SEC staff issues guidance on Rule 14a-8 calling for board involvement in evaluating shareholder proposals

2018 ◽  
Vol 19 (1) ◽  
pp. 20-27 ◽  
Author(s):  
Richard J. Parrino ◽  
Alan Dye ◽  
Alex Bahn
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Decision Making Process ◽  
Content Type ◽  
Policy Issues ◽  
Shareholder Proposals ◽  
Business Operations ◽  
Depth Analysis ◽  
Board Level ◽  
Directors And Officers

Purpose 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. Design/methodology/approach 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. Findings 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. Originality/value This paper provides expert guidance on a major new SEC disclosure requirement from experienced securities lawyers.

Bringing order to non-GAAP financial measures: SEC sues to enforce “equal-or-greater-prominence” requirement

2019 ◽  
Vol 20 (4) ◽  
pp. 51-57
Author(s):  
Richard J. Parrino
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Financial Measures ◽  
Generally Accepted Accounting Principles ◽  
Enforcement Action ◽  
Accounting Principles ◽  
Depth Analysis ◽  
The Us ◽  
Earnings Releases

Purpose This article examines the first action by the US Securities and Exchange Commission to enforce the “equal-or-greater-prominence” requirement of its rules governing the presentation by SEC-reporting companies, in their SEC filings and earnings releases, of financial measures not prepared in accordance with generally accepted accounting principles (GAAP). Design/methodology/approach This article provides an in-depth analysis of the equal-or-greater-prominence rule and the SEC’s enforcement posture in the context of the SEC’s concern that some companies present non-GAAP financial measures in a manner that inappropriately gives the non-GAAP measures greater authority than the comparable GAAP financial measures. Findings Although the appropriate use of non-GAAP financial measures can enhance investor understanding of a company’s business and operating results, investors could be misled about the company’s GAAP results by disclosures that unduly highlight non-GAAP measures. The SEC’s enforcement action signals a focus on the manner in which companies present non-GAAP financial measures as well as on how they calculate the measures. Originality/value This article provides expert guidance on a major SEC disclosure requirement from an experienced securities lawyer.

SEC adopts rule to implement Dodd-Frank CEO pay ratio disclosure requirement

2016 ◽  
Vol 17 (1) ◽  
pp. 122-130
Author(s):  
Richard J. Parrino
Keyword(s):  
Design Methodology ◽  
Chief Executive ◽  
Securities And Exchange Commission ◽  
Total Compensation ◽  
Content Type ◽  
Meaningful Information ◽  
Depth Analysis ◽  
Ceo Pay ◽  
Annual Total ◽  
Disclosure Requirement

Purpose This article examines the rule issued by the Securities and Exchange Commission in August 2015 that requires most SEC-reporting companies to disclose annually the ratio of the annual total compensation of their chief executive officer to the median of the annual total compensation of their employees other than the CEO. Design/methodology/approach This article provides an in-depth analysis of the operation of the controversial pay ratio disclosure rule against the backdrop of concerns expressed by many commenters on the rule proposal, as well as by the two Commissioners who dissented from adoption of the rule, that the disclosure will not provide meaningful information to investors and will be excessively costly and burdensome for companies to produce. Findings The SEC fashioned the final pay ratio disclosure rule with a vaguely defined statutory purpose to guide it and a heavy volume of comments on its rule proposal that urged widely disparate approaches to implementation. In overhauling the proposed rule, the SEC sought to satisfy its mandate under the Dodd-Frank Act while providing companies with flexibility in implementing the new rule that it believes will reduce compliance costs and burdens. Originality/value This article provides expert guidance on a major new SEC disclosure requirement from experienced securities lawyers.

