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The Rise of the Investor-Centric Activism Defense Strategy by Peter Michelsen and Derek Zaba of CamberView Partners
Publication Date: October 17, 2017

CamberView Partners provides advice to public companies on engagement and shareholder relations, activism and contested situations, sustainability and complex corporate governance matters.

Shareholder activism is often thought of in binary terms: activist v. company, dissident nominees v. company directors. Media coverage dramatically frames the "showdown" of prominent and press-savvy activists taking on companies as both sides seek the upper hand on the way to the ballot box. While an "us vs. them" mentality makes for a compelling narrative, this framework has a major flaw: it doesn't include shareholders, who are the most important constituency in driving the outcome of proxy contests.

Gaining the support of shareholders, in particular large institutional shareholders, through a well-crafted "investor-centric" activism defense strategy is increasingly the key to success in activism situations. Below we outline how activism defense and the investor landscape have evolved and why the "investor-centric" strategy has become the optimal path to victory for most proxy contests, regardless of whether they culminate in the withdrawal of the activist, a shareholder vote or a mutually agreed settlement.

Where it Began – Tactics, Tactics, Tactics

Five years ago, it would not have been uncommon to find a whiteboard on the wall of a company boardroom in a contested situation filled with a list of tactical measures to thwart the activist's campaign: poison pills, changing bylaws, moving meetings to remote locations, lawsuits, and shifting record dates. The primary focus of a tactical strategy was to outmaneuver the hostile acquirer or activist, the latter of which was more often than not pursuing a straightforward "sell the company" or "lever up and distribute" thesis and had limited ability to sustain a multi-year campaign.

Today, investors and proxy advisory firms are more skeptical of actions taken by the Board that appear purely tactical or are otherwise perceived as impinging upon shareholder rights. Often, these actions carry the risk of souring investors who might otherwise be willing to support the company but feel disenfranchised from decisions that materially impact the value of their portfolio company. While such tactics may still be part of the activism defense toolbox, they should be considered with great care and in the context of their impact on maintaining support from companies' increasingly diverse and sophisticated shareholder base.

The Activist-Centric Defense Strategy

As tactical considerations became less effective as an activism defense strategy, boards turned their focus directly to the activists and their agendas. Specifically, some companies took actions with the goal of either preempting the activist or appeasing them, aiming to implement enough of the activist's thesis to make the remainder of their demands not worth fighting for. The resonant concept was that boards should "think like an activist." In some cases, these actions resulted in a settlement with the activist or the activist withdrawing after achieving a partial, but "sufficient," victory.

However, in present times the major problem with a defense strategy focused primarily on addressing the concerns of an activist is that while the activist may have been satisfied by the outcome, some or many of the activist viewpoints may not have been shared by the broader base of long-term investors. In fact, in recent years, there has been significant pushback from large institutional investors, whose risk profiles and investment time horizons often differ from those of a vocal activist fund, about the practice of companies reaching settlements without receiving input from other shareholders. An unsettled shareholder base can leave companies vulnerable to a follow-on campaign either by the initial activist or another activist with a different agenda.

Evolution of the Investor Landscape

The evolution of defense strategies has occurred against a backdrop of recent tectonic shifts in the investor landscape that have reinforced the centrality of the broader, long-term shareholder base in activism situations. The oversight failures of the early 2000s and 2008 financial crisis spurred many investors to become more active owners and voters. Over time, governance-focused institutional investors have built out their proxy voting teams, which has allowed them to engage with a broader range of companies and other market players. Activism itself has undergone a transformation, with activists seeking to shed their "corporate raider" label while building relationships with investors. Additionally, active managers under pressure to generate alpha are more receptive than ever to activist theses.

Underlying all of this is the increasing concentration and acceleration of fund flows into passively managed index funds and ETFs over the past several years. Today, the top five institutional shareholders hold more than 20%, on average, of S&P 500 companies and one of the three biggest index funds (BlackRock, Vanguard and State Street) is the largest single shareholder in 88% of companies in that same index. These passive investors are increasingly important as they tend to have a longer-term perspective which results in them being more willing to support a company if they believe in its long-term strategy regardless of potential short-term negative impacts to the business or stock price.

The growth of assets held by passive investors has also heightened the focus on corporate governance and board-related matters across the market. These topics are now a critical focal point in activism campaigns. As a result, success in an activist situation now increasingly requires companies to persuade and win the support of a range of constituencies much broader than the traditional portfolio manager and buy-side analyst community, including governance teams, proxy advisory firms and key asset owners such as public pension funds.

The Investor-Centric Defense

The evolution of the investor landscape, in addition to the aforementioned problems that have arisen with prior defense strategies, has elevated the concept of an "investor-centric" defense strategy. Unlike previous strategies, this approach begins well before an activist arrives with their demands and is built on companies understanding their investors' concerns through years of engagement and relationship building. As the Chairman and CEO of Vanguard recently wrote, quoting a corporate CEO during one of their engagements, "You can't wait to build a relationship until you need it."

Rather than "think like an activist," the right approach for companies is to "think like a shareholder representative": engage with investors, understand and incorporate their perspectives, and educate them on why the company is pursuing a particular strategy, particularly before an activist appears. Ongoing dialogue enables companies to build credibility with key decision-makers within both the investment and governance teams at institutions, even if there are topics where these disparate teams are not in complete agreement. Even in situations where there is a large and supportive base of retail investors, it is these key decision-makers who will make the ultimate difference between winning and losing.

While companies typically have very active investor relations efforts focused on portfolio managers and research analysts, they must also understand how to engage with all investor constituencies that will drive outcomes in a potential activist situation.

For actively-managed funds, where communication during an activism situation is frequent, feedback will generally be more direct and the decision-making process will be primarily focused on core economic issues. Companies that have built buy-in for their strategy in advance of a fight by being responsive to feedback from these funds will benefit from a higher probability that these investors will vote with management.

