensation Committees

Appendix B Text of Selected Proxy Rules

Appendix C SEC Rule 14a-16 Internet Availability of Proxy Materials

Appendix D Selected Executive Compensation, Corporate Governance and Other Disclosure Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Excerpts)

Appendix E SEC Release No. 34-40018 (May 21, 1998) Final Rule: Amendments to Rules on Shareholder Proposals

Appendix F Selected Requirements for Disclosure of Equity Compensation Plan Information

Appendix G NYSE Corporate Governance Listing Standards— Section 303A of NYSE Listed Company Manual

Appendix H NYSE Rule 452—Giving Proxies by Member Organization

Appendix I NASDAQ Stock Market Rule 5250(b)(3) Disclosure of Third Party Director and Nominee Compensation Corporate Governance Rules and Associated Interpretative Material

Appendix J Compensation and Proxy Disclosure Requirements for Emerging Growth Companies—Excerpts From the Jumpstart Our Business Startups Act

Appendix K September 6, 2019 SEC Announcement Rule 14a-8 No-Action Requests and Related Shareholder Proposals: STAFF LEGAL BULLETIN No. 14J, October13, 2018

Appendix L Shareholder Proposals: Staff Legal Bulletin No. 14K (CF), Securities and Exchange Commission

Appendix M Procedural Requirements and Resubmission Thresholds Under Exchange Act Rule 14a-8,Securities And Exchange Commission

Appendix N Nasdaq Diversity Rule, Securities and Exchange Commission