SEC issues new guidance on excluding shareholder proposals under rule 14a-8

2016 ◽  
Vol 17 (2) ◽  
pp. 23-26
Author(s):  
John Newell ◽  
Arthur McGivern ◽  
David Roberts
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Policy Issue ◽  
Wall Street ◽  
Content Type ◽  
Policy Issues ◽  
Majority Opinion ◽  
Shareholder Proposals

Purpose To explain SEC Division of Corporation Finance Staff Legal Bulletin No. 14H (SLB 14H), which provides interpretive advice on how the Staff will treat shareholder proposals under the “directly conflicts” and “ordinary business” exclusions under Rule 14a-8. Design/methodology/approach Explains Rule 14-8 concerning the inclusion of shareholder proposals in a company’s proxy materials, Rule 14a-8(i)(9) on substantive bases for exclusion of shareholder proposals, guidance from SLB 14H on shareholder proposals that do and do not directly conflict with company proposals, Staff guidance prior to SLB 14H, the “ordinary business” exclusion under Rule 14a-8(i)(7), and how SEC staff guidance differs from the majority opinion in Trinity Wall Street v. Wal-Mart Stores, Inc. on the ordinary business exclusion. Findings The SEC Staff’s new standard for conflicting proposals is likely to make it more difficult for companies to exclude a shareholder proposal that is different from a management proposal if the two proposals are not “mutually exclusive”. Staff guidance also states that companies may not exclude proposals focusing on a significant policy issue under the ordinary business exclusion if “the proposals would transcend the day-to-day business matters and raise policy issues so significant that it would be appropriate for a shareholder vote”. Originality/value Expert guidance from experienced securities and financial services lawyers.

SEC’s disclosure effectiveness initiative reshapes MD&A disclosure requirements

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Richard J. Parrino
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Financial Information ◽  
Content Type ◽  
Market Participants ◽  
Financial Condition ◽  
Disclosure Requirements ◽  
Depth Analysis ◽  
The Us ◽  
Financial Disclosures

Purpose This article examines rule amendments issued by the US Securities and Exchange Commission in November 2020, as part of the SEC’s ongoing “disclosure effectiveness initiative”, that revise in significant respects the requirements for financial disclosures presented in SEC filings as Management’s Discussion and Analysis of Financial Condition and Results of Operations. Design/methodology/approach This article provides an in-depth analysis of the rule amendments in the context of contrasting perspectives expressed by the SEC, individual SEC Commissioners who dissented from adoption of the amendments, and market participants regarding the merits of the SEC’s movement away from prescriptive disclosure requirements towards a more principles-based approach to disclosure. Findings Although the SEC’s rules have long reflected a mix of principles-based and prescriptive disclosure elements, the principles-based emphasis in this latest stage of the SEC’s disclosure modernization project accords the managements of filing companies greater latitude to determine whether financial information is material to investors and how such information should be presented. Originality/value This article provides expert guidance on a major new SEC disclosure development from an experienced securities lawyer.

New compliance guidance by SEC staff signals increased scrutiny of non-GAAP financial measures

2016 ◽  
Vol 17 (4) ◽  
pp. 23-33 ◽  
Author(s):  
Richard J. Parrino
Keyword(s):  
Design Methodology ◽  
Operating Performance ◽  
Securities And Exchange Commission ◽  
Appropriate Use ◽  
Content Type ◽  
Financial Measures ◽  
Generally Accepted Accounting Principles ◽  
Accounting Principles ◽  
Depth Analysis ◽  
Disclosure Requirement

Purpose This article examines compliance and disclosure interpretations issued by the staff of the Securities and Exchange Commission in May 2016 that provide guidance to SEC-reporting companies on how they can use financial measures not prepared in accordance with generally accepted accounting principles in a manner that complies with SEC rules governing the presentation of non-GAAP measures in SEC filings and other public communications. Design/methodology/approach This article provides an in-depth analysis of the new interpretive guidance in the context of the increasing use of non-GAAP financial measures by SEC-reporting companies and the SEC’s concern that some companies have been using non-GAAP measures inappropriately to present a materially different picture of their operating performance than investors can discern from financial measures prepared in accordance with GAAP. Findings Although the appropriate use of non-GAAP financial measures can enhance investor understanding of a company’s business and operating results, a relatively permissive SEC attitude towards the use of non-GAAP measures in recent years has emboldened some companies to increase their reliance on non-GAAP measures in a manner the SEC views as inconsistent with its rules. The SEC staff’s new guidance signals a renewed focus by the SEC on compliance with its requirements concerning the nature of permissible non-GAAP measures and the ways in which companies should present those measures. Originality/value This article provides expert guidance on a major new SEC disclosure requirement from experienced securities lawyers.