On the other hand, governance-focused investors often enter a fight with a limited understanding of the company and are concerned about a range of strategic, financial and governance elements. Building trust with this constituency often means demonstrating that the company has the right board in place to evaluate and oversee long-term strategy, and that the board is operating with a focus on the best interests of shareholders. While this trust can be established in the fast-paced environment of a proxy fight, companies that have proactively built relationships with governance teams and proxy advisors will generally fare better than those that are scrambling to do so under a stormy sky.

With all of this in mind, it is clear that companies in an active defense situation must evaluate every decision through the lens of how investor constituencies will view the action and how it will affect the potential vote. Even if a threatened proxy contest ends in settlement, the leverage that companies have in negotiation derives primarily from the support of these key investors.

Takeaways for Issuers

The delicate balance among boards, management teams, investors and activists is a constantly-changing equation. Over the past several years, a small number of asset managers have amassed trillions of dollars of assets and significant power. These investors represent the ultimate "swing vote" that can effectively determine the outcome of an activist situation and are more willing than ever to exercise their vote. Activists have adapted their approaches to appeal to this increasingly powerful bloc of voters, while public companies have been somewhat slower to proactively build relationships beyond traditional investor relations efforts.

Given these new dynamics, it is critical that companies view their potential actions through an investor lens, whether three weeks before a meeting or during the off-season. A key step is engagement and relationship-building with all key investor constituencies before being confronted by an activist. If an activism situation occurs, company management and board will be able to draw on the trust generated with key decision-makers, will have had the opportunity to tell their story on critical strategic and governance issues, and will have heard and addressed the feedback and concerns of their investors.


Peter Michelsen is President and Co-Head of the Contested Situations Practice of CamberView Partners.

Derek Zaba is a Partner and Co-Head of the Contested Situations Practice of CamberView Partners.

CamberView Partners provides advice to public companies on engagement and shareholder relations, activism and contested situations, sustainability and complex corporate governance matters. CamberView helps its clients succeed by providing unique insight into investors' perspectives on long-term value creation, interpreting the evolving governance landscape and creating proactive strategies to stay ahead of investor challenges.

CamberView's services include: Shareholder Engagement, Governance Advisory, Sustainability, Complex IR Strategy, Say on Pay, "Vote No", Environmental, Social and Governance Shareholder Proposals, Activism Defense, Hostile M&A, Complex "Friendly" M&A, and Defense Preparedness.


The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.

Nasdaq Talks to . . . Express Scripts' CEO Tim Wentworth about Why He Believes Inclusion is the Soil in which Diversity can Flourish and Contribute to Competitive Success
Publication Date: October 9, 2017

Express Scripts Holding Company (Nasdaq: ESRX) is a Nasdaq-100 company that believes "diversity and inclusion are the foundation on which success and growth are built." This company walks the talk, from the boardroom to the front lines of its workforce. The Express Scripts board is over 40% gender and ethnically diverse, while the company's 26,000-strong workforce is nearly 70% female and 40% minority. The average age of Express Scripts' workforce is 43 and over a third of its management personnel are under age 48.

Nasdaq spoke with Tim Wentworth, CEO of Express Scripts, to find out how the company built a culture based on holistic diversity and inclusivity, and nurtured it into a competitive advantage.

Q: Express Scripts states in its proxy that "broad-based diversity is an important attribute of a well-functioning board." Can you share how diversity contributes to the effectiveness of your board?

A: I'm one of the luckiest CEOs in America, I have a tremendous board that collectively understands and collaboratively analyzes the issues we face in a way they couldn't do if they weren't so diverse.

Many companies view diversity as a goal, rather than a byproduct of how you build the culture, how you run the company, and how you build a governance model. Express Scripts is focused on patients and operates within a very complex health-care system, so it was natural for us to recruit people to the board who represent a broad range of perspectives and come from different backgrounds. It was imperative to create an environment where those views are fully contributing to the mission of making us a better-governed and more effective company.

Express Scripts' commitment to diversity and inclusion starts at the very top of the company, and that is a very powerful dynamic for me as a CEO—and a powerful motivator of our employees.

Q: Express Scripts diversity and inclusion model extends to its workforce. How has Express Scripts achieved such a diverse workforce and why does the company view diversity in its workforce as a competitive advantage?

A: Our workforce deliberately reflects the patients we serve and Express Scripts has been very intentional about diversity for a long time. Diversity of race, gender, age and thought means we reflect our patients and clients and understand their individual needs much better. Our governance committee and our broader board have made diversity a priority. There is not a board meeting that I attend where we don't talk about the diversity of our workforce broadly—and our board specifically—and ask if we are doing enough.

Inclusion is the soil in which diversity can flourish and contribute to competitive success. We continually build programs and initiatives that support our demographically shifting workforce, which ensure we get the best from everybody who comes in the door. By engaging our employees in recognizing and legitimizing the differences that we all bring to work—and identifying how they make us a better company—we have created a workforce that is biased towards action.

Our inclusion model is based on three pillars: culture, engagement and leadership. We built six broad-based employee resource groups (ERGs) that have focused our cultural diversity initiatives and business strategies from the ground up. Every one of the ERGs has an executive sponsor. We have nearly 5,000 employees participating, which on a benchmark basis is very high for a company our size. More importantly, our employee-survey results tell us that members of these groups are the most engaged and the most likely to recommend us as a place to work.

Employees judge us by how we treat, engage with, and support that community. Our resource groups make employees feel better about the company they work for, and that's a very important byproduct of executing inclusion well.

Q: What can other Nasdaq companies learn from Express Scripts about the benefits of a culture of inclusion and diversity?

A: Diversity and inclusion create a culture of unity that benefits everybody. Employees feel part of something larger than themselves; they are no longer just members of a particular community or department, but part of a diverse and unified company from the board all the way to the entry-level of the workforce.

Our employees acknowledge that they work for a company where the words match the music—a company that is committed top to bottom to inclusion. This provides motivation that goes beyond a 3% pay increase.

