Corporate & Securities Blog

The Senate recently passed the Consumer Financial Protection Act of 2010 and, like the House financial reform legislation passed back in December, it has a lot to say on corporate governance and executive compensation.

The Patient Protection and Affordable Care Act adds a new provision to the Internal Revenue Code that could provide a significant benefit to small and mid-size companies in the biotechnology industry.  The Act, which was signed by President Obama on March 23, authorizes the Secretary of the Treasury to award up to $1 billion in qualifying therapeutic discovery project credits in 2009 and 2010.  The credit is equal to 50% of an eligible taxpayer’s qualified investment in a qualifying therapeutic discovery project.

Somewhat lost in the excitement of pending healthcare legislation, on March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act.  The HIRE Act features two new tax benefits designed to incentivize employers to hire and retain workers who were previously unemployed or working part time.

As part of its recently adopted Final Rules on Proxy Disclosure Enhancements, the SEC added a new Item 5.07 to Form 8-K.  Item 5.07 requires a company to report the results of voting at any shareholders meeting within four business days after the meeting at which the vote was held.

As approved by the SEC, the revised rules (more fully described in this SEC Release) basically conform the NYSE corporate governance listing standards to the requirements of Item 407 of Regulation S-K and to Form 8-K by eliminating duplicative disclosure requirements currently included in the NYSE standards and directly incorporating the Item 407 requirements.

On December 16, 2009, the SEC voted to approve final rules on proxy disclosure and solicitation enhancements which had been initially proposed by the SEC in July 2009. As stated in the SEC's adopting release the new rules will be effective February 28, 2010, meaning they will apply to the 2010 proxy season for substantially all calendar year issuers.

While we continue to monitor all of the regulations and rule changes proposed by the SEC as well as the different and overlapping versions of legislation proposed in Congress, we know that at least one rule proposal has been approved and will be in effect on January 1, 2010.

Following up on its June proposal to change federal proxy rules to facilitate the rights of shareholders to nominate directors, on December 14 the Securities and Exchange Commission announced that it is re-opening the public comment period to "seek views on additional data and related analyses." The SEC staff continues to expect to make a final recommendation to the Commission "early next year."

One non-regulatory proxy statement-related development of note is the SEC’s new position on responses to proxy statement comments.  The position was articulated by Shelley Parratt, the SEC’s Deputy Director, Division of Corporation Finance at a November 2009 conference.

One goal of the Securities and Exchange Commission’s recent rule proposal on Proxy Disclosure and Solicitation Enhancements is to encourage public company boards of directors and compensation committees to evaluate how the company’s risk management and oversight functions relate to executive compensation decisions and processes.  What questions should your Company's compensation committees be asking?