COVID-19 considerations for SEC cybersecurity guidance, disclosure, enforcement, and parallel proceedings: navigating the new normal

2020 ◽  
Vol 21 (2/3) ◽  
pp. 111-126
Author(s):  
Aldo M. Leiva ◽  
Michel E. Clark
Keyword(s):  
Securities And Exchange Commission ◽  
Effective Vaccine ◽  
Resource Reallocation ◽  
Securities Litigation ◽  
Public Companies ◽  
Content Type ◽  
Business Operations ◽  
Expert Analysis ◽  
Securities Industry ◽  
Remote Operations

Purpose To examine the COVID-19 pandemic’s effects on regulated entities within the context of cybersecurity, US Securities and Exchange Commission (SEC) compliance, and parallel proceedings. Design/methodology/approach Describes the SEC’s ability to conduct its operations within the telework environment, its commitment and ability to monitor the securities market, its enhanced monitoring of the adverse effects of SEC-regulated companies from COVID-19, its guidance to public companies of disclosure obligations related to cybersecurity risks and incidents, the SEC Office of Compliance and Examinations’s (OCIE’s) focus on broker-dealers’ and investment advisories’ cybersecurity preparedness, the role and activities of the SEC Division of Enforcement’s Cyber Unit, and parallel proceedings on cyberbreaches and incidents by different agencies, branches of government or private litigants. Findings SEC-regulated entities face many challenges in trying to maintain their ongoing business operations and infrastructure due to severe financial pressures, the threat of infection to employees and customers, and cybersecurity risks posed by remote operations from hackers and fraudsters. The SEC has reemphasized that its long-standing focus on cybersecurity and resiliency within the securities industry will continue, including ongoing vigilance over companies’ efforts to identify, assess, and address the inherent, heightened cybersecurity risks of teleworking and the resource reallocation that business need to sustain their operations until a safe and effective vaccine is developed for COVID-19. Originality/value Expert analysis and guidance from experienced lawyers with expertise in securities, litigation, government enforcement, information technology, data protection, privacy and cybersecurity.

Publishing quantitative careers research: challenges and recommendations

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bert Schreurs ◽  
Angus Duff ◽  
Pascale M. Le Blanc ◽  
Thomas H. Stone
Keyword(s):  
Design Methodology ◽  
Team Member ◽  
Research Question ◽  
Editorial Team ◽  
Board Members ◽  
Decision Making Process ◽  
Cross Sectional ◽  
Content Type ◽  
Insight Into

Purpose This article aims to provide prospective authors guidelines that will hopefully enable them to submit more competitive manuscripts to journals publishing careers research.Design/methodology/approach Based on their experience as an author, reviewer and editorial team member, the authors identify the main criteria that a quantitative study must meet to be considered for publication in international peer-reviewed journals covering career-related topics. They emphasize the importance of contributing to the careers literature and of designing the study in accordance with the research question.Findings Manuscripts are rejected because they are insufficiently innovative, and/or because sample, instruments and design are not appropriate to answer the research question at hand. Cross-sectional designs cannot be used to answer questions of mediation but should not be discarded automatically since they can be used to address other types of questions, including questions about nesting, clustering of individuals into subgroups, and to some extent, even causality.Originality/value The manuscript provides an insight into the decision-making process of reviewers and editorial board members and includes recommendations on the use of cross-sectional data.

Is agricultural revitalization possible through the climate-smart agriculture: a systematic review and citation-based analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mangirdas Morkunas ◽  
Tomas Balezentis
Keyword(s):  
Design Methodology ◽  
Agricultural Sustainability ◽  
Environmental Footprint ◽  
Independent Research ◽  
Research Directions ◽  
Content Type ◽  
Depth Analysis ◽  
Smart Agriculture ◽  
Scientific Framework ◽  
Research Avenue

PurposeThis paper seeks to identify the prevailing streams in the research of climate-smart agriculture in order to help to conceptualize this new scientific notion and assist in drawing clear borders between climate-smart agriculture, agricultural sustainability and resilience.Design/methodology/approachIn order to conceptualize the climate-smart agriculture (CSA), the current research provides an in-depth bibliometric analysis indicating the prospective research directions in CSA. The findings of this paper are important in guiding the research on creation of climate-smart agriculture across different regions.FindingsThe notion of the CSA covers three main objectives: increased productivity, enhanced resilience and reduced environmental footprint of agriculture. It is found that due to its novelty, the climate-smart notion does not always have its defined research agenda and is considered to be both a constituent part of some other scientific framework (e.g. sustainability) and an independent research avenue.Originality/valueThis paper presents an in-depth analysis of the literature on the CSA. The linkages among the concepts, research centers and research strands are identified via the citation-based analysis.