The benefits of diversity extend to the fiduciary duty of every public company—creating value for shareholders. In Express Scripts' case, this means fulfilling our mission of putting medicine within reach.

Our shareholders can be confident that our board is seeking, and thoughtfully considering, input from across the entire organization in pursuit of that mission. Express Scripts' solid foundation of diversity and inclusion drives alignment around our broader mission, because our employees don't question whether they are included—they know their voices count.

Q: Many companies claim they have a hard time finding diverse candidates for board service. Can you share how Express Scripts overcame that obstacle?

A: There's no question that it's a challenge to diversify a board, but the real obstacle is ensuring the company is attractive to diverse talent in the first place. The goal should be recruiting talented leaders who represent diverse perspectives and come from diverse backgrounds.

Express Scripts' culture works for us when we are recruiting board members. When we were searching for a new board member a couple of years ago, our candidate pool included two extraordinary African-American leaders. These two individuals had unique and important skill sets related to Express Scripts' corporate mission. As a board, we quickly realized we had a chance to bring on two diverse and highly sought after board members, and after minimal discussion decided it wasn't an either/or proposition. The fact that both of these talented individuals were interested in us is indicative of the fact that they felt our culture and our board was going to be a welcoming place for them to contribute.

Kathy Mazzarella, who is the Chief Executive and President of Graybar Electric Co., is another example of a highly talented candidate who was attracted to our board. She's a tremendously strong leader with a great skill set. She saw in us what we see in ourselves – a diverse board that attracts strategic thinkers who can help solve healthcare's biggest challenges.

Q: How does the Express Scripts governance committee define "diverse slate of candidates" to a search firm?

A: It all starts with what your board needs from a skill-set standpoint. It's not sufficient to have a diverse board that doesn't have the right skill sets. All our board members bring complementary skill sets to achieving our business goals and growing value for our shareholders.

The challenge to our search firm was very simple: "These are the skill sets we need. Go find us diverse leaders who have those skills."

We don't mandate a ratio for the slate, beyond sharing our bias towards diversity. I'm not going to fire a search firm that can't bring me a 40% diverse slate if they can bring me one or two terrific diverse candidates we can consider based on the skills that we need on the board.

We also turn to our own board to add people, they know and have worked with, to the slate. An advantage of having a diverse board is that they are a great resource in finding and attracting other highly qualified and diverse candidates.

Q: What are your thoughts on why the diversity needle is moving slowly in corporate America?

A: For the most part corporate America has very good intentions, but a big part of the problem is limiting the talent pool to CEOs. As a sitting CEO myself, I'm not going to be on other company boards. I've got enough to do, right now.

Competition for qualified diverse candidates is increasing because board diversity is in the governance spotlight now. The board members we recently added had many other companies that would have loved to retain them, so we're very grateful that our mission and our culture attracted them.

Given that environment, companies are going to need to broaden the search aperture a bit—perhaps looking at CEOs recently retired, or executives who weren't CEOs but do have C-suite experience. Rick Palmore, for example, was General Counsel at General Mills, one of the most admired companies in America.

If companies expand their searches to SVP-level candidates who have CEO potential or broader leadership potential, they can find high-quality candidates who will benefit from the experience and bring important skills to the table. A talented division president who is diverse and has high potential would be a strong board member for many companies.

Q: If a company doesn't have a diverse board today, what is a first step in that direction?

A: Start with a very honest conversation about the true level of commitment to diversity and inclusion, and what the path is going to be to change the composition.

The path to board diversity isn't just bringing in a face, it's acknowledging that things need to evolve to allow leaders to be successful and contribute in a meaningful way. The board needs to ask honestly "Are we committed to creating an environment where a woman or a minority can be highly productive?"

That journey also starts with the employee base. Prospective board members are going to notice if a board doesn't match its aspirations with its own employee base. If the board is honest about its culture, and the culture of the company it is governing, the rest will follow naturally.

Q: How does a board that has no diversity convince a talented minority or female candidate to join them?

A: Have the courageous conversation around how you got to this point, and have the conviction to share that honest conversation with talented candidates. Focus on where you want to get to, set a course and be tenacious in achieving your goals. Talented, diverse board members are available. Make them available to your company.

Express Scripts Holding Company (Nasdaq: ESRX) is the largest independent pharmacy benefit manager in the United States and has been recognized by numerous organizations for their commitment to diversity and equality. Express Scripts scored 100% on both the Human Rights Campaign Foundation's 2017 Corporate Equality Index and the U.S. Business Leadership Network's 2017 Disability Equality Index. For the past two years, Express Scripts was also included in DiversityInc's 25 Noteworthy Companies.

governance news
September's Must Reads
Publication Date: October 5, 2017

Each month, we will scour the web to bring you the news items and thought leadership pieces you need to get the governance advantage.

1. Financial Reporting Implications of Disasters – Deloitte
This Financial Reporting Alert highlights some of the financial reporting implications of disasters, such as hurricanes Harvey, Irma, and Maria and provides the relevant authoritative guidance for entities reporting under U.S. GAAP.

2. Improving cybersecurity governance in the boardroom - CSO Online
The risk landscape for corporations is constantly changing with new threats, regulations, and evolving cybersecurity vulnerabilities. This author explains how corporate boards can create a culture of security to mitigate risk and better protect their company's critical infrastructure, data systems and reputation.

3. New York City Comptroller and NYC Pension Funds Launch National Boardroom Accountability Project Campaign – New York City Comptroller
New York City Comptroller Scott M. Stringer and the New York City Pension Funds recently launched the "Boardroom Accountability Project 2.0." This campaign is intended to put pressure on some of the biggest companies in the world to make their boards more diverse, independent, and climate-competent.

4. Tips on Using the Remainder of 2017 to Prepare for the 2018 Proxy Season – Wilson Sonsini Goodrich & Rosati
This Wilson Sonsini Goodrich & Rosati report highlights compliance best practices that companies should focus on, as well as items that can be addressed in 2017 to make the 2018 proxy season easier. These practices include enhancing disclosure regarding board composition/diversity as well as environmental, social, and governance issues.

