John R. Thomas Partner

On July 22, 2011, the U.S. Court of Appeals for the D.C. Circuit issued its highly anticipated opinion in the challenge to SEC Rule 14a-11 brought by the Business Roundtable and the U.S. Chamber of Commerce. Rule 14a-11 would have required companies subject to the Exchange Act’s proxy rules to include in their proxy materials shareholder nominees for director who met specified conditions. In the strongly worded opinion, written by Judge Ginsburg, the court vacated Rule 14a-11, characterizing the SEC proxy access rule as “arbitrary and capricious” and stating that the SEC had failed “adequately to assess the economic effects” of Rule 14a-11. The court did not address the constitutional challenges raised by the plaintiffs under the First Amendment.

The SEC recently settled a Regulation FD action against Office Depot and several of its executives.  This Update summarizes the key issues addressed in this action and offers practical guidance.

Congress has approved the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and President Obama has signed it into law.

In Lyondell Chemical Corp. v. Ryan, C.A. 3176 (Del. Mar. 25, 2009), the Delaware Supreme Court, acting en banc, reversed the decision of the Delaware Court of Chancery and granted summary judgment to Lyondell's board of directors, dismissing the claim that it failed to act in good faith in conducting the sale of its company through an accelerated negotiation process.  The Court reaffirmed important principles governing a board's Revlon duties in connection with the sale of a company and directors' good faith performance of those duties.

The 2009 proxy season marks the first year in which all public companies must comply with the Securities and Exchange Commission's e-proxy rules.  These rules were effective for large accelerated filers, and on a voluntary basis for all other companies, as of January 1, 2008.  The experience of early adopters in 2008 provides valuable insight for companies implementing the e-proxy rules for the first time, as well as those companies that are looking for ways to improve their e-proxy experience over last year.  The lessons learned will help companies better anticipate challenges, establish informed expectations, and identify strategies for the upcoming proxy season.  This Update provides background information on e‑proxy rules and offers our "Top 8" lessons learned from the 2008 e-proxy season.

The Federal Trade Commission and the Department of Justice recently released their Hart-Scott-Rodino Annual Report for Fiscal Year 2007 for the period from October 1, 2006 to September 30, 2007.

The SEC recently published an interpretive release providing guidance on compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The SEC separately finalized rule amendments relating to internal control over financial reporting and defining the term “material weakness.” The guidance became effective on June 27, 2007, and the amendments to the rules will be effective August 27, 2007. The SEC also proposed a new definition for the term “significant deficiency.”

This Update summarizes key highlights of the SEC's interpretive guidance, the SEC's new and proposed rules and PCAOB Auditing Standard No. 5.

Last week the SEC Division of Corporation Finance released much-anticipated new Staff guidance on the rest of its new proxy disclosure requirements under amended Regulation S-K, completing its interpretations of the new rules and complementing its guidance on the new executive compensation disclosure requirements released in January 2007. This new SEC Staff guidance addresses a wide variety of topics covering a diverse set of specific circumstances and replaces or revises prior Staff interpretation of Items 201, 403, 404, and 407 of Regulation S-K as previously published in the SEC's Manual of Publicly Available Telephone Interpretations and its supplements.

The Securities and Exchange Commission amended its new executive officer and director compensation disclosure rules in December 2006 and released Staff guidance on these rules in 2007. The substantial changes to the rules will likely increase the attention and scrutiny the SEC, investors and the public apply to proxy statements and annual reports during ongoing proxy and annual reporting seasons. The revised edition of the Executive Compensation Disclosure Handbook: A Practical Guide to the SEC's New Rules provides an overview of the most significant changes and requirements through mid-February 2007 under the new rules and guidance and offers practical advice to help companies understand, and comply with, the new disclosure requirements.