Preliminary 2014 Proxy Season Checklist

by Stinson Leonard Street - Dodd-Frank and the Jobs Act

At this time, there are relatively few new items that need to be considered for the upcoming proxy and 10-K season.  Those involved with the SEC reporting process may want to review our publication “A Lawyer’s Guide to Proposed Lease Accounting Rules” and proposed changes to the auditor’s report, as well as this interactive checklist.



Proxy Statements


1.  Update officer and director questionnaires.


  • Both the NYSE and NASDAQ have adopted rules for compensation committees of listed companies that require additional considerations when determining the independence of listed directors.  Smaller reporting companies are exempt.  The requirements are effective for the earlier of the first annual meeting after January 15, 2014, or October 14, 2014.  Questionnaires should be updated to solicit appropriate information.  Perhaps even more importantly, boards should also be prepared to implement this provision.

Effective.  See our thoughts on necessary updates here.

  • The SEC has adopted final rules related to “Disqualification of Felons and Other “Bad Actors” from Rule 506 Offerings.”  We would recommend all public companies, and especially those who plan to rely on Regulation D for private placements, to incorporate appropriate provisions into their questionnaires.  We also recommend that the questionnaire be completed by potential directors, potential executive officers and any other officer that may participate in a Regulation D offering.


2.  Verify the Right Compensation Committee Charter is Included or Referenced in the Proxy Statement.  In connection with the NYSE and NASDAQ adoption of the rules for listed company compensation committees referenced above, most listed companies were required to amend their compensation committee charters by July 1, 2013. We recommend listed companies verify the correct charter is provided or referenced in response to Regulation S-K Item 407(e)(2) and Instruction 2 thereto.


3.  NASDAQ Listed Companies Will Have to Certify Compliance With the New Compensation Committee Rules.  NASDAQ Rule 5605(d)(6) requires NASDAQ listed companies to certify compliance with Rule 5605(d) no later than 30 days following the final implementation deadline applicable to the issuer.  The deadline is the earlier of the first annual meeting after January 15, 2014, or October 14, 2014.  We understand NASDAQ will provide a form for the certification.


4.  Revise Reference to Communications with Audit Committees in Audit Committee Report.  Item 407(d)(3)(i) of Regulation S-K(B) currently requires the audit committee to state whether “[t]he audit committee has discussed with the independent auditors the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards , Vol. 1. AU section 380), 1 as adopted by the Public Company Accounting Oversight Board in Rule 3200T.”  On December 17, 2012, the SEC issued an order granting approval of proposed Rules on Auditing Standard No. 16, Communications with Audit Committees, and Related and Transitional Amendments to PCAOB Standards.  The existing reference to AS 61 in the audit committee report should be replaced with the reference to AS 16.


Effective.  While Item 407 has not been amended, you can see the SEC order approving the rule change here.

While there is nothing new on the say-on-pay rules, the following provisions are included because issuers are on different cycles.


5.  Say-on-pay advisory vote: Whether issuers are required to include a say-on-pay advisory vote depends on what frequency the Board adopted in prior years after considering the shareholder advisory vote on frequency.  If a say-on-pay vote is included:


  • Rule 14a-21(a):  Resolution for an advisory vote on compensation of named executive officers as disclosed pursuant to Item 402 of Regulation S-K.


  • Item 24 of Schedule 14A:  Required disclosure that advisory votes under 14A-21 are included pursuant to Section 14A of the Exchange Act and the general effect of each such vote.



  • Rule 14a-21(c):  Optional disclosure on golden parachutes to avoid subsequent vote or disclosures in connection with certain M&A transactions.  See SK Item 402(t) for disclosure requirements.



6.  Other say-on-pay disclosures where a prior vote was held:


  • S-K Item 402(b)(1)(vii):  Disclose in the CD&A the extent to which previous shareholder say-on-pay votes has been considered.


  • Item 24 of Schedule 14A:  Disclose current frequency of shareholder advisory votes on executive compensation and when the next shareholder advisory vote will occur.



7.  Say-on-pay frequency vote


  • Rule 14a-21(b):  A frequency vote must be held every six calendar years.  For most issuers the next frequency vote will be for the 2017 proxy season.  For smaller reporting companies it is likely the next vote would be for the 2019 proxy season.


  • Rule 14a-21(b): Resolution on advisory vote as to whether say-on-pay vote shall be held every one, two or three years.



  • Rule 14a-4(b)(3):  Form of proxy—must offer choice between 1, 2 or 3 years or abstain.



  • Form 8-K:  Item 5.07 of Form 8-K requires an 8-K filing within 150 days after any meeting including a frequency vote.


Form SD


1.   Conflict Minerals:  Final rules require certain companies to disclose their use of conflict minerals if those minerals are “necessary to the functionality or production of a product” manufactured by those companies.  Issuers must comply with the final rule for the calendar year beginning January 1, 2013 with the first reports due May 31, 2014.

Effective.  The court rejected a challenge to the rules which is being appealed.

2.  Resource Extraction Issuers: The court vacated the resource extraction rules and the SEC did not appeal.  The SEC is expected to propose new rules.

Awaiting SEC action.

Awaiting Further Action


1.   Pay for performance disclosures (Section 953 of the Dodd-FrankAct)

  • Demonstrate relationship between compensation actually paid and the financial performance of the issuer

No proposed rules have been published.  The SEC no longer publishes a proposed rulemaking time frame. The SEC may believe the current CD&A rules meet this Dodd-Frank requirement.

2.   Pay disparity ratio (Section 953 of the Dodd-FrankAct)

  • Annual compensation of CEO
  • Median total compensation of all employees other than the CEO
  • Ratio of median total compensation to CEO compensation

The SEC has published proposed rules which are not expected to be effective for most issuers in 2014.

3.   Clawback requirements  (Section 954 of the Dodd-FrankAct)

  • Disclosure of policy on incentive-based compensation based on financial information
  • Clawback in the event of an accounting restatement

No proposed rules have been published.  The SEC no longer publishes a proposed rulemaking time frame.

4.   Disclosure of hedging policy (Section 955 of the Dodd-FrankAct)

  • Disclose whether directors or employees are permitted to hedge company securities

No proposed rules have been published. The SEC no longer publishes a proposed rulemaking time frame.

Check frequently for updates on the JOBS Act, the Dodd-FrankAct and other important securities law matters.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Stinson Leonard Street - Dodd-Frank and the Jobs Act | Attorney Advertising

Written by:

Stinson Leonard Street - Dodd-Frank and the Jobs Act

Stinson Leonard Street - Dodd-Frank and the Jobs Act on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.