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Washington Returns to Business as Usual

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Washington Returns to Business as Usual

SEC Action Has Current Proxy Season Implications

Washington seems to finally have its voice back after several weeks of assessing the political fallout from the Massachusetts Democratic Senate loss. The apparent new strategy has President Obama creating a bit of separation from Congress, while publicly positioning Democrats as willing to work with Republicans. Despite the huge Democratic majority in both House and Senate, they still appear to be hurting, and Republicans still seem to be in a “vote no” posture.

It will be an interesting test when Committee Chairman Dodd likely unveils a Democratic Senate financial services reform bill this week. As I mentioned last week, Republicans appear split creating uncertainty around the potential for an alternative Senate Republican bill. Things are fluid and there is much action behind closed doors. Regardless, the two keys will be the ultimate content of the bill, and Republican reaction. Hearings will follow, and we could possibly see the Senate vote in early spring on a bill that includes corporate governance reform. I will keep you up to date as this plays out.

The SEC was relatively quiet last week, although during a visit, I could not help noticing the “Who’s Who” of Washington influencers in the lobby. That confirms what I have been telling you about the importance of the SEC as a change agent in Washington. Speaking of the SEC’s importance, Commissioner Walter was very vocal about the need for better MD&A disclosures in a recent speech. She indicated that boilerplate disclosure should be replaced with a more dynamic approach telling each company’s unique story. While this is only one of five Commissioner’s comments, it is worthwhile watching to see if there is change in the wind on MD&A.

In a move with implications for the current proxy season, yesterday the Commission issued an adopting release regarding amendments to Notice and Access, or “e-proxy” rules, originally proposed last October. As you know, NIRI has advocated on your behalf for e-proxy improvements, and we are pleased the SEC will provide issuers flexibility in the language and formatting of the Notice. The Commission concurrently announced a series of education initiatives to help investors understand the proxy voting process and encourage greater investor participation in corporate elections. Look for a NIRI Executive Alert in the near future summarizing these important developments.

Other Commission items of note for this week include two open meetings. The first was yesterday’s Investor Advisory Committee meeting. This committee, while no different than past SEC advisory committees, is being used to vet projects in advance of potential Commission actions. The committee recommended the SEC issue interpretive guidance regarding Reg. FD compliance and shareholder/investor meetings, and that it study the costs/benefits of data-tagging proxy filings. As the name suggests, this committee only represents the voice of the investor. Based upon some of the committee discussions, I think the SEC missed an opportunity to increase the committee’s value by broadening its scope, perhaps creating a “markets” advisory committee – complete with investors, issuers, and other market participants – that would have been more in keeping with the full mission of the SEC.

The other open meeting will be tomorrow to consider adopting proposed short sale restrictions, and to consider publishing a statement regarding the Commission’s continued support for a single global accounting standard and incorporating IFRS into the U.S. financial reporting system.

Yesterday I had the pleasure of joining NIRI’s Kansas City Chapter as they rang the bell at the Kansas City-based BATS exchange. In closing this week, I want to make sure you are aware of several NIRI member benefits – today’s Non-GAAP Financial Reporting webinar, and next week’s CSR and ESG webinar. As always, these recorded webinars are free to members, while non-members can obtain this education for $149.00. And considering that we are now nearing the end of earnings season, I encourage you to set up your profile and join in the conversations on NIRI’s newest member benefit, our eGroups social networking forum. Your peers are there, why aren’t you?

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

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National Investor Relations Institute

Washington Returns to Business as Usual