5. Ethics and Compliance Training Remains a Challenge from the Boardroom Down – Security Magazine
According to the NAVEX Global 2017 Ethics & Compliance Training Benchmark Report, 17 percent of new directors received ethics and compliance training and one-fourth of organizations cover cybersecurity and cyber risk with the board. NAVEX recommends that enterprises consider improving program planning to better stretch training budgets and resources, adding new training formats to the mix, and improve overall effectiveness measurement to secure additional funding or training time.

6. Revenue recognition: 5 key considerations for implementation – Boston Business Journal
RSM Partner, Stacy Dow, highlights what companies should consider with respect to new revenue recognition standards. Accounting Standard Codification No. 606, Revenue from Contracts with Customers, represents a fundamental and significant change in accounting and replaces all current revenue recognition guidance.

7. How artificial intelligence can deliver real value to companies – McKinsey and Company
Early evidence suggests that artificial intelligence ("AI") can deliver real value to companies willing to use it across operations and within their core functions. A McKinsey and Company survey shows that early AI adopters that combine strong digital capability with proactive strategies have higher profit margins and expect the performance gap with other firms to widen in the next three years.

tone at the top
Tone from the Top: Influence Boards Don't Know They Have by Dr. Phillip Shero
Publication Date: October 3, 2017 

Dr. Phillip Shero is the President of MasterMinds Leadership and works with CEOs and Board Chairs to build bridges of trust and accountability.

In a recent conversation, the Corporate Secretary of a Fortune 500 company proudly explained to me their culture of accountability and intentional investment in leadership at all levels.

"That sounds amazing," I said. "Tell me, what is the board's role in creating and sustaining that culture?"

He said, "There's not much the board can do about that. Culture is the CEO's job."

Therein lies the problem.

We have done such a good job emphasizing management's responsibility to drive culture that directors don't see the levers of culture available to them. If we want to succeed at creating the right "tone at the top," boards must recognize and embrace their levers of influence.

No Accidental Success

Consistent success over time is not an accident. It is purposeful. If the culture was truly exceptional at his company, I could not believe that the board was not involved.

I asked further questions and pointed to examples the Corporate Secretary had already given me to help him see the board's role in their success. His eyes went wide and he said, "Yes! I guess we did play a part." He was then able to cite several practical situations where the board set a tone for accountability and leadership development. Even in situations where the board was not directly involved, he was able to see how the members knew of and supported management's efforts to develop leadership and accountability.

One of his examples was an annual board meeting where the achievements of two dozen high potential employees were celebrated. He affirmed that the directors knew who these up-and-coming leaders were and were proud of their development.

His story is a clear case of unconscious competence: until that conversation, he did not realize what his board was doing right or how powerfully it supported their company's culture and tradition of leadership development.

Where are the Levers of Culture for Directors?

The Corporate Secretary was right in this: the two functions of management and governance have different arenas of responsibility. Directors do not have the same proximity to employees or opportunity to influence culture daily that the CEO and executive team have.

However, directors do have three levers to intentionally influence the culture of their organizations. These are the levers of Leadership, Alignment, and Perspective.

1) The Leadership Lever: Hiring the right CEO and building a relationship of genuine trust.

Boards select a CEO for many reasons—not least of which is his/her ability to drive profit. However, we know that not all profit is equally good. An executive can slash jobs and create profit instantly, but the effects on morale and culture will diminish those returns over time.

David Katz writes in Harvard Law School's Forum on Corporate Governance that cultural fit is one of two key elements in the CEO selection process. I believe his criterion can be strengthened further—a CEO candidate must have demonstrated ability to create and sustain healthy cultures, not just fit the culture that already exists.

Selecting the right CEO is a massive culture lever for directors, but it can only be moved about every 5 years. Therefore, directors must give attention to relationship quality.

The CEO selection lever has a dial to the side, which measures the trust, transparency, and relationship quality between the Board and CEO. Directors can influence organizational culture by turning up that dial to increase trust and transparency in the boardroom. One of the best ways I know to begin creating more trust between directors and the CEO is by getting to know each other outside of board meetings. Any process that creates the ability to share and recognize each other's strengths and weaknesses will strengthen the foundations for trust.

2) The Alignment Lever: Modeling the culture and rewarding a single standard.

It may come as a surprise to think of the culture of the boardroom as a reflection and lever of influence on the culture of the organization. Edgar Schein described culture as a combination of shared beliefs, values, and actions (or artifacts). All three are present in a board meeting: shared beliefs (what is true and/or real), shared values (what is important), and shared actions (what we do).

The cultural artifacts of the boardroom include how people are greeted, what makes it onto the agenda, how much time is given to different topics, what relationships are cultivated, whether interrupting speech is tolerated, and whether healthy conflict is possible or encouraged.

Along with modeling the desired culture in the boardroom, directors can leverage their interactions with the CEO to influence culture through relentless pursuit of alignment.

One way to pursue alignment is by rewarding a single standard. Note this example of a double standard: the board desires a culture where Millennial workers are developed and retained, but the CEO is rewarded for cutting lower-level jobs to achieve projections.

Directors can measure their current alignment through use of strategy-focused board surveys, facilitated by a third party. Many board surveys are heavily weighted toward compliance with standards and regulations, which tell little about internal alignment. However, a survey weighted toward strategic issues can reveal misalignment between governance and management early enough to make corrections.

3) The Perspective Lever: Asking the right questions and cultivating multiple perspectives.

As humans, directors and chairs must overcome the built-in social pressures that suppress hard questions. I continue to read about and hear from directors who do not ask questions out of concern that they would look uninformed or out of step.

In recent years, directors have been encouraged to ask more questions about more types of risk, including cybersecurity. Boards know they are responsible for risk. Yet, there is a disconnect when it comes to asking relevant and probing questions about culture, often until it blows up on the news. When bad news breaks, defective cultures are usually blamed on CEOs, with boards taking little responsibility. Consider recent news related to companies with broken cultures that resulted in a variety of toxic practices, including customer abuse, sexism, gender bias, and massive sales fraud. In each case, the assumption is that the CEO is at fault for bad culture. The board bears little or no responsibility.

A report issued by one company cited management's failure to correct an oppressive sales culture. The board did acknowledge some responsibility, but the report couched it as a structural issue—i.e. the board failed to fix a flawed, decentralized structure. Even with that admission, board members complained that they were not made aware of complaints and cultural problems. Perhaps so, but did they ask the right questions?

In addition to asking deeper questions about culture, directors can move the lever of culture by cultivating multiple perspectives. The board should ensure that it hears from various sources. If an internal study is commissioned, let the person who led the study present the report to the board personally. If an external consultant assesses the culture, the board should hear their findings in person. When it comes time to conduct evaluations, invite a third party to facilitate the survey and interpret the results.

The need to cultivate multiple perspectives is not an indictment of the CEO's or chair's lack of objectivity. Nor does it indicate lack of trust. Instead, hearing from multiple voices allows the directors and CEO to listen together, reflect together, ask questions together, and eliminate bias together. Important cultural indicators emerge from this shared listening, which can be easily overlooked when the same few sources always provide and interpret information.

Directors need to ask themselves the hard, honest questions about their attention to cultural health, and they need to brace themselves for the answers. What voices have been invited to speak in the boardroom outside of the top management team, audit firm, and legal advisors? What insights and new perspectives did they gain from hearing them? How deeply did they dig to understand the information that was shared?

Shifting "Tone at the Top" by Moving the Levers

Boards that want to shift the "tone at the top" must first recognize that they, as directors, have real influence on the culture of the organization. Directors can work together and individually to move the levers of Leadership, Alignment, and Perspective to actively extend their influence and shape the culture of the organization.


Dr. Phillip Shero is the President of MasterMinds Leadership and an executive coach to CEOs, senior management teams, and boards. He lived in Uganda for 15 years, where he became the co-founder and first president of LivingStone International University, an accredited liberal arts institution dedicated to producing ethical and empowered leaders in Africa. His firm specializes in executive leadership development, coaching high performing senior teams, and strategic planning. Dr. Shero writes weekly on leadership and publishes on LinkedIn.

The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.

Nasdaq Talks to the Equity Dealers Association about . . . Incentivizing EGCs to Go Public and Providing More Opportunities for Individual Investors
Publication Date: September 26, 2017

Reforming the capital markets has become a priority for investors, public equity firms, and regulators alike in the wake of the decline in the number of public companies in the U.S. At Nasdaq, we recently drafted a blueprint for revitalizing the capital market ecosystem, and are collaborating with other organizations intent on that same goal.

One such organization is the Equity Dealers of America (EDA). The EDA is a trade association formed to promote fair, efficient, and competitively balanced equity capital markets that protect investors, advance financial independence, stimulate job creation, and increase prosperity. In addition to policy advocacy and public outreach, the EDA hosts meetings on the equity markets to inform and educate its members on the issues relevant to their businesses.

"The EDA is working to incentivize emerging growth companies to enter the public equity markets and give individual investors an equal opportunity to participate in their growth," said Chris Iacovella, CEO of the EDA. "We want to ensure that small businesses can access the capital they need to create jobs and grow the American economy."

According to Iacovella, the path forward is two-fold and must be bipartisan. In order to reduce the compliance burden on EGCs and stimulate liquidity in their stocks, the EDA is drafting a regulatory agenda that can be implemented by the SEC as well as outlining statutory changes for Congress.

"Next year is an election year and since this is a jobs issue, the EDA believes there is a real opportunity to move forward to resolve these issues," said Iacovella. Following are a number of the capital market reforms the EDA is advocating:

Revamp market structure.

The JOBS Act was a good start to try and generate more IPOs in the marketplace, particularly by establishing a category of emerging growth companies (EGCs) with revenues under $1 billion. However, it's necessary to build on that concept to reduce disclosures and the costs associated with some of the internal controls, as well as modify the market structure so that it is applicable to emerging growth companies.

The one-size-fits-all construct put forth under Regulation NMS ten years ago does not work for small- and medium-sized companies, as the current equity market structure increases fragmentation and disproportionately harms EGCs. This needs to change, and the EDA is advocating for market structure reforms at the SEC.

There was an initiative recently to create venture exchanges to address this issue, but venture exchanges are not necessary. It makes more sense to empower issuers to choose whether they want to be a Reg NMS corporation or have their security traded on the exchange that they list on. This would cure the fragmentation occurring in smaller issuer stocks, as many are very illiquid and transact only 50,000 to 200,000 shares a day. If more EGCs choose to have their security traded only on the exchange that they're listed on, then centralized pools of liquidity will develop.

As liquidity improves, EGCs may be able to incentivize broker dealers to make markets and pay for research. The entire research ecosystem must be changed—the more research coverage that EGCs get, the better off they will be in terms of people wanting to transact in their stocks.

The time is right for a secondary market structure change, because the SEC's Investor Advisory Committee and Advisory Committee on Small and Emerging Companies are both also looking at ways to improve liquidity and increase research in these small company stocks.

Allow EGCs to opt out of Sarbanes-Oxley 404(b).

Allowing issuers that generate $1 billion or less in revenue to opt out of Sarbanes-Oxley 404(b) will lower the regulatory tax burden on those companies. Independent audits are one of the largest costs incurred by a small company when it first goes public, and those costs are ongoing.

Investors and issuers are aligned on this issue. Accounting firms want more public companies too, but reforms to Sarbanes-Oxley must be tackled in a manner that brings them into the process. For example, by relaxing independence rules for EGCs that choose to opt out of 404(b), accounting firms could be permitted to offer audit and consulting services to those companies until they exceed the $1 billion revenue level or become a Reg NMS security.

Streamline the SEC's disclosure regime.

There are certain industries, and companies within certain industries, where it doesn't make sense to go through the burden and substantial costs of filing 10Qs every quarter, supplementing with 8-Ks, and then bearing the cost of issuing a 10K at the end of the year.

For example, new biotech companies lose money until they have approval from the FDA. During the product development phase, it's not relevant to the investor to know anything other than where they are in the pipeline process of working their drug or their solutions through Phase 1, Phase 2, and Phase 3 of FDA approval. There are other industries that operate in a similar way.

While there is a substantial investment that goes into a biotech or any emerging company, the 8-K process can address those investors. If that information is not sufficient to investors, they will vote with their feet. If investors sell off a company's stock, then management will have to do something different, maybe go back to filing the Qs. Or perhaps the investors who hold the stock will say "We don't mind that you're only filing 8-Ks here, but we'd like to see at least some financials on a quarterly basis."

This idea also reduces short-termism by encouraging investors to allow enough time for critical research and development to bear fruit.

Increase the shareholder proposal threshold.

Frivolous shareholder proposals filed by low-dollar investors are becoming a burden for EGCs, who desperately need their time, resources, and capital to run and grow the business. Increasing the amount of stock that shareholders are required to own from $2,000 to $100,000 would reduce the costs associated with politically motivated proposals that are designed to advance personal agendas and interfere with corporate governance. This can only benefit EGCs as they will be able to put the limited resources they have to their highest and most efficient use.

Exempt pre-IPO discussions from Section 17 liability.

Fear of Section 17 misstatement liability is another hurdle to going public. Research analysts are focused on the future value of a company; however, potential issuers are often hesitant to speculate about future company valuations, cash flows, business lines, or multi-year growth projections because they're worried if projections don't come to fruition the company will be hit with a Section 17 misstatement liability. This issue could be resolved by allowing more free-flowing dialogue between issuers and potential investors and analysts during pre-IPO evaluation discussions and roadshows, while confining Section 17 liability to the offering documents themselves.

Increase the opportunities for individuals to invest in EGCs.

The ability to invest in EGCs has long been an opportunity for retail investors to build wealth. As the number of public companies dwindles, retail investors are being forced into passive investments, while private capital benefits from the wealth acquired during the growth stages of companies.

"The EDA wants to bring back the environment that existed when Walmart went public," said Iacovella. "In 1970, Walmart issued a 28-page prospectus and that initial offering raised just $5 million. The company continued to go back to the capital markets in subsequent years. The growth Walmart experienced since going public revitalized the economy of northwest Arkansas, and the folks who invested in Walmart over the years have been handsomely rewarded for it. That is a perfect example of how the equity capital markets are supposed to work."


Chris Iacovella is Chief Executive Officer of the Equity Dealers of America (EDA). Previously he was the Senior Director of Global Government Affairs, Strategy, and Public Policy at Bloomberg, L.P. where he worked directly with Bloomberg's internal businesses on regulatory solutions and interfaced with policymakers and regulators across the globe to discuss equity, fixed income, and derivatives market structure policy.

Read more about Nasdaq's blueprint for Revitalizing the Capital Markets >>

outside insight
Ransomware Defense for Boards by Betsy Atkins with input from Bill Lenehan
Publication Date: September 20, 2017

For all the clever coding involved, most ransomware delivers a very crude but deadly message when it strikes your company. Important company files are locked, and may be destroyed, unless you pay a specific ransom amount, anonymously, with a short deadline. At that point, panic sets in. But if your top management, IT team and board of directors have devoted some time, thought and resources in advance, you'll know how to respond (and might dodge the bullet altogether).

In my own recent boardroom experience, how boards should deal with cybersecurity is one of the hottest topics. I've been an evangelist for getting boards active in setting and assuring effective corporate digital policies. Much of this should be basic good governance for the twenty first century. Realize that a cyber-attack is now a matter of when not if. Make your board digitally savvy so it can ask smart questions on technology, threats, and liabilities. Assure things like up-to-date platforms, software, and third-party testing.

I should note that the majority of company hacking attacks still involve these conventional threats -- the cyber equivalent of smash-and-grab theft. However, the special dangers posed by digital hostage taking demands a unique corporate governance role. If regular hackers penetrate your systems to steal money or data, there are few shades of grey. There may be debates between IT and the rest of management on budgeting for safeguards (the board should be IT's advocate and "nudger" on this, by the way). However, the priorities after a conventional breach are never in doubt -- assess and limit the damages and learn from the attack.

Ransomware is existentially different and goes to the heart of a board's governance and fiduciary role. Do we as a company pay a ransom demand or do we take the moral high ground and say no? Your board needs to tackle this question, with its uncomfortable blend of technology and ethics, now, before an attack. The major ransomware strains, such as Petya and WannaCry, offer a short time frame (sometimes as little as 24 hours) to pay up or face the consequences. Convening a board meeting that quickly to deal with a flash crisis would be both impractical and unwise. Further, the actual ransom itself can be oddly small. Would you really convene an emergency board session to discuss expending $1,000?

Real-world board experiences with ransomware suggests there is a better way. I've seen ransom demands first-hand at one of my boards, and spoke with Bill Lenehan, CEO at Four Corners Property Trust, who's also faced these traumas. We have observed a number of effective strategies specifically targeted at dealing with the unique threat of a ransomware attack:

Have the ethical discussion before a ransomware attack occurs. Your top executives and IT staff need guidance from the boardroom on the big question of whether or not the company should submit to a demand for ransom. The decision is not an easy one; losing business (and perhaps the business itself) by taking the moral high ground is not your call as a shareholder fiduciary. Your number one mission is to protect the business for investors. That may involve the tough decision to pay up if it will save data or needed access.