Evaluation of barriers in the adoption of halal certification: a fuzzy DEMATEL approach

2019 ◽  
Vol 14 (1) ◽  
pp. 153-174 ◽  
Author(s):  
Shahbaz Khan ◽  
Mohd Imran Khan ◽  
Abid Haleem
Keyword(s):  
Decision Making ◽  
Design Methodology ◽  
Specific Region ◽  
Integrative Approach ◽  
Decision Making Process ◽  
Management Support ◽  
Fuzzy Dematel ◽  
Content Type ◽  
Certification System ◽  
Expert’S Opinion

PurposeHigher level of customer satisfaction for halal products can be achieved by the effective adoption of halal certification through assessment and accreditation (HCAA). There are certain issues that seem detrimental towards the adoption of HCAA. The purpose of this paper is to identify the major barriers towards the adoption of HCAA and evaluate inter-relationships among them for developing the strategies to mitigate these barriers.Design/methodology/approachThe barriers towards the adoption of HCAA are identified through an integrative approach of literature review and expert’s opinion. The inter-relationship among the identified barriers is evaluated using fuzzy-based decision-making trial and evaluation laboratory (fuzzy DEMATEL) technique, which categorises them into influential and influenced group.FindingsThe evaluation of inter-relationship among barriers using fuzzy DEMATEL indicates four influencing barriers and six influenced barriers towards the adoption of HCAA. Further, findings suggest an extensive government, and management support is vital in terms of commitment, resources and actions to realise the benefits attributed with HCAA.Research limitations/implicationsThe inter-relationship among barriers is contextual and based on the perception of experts which may be biased as per their background and area of expertise. This study pertains to a specific region and can be extended to the generalised certification system.Originality/valueThe empirical base of the research provides the inter-relationship among the barriers towards the adoption of HCAA which can be effectively used as input in the decision-making process by producers, manufacturers and distributor. The policy maker can analyse the cause group and effect group of barriers to formulate policies that would help in the adoption of HCAA.

How firms borrow in international bond markets

2018 ◽  
Vol 26 (1) ◽  
pp. 135-169
Author(s):  
Alberto Fuertes ◽  
Jose María Serena
Keyword(s):  
Emerging Economies ◽  
Design Methodology ◽  
Choice Behavior ◽  
Global Financial Crisis ◽  
Securities And Exchange Commission ◽  
Bond Markets ◽  
Data Set ◽  
Content Type ◽  
Parametric Analyses ◽  
The Global Financial Crisis

Purpose This paper aims to investigate how firms from emerging economies choose among different international bond markets: global, US144A and Eurobond markets. The authors explore if the ranking in regulatory stringency –global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – leads to a segmentation of borrowers. Design/methodology/approach The authors use a novel data set from emerging economy firms, treating them as consolidated entities. The authors also obtain descriptive evidence and perform univariate non-parametric analyses, conditional and multinomial logit analyses to study firms’ marginal debt choice decisions. Findings The authors show that firms with poorer credit quality, less ability to absorb flotation costs and more informational asymmetries issue debt in US144A and Eurobond markets. On the contrary, firms issuing global bonds – subject to full Securities and Exchange Commission requirements – are financially sounder and larger. This exercise also shows that following the global crisis, firms from emerging economies are more likely to tap less regulated debt markets. Originality/value This is, to the authors’ knowledge, the first study that examines if the ranking in stringency of regulation – global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – is consistent with an ordinal choice by firms. The authors also explore if this ranking is monotonic in all determinants or there are firm-specific features which make firms unlikely to borrow in a given market. Finally, the authors analyze if there are any changes in the debt-choice behavior of firms after the global financial crisis.

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