"Boards need to provide guidance and support on how this is handled," recalls Bill Lenehan. He finds laying out the issues directly to the board helps clarify their thinking. "I was talking with a 70-year old board chair, and said 'Let me throw you a curve. You're trying to close a $200 million acquisition, when suddenly, your employees get a ransomware demand for a total of $3000. If you don't pay, you jeopardize the deal, your relationship with numerous counterparties, and maybe the company itself.' The response, 'My God, I never thought of this!??'"

Hold this debate now at the board level, because when a hacker's WARNING screen pops up, it's too late for philosophy.

Shape a corporate ransomware response policy based on the ethics discussion. Take the strategic principles the board has developed for responding to ransomware attacks and turn them into a working tactical policy. Include functional steps, like who is to be notified, who makes the final payment decision, damage/cost tradeoffs to weigh, etc. Also, will you even be able to pay the crooks? It sounds distasteful, but assure that you have the mechanisms in place to quickly meet the ransom demands if you choose to.

"You don't want to be scrambling to pay, figuring out how to practically make this work," Bill Lenehan recalls from his own experience as CEO of Four Corners Property Trust. At 5:30 one morning, he received a text message from the company controller telling him there was a problem -- a short-term ransomware attack was spreading globally. "Our board chairman was out of the country, hours behind us, so what do I do as CEO? Would I pay, or not pay, do I need to inform my board, or just hurry to set up a Bitcoin account?"

The CEO and other staff should not have to make these decisions on the fly -- and if they do, it's the fault of the board, which didn't prepare in time. "Ransomware is not the fault of the CEO," notes Lenehan. "It's like a school snow day -- you have to set your decision policies in advance." (Lenehan also notes that his small company has a staff of 12, and is as far off the business news radar as can be -- yet hackers still found them).

No policy can mean inability to respond at all. At a major company whose board I had served on, we faced a short-term ransomware demand, and decided we had to pay. But the hackers demanded payment in Bitcoin, and the company didn't have a Bitcoin account. This took two days to set up -- by which time the deadline had passed. In the missed deadline experience I referred to, we were able to negotiate a compromise. We were ultimately able to decrypt our files.

Also, ask what you'll do if other problems crop up. In Europe, a recent Petya attack demanded payment to the bit-napper's Posteo email account. But before victims could comply, Posteo had blocked the mailbox.

Beware risks related to ransomware attacks on third-party affiliates. Ransomware is not just an internal danger. Even after you shape a sound emergency policy for your corporate response, what about the suppliers, customers and advisors you depend on? Lenehan tells of a ransomware strike, not at his company, but at a major law firm they were depending on to close a $20 million acquisition. "The lawyers got an email from IT early in the morning telling everyone not to turn on their laptops and check them in immediately." A pending deal was suddenly frozen solid.

What would happen at this very moment if one of your top vendor's or client's IT system instantly went dark for an uncertain period of time? Are they able to back up their information with systems completely walled off from the afflicted ones?

Fight hackers with unconventional warfare. Above, I noted the generic things a board can do to improve the technical odds of avoiding and fighting cyber mischief. Push IT to innovate outside its normal comfort zone. Third-party vendors like Optiv, SecureWorks, and Stroz specialize in penetration testing, 24/7 threat monitoring and ethical hacking. Your IT staff says they have the latest software updates and threat assessments? Good -- let's contract with outside experts who can make sure. The expenses involved should be modest and today are a basic cost of doing business. Want to drive a car? You need to buy insurance. Want to operate in today's digital world? Invest in outside cyber-expertise.

Check that cyber insurance coverage is adequate. Speaking of insurance, check your liability and other business policies when it comes to hacking damages and, specifically, ransomware costs. What sort of losses are covered, which aren't, how much could ransomware losses total, what compliance measures must you have in place, and what are disqualifiers? Also, how should your company decide on making a claim? (If you file a claim for a ransomware payment of $5,000, will your premiums shoot up by ten times that amount?) "If someone demands $350 in Bitcoin, it may be like when someone keys your car in a parking lot," notes Lenehan. "Rather than making a claim, you just get it detailed out on your own dime."

Ultimately, boards and management need to respond to a ransomware crisis the same way they respond to any company crisis. They must assure good response tools and plans are in place and functioning, that tough questions are asked, and that everyone knows their role. But for the board, ransomware prep demands an added step -- asking if they're ready to make a deal with the devil.


Betsy Atkins serves as President and Chief Executive Officer at Baja Corp, a venture capital firm, and is currently the Lead Director and Governance Chair at HD Supply. She is also on the board of directors of Schneider Electric, Cognizant, and a private company, Volvo Car Corporation, and served on the board of directors at Nasdaq LLC and as CEO and Board Chairman at Clear Standards.

Bill Lenehan is the Chief Executive Officer of Four Corners Property Trust, a real estate investment trust that owns over 500 restaurant properties. He is also on the board of directors of Macy's, the department store company. Prior experience includes board service at Darden Restaurants and Gramercy Property Trust, among others. He spent ten years as an investor at Farallon Capital Management.


The views and opinions expressed herein are the views and opinions of the author at the time of publication and may not be updated. They do not necessarily reflect those of Nasdaq, Inc. The content does not attempt to examine all the facts and circumstances which may be relevant to any particular company, industry or security mentioned herein and nothing contained herein should be construed as legal or investment advice.

Ransomware Payment: Legality, Logistics, and Proof of Life
Part One: Background and Reality
Publication Date: September 12, 2017 

Cybersecurity expert John Reed Stark has authored a three-part series of white papers offering guidance for boards of directors on the legal issues, logistical considerations and financial implications of responding to ransomware threats.

In the 2000 American thriller film Proof of Life, the title refers to a phrase commonly used to indicate proof that a kidnap victim is still alive. As an expert negotiator in kidnapping cases, Terry Thorne, played by Russell Crowe, is engaged to bargain for a corporate kidnap victim's safe return. Proof of Life's screenplay was partly inspired by Thomas Hargrove's book The Long March to Freedom, which recounts how the release of the once-kidnapped Hargrove was negotiated by Thomas Clayton, the founder of kidnap-for-ransom consultancy Clayton Consultants, Inc.

The film Proof of Life is not just a compelling narrative – its premise and main character also provide some useful insights into managing the emerging threat of ransomware. Ransomware, a special and more nascent type of malware, prevents or limits users from accessing their data by locking system screens or user files unless and until a ransom is paid.

Just like Clayton Consultants, the team advising a ransomware victim company (whether the victim is a hospital or global corporate conglomerate) must employ a thoughtful, careful and methodical protocol to survive the ransomware crisis. Like any hostage situation, when a cyber-attacker locks up critical data files the logistics and legalities of ransomware refusal, acquiescence or capitulation can be both elaborate and complicated.

To make matters worse, seeking law enforcement help for a ransomware attack unfortunately remains a very limited option. First, law enforcement has become inundated with ransomware reports and lacks the resources and wherewithal to assist victims. Second, most of the ransomware attackers are overseas, where merely obtaining an electronic evidence or interviewing a witness—let alone successful extradition and prosecution—are rarely possible. Finally, ransomware demands are often at monetary levels in the hundreds or thousands of dollars – too small to warrant federal law enforcement consideration and clearly outside of the jurisdiction of local law enforcement.

Thus, it should come as no surprise that a significant number of ransomware victims opt to pay the ransom. When padlocked files are business-critical (e.g., an important intellectual property formula); when encryption cannot be defeated (no matter how good the code-breaker) or when time is of the essence (e.g., when patient data is needed for life-saving surgery), paying the ransom can become the proverbial best worst option. Moreover, the typically de minimus ransomware payment demands (on average, about $679) are more akin to a financial nuisance than a material fiscal line-item, so from a cost-benefit perspective, payment can make the most sense.

This three-part series of articles provides guidance on the legal issues, logistical considerations and financial implications when managing ransomware threats, including an exposition of the unique issues which can arise when seeking proof of life and opting to meet the monetary demands of ransomware attackers.

Part One provides the keys to understanding the impact of recent ransomware strains, including a discussion of the nature and growth of ransomware; the dangerous aspects of some recent ransomware attacks; and the role (or lack thereof) of law enforcement when managing a ransomware attack.

Part Two will examine the intricacies involved in ransomware response including ransomware investigative tactics, ransomware payment logistics, and the legalities of ransomware response.

Part Three will cover the remaining range of key ransomware essentials including: notification requirements, ransomware remediation, and ransomware cyber insurance.

Read Part One of Ransomware Payment: Legality, Logistics, and Proof of Life >>


John Reed Stark is President of John Reed Stark Consulting LLC, a data breach response and digital compliance firm. Formerly, Mr. Stark served for almost 20 years in the Enforcement Division of the U.S. Securities and Exchange Commission, the last 11 of which as Chief of its Office of Internet Enforcement. He also worked for 15 years as an Adjunct Professor of Law at the Georgetown University Law Center, where he taught several courses on the juxtaposition of law, technology and crime, and for five years as managing director of a global data breach response firm, including three years heading its Washington, D.C. office. Mr. Stark is the author of, "The Cybersecurity Due Diligence Handbook," available as an eBook on Amazon, iBooks and other booksellers.

Nasdaq-Listed Companies Moving the Needle on Diversity in the Boardroom
Publication Date: September 6, 2017 

The discussion on gender parity in the boardroom is evolving beyond equality as gender diversity is increasingly correlated with higher profitability—and Wall Street is taking notice. As Janice Ellig notes in her recent article "Fearless Girl—SHE is the future and the future is NOW," a number of index funds have launched that focus on corporations with gender diverse C-suites and boardrooms. These include State Street Global Advisors Gender Diversity Index ETF, Barclays Women in Leadership Total Return Index and Bloomberg's Gender-Equality Equity Index. These funds may offer further tangible evidence that companies with diverse boards outperform their peers.

Despite correlations between gender diversity and profitability, studies such as those commissioned by Equilar, Deloitte and McKinsey continue to indicate that gender diversity in the boardroom is improving only incrementally. Some institutional investors are losing patience with the slow progress and plan to use their proxy vote to spur corrective action: State Street Global Advisors (SSGA) and BlackRock both recently announced they are prepared to vote against directors of boards composed solely of men. While proxy advisory firms Glass Lewis and ISS don't currently make gender diversity a determining factor in voting recommendations, there are signs these firms may soon follow the lead of SSGA and BlackRock. ISS' annual Governance Principals Survey—which can foreshadow upcoming changes to voting polices—includes a question this year about gender diversity on boards and whether organizations should vote against directors of public company boards with no female representation.

We began tracking gender diversity statistics of Nasdaq-listed company boards last year to gauge their progress against the datasets included in the studies mentioned above, as smaller, newer corporations are often not included in studies. We continue to find evidence that there are many Nasdaq-listed companies moving the needle towards gender parity in the boardroom. In fact, Nasdaq currently boasts 46 companies with boards that are at least 40% female. These companies represent many different sectors of the market and a wide range of market capitalizations. By shifting the spotlight towards these companies instead of overall statistics, we can begin to fully appreciate the progress that Nasdaq companies have made.

Many other Nasdaq companies made progress toward gender parity over the past year, including 24 companies that improved boardroom gender diversity by at least 20%, and 33 Nasdaq companies added two or more new women to their boards. In fact, Nasdaq added two women to its own board in 2017, which now includes three women out of nine members.

diversity stats

Overall, smaller and newer publicly-traded companies continue to have less diverse boards than larger, more established companies. However, not all companies follow this trend: Mersana Therapeutics, Inc. (Nasdaq: MRSN), a $350 million biopharmaceutical company that started trading on Nasdaq less than two months ago, is a shining outlier with four women sitting on a six-seat board.

When considering progress in board diversity, it is also important to remember that gender diversity is not the only type of diversity. While gender is one of the easier categories to measure, diversity in ethnicity, age, background and geography are also critical when viewing board diversity from a holistic perspective. State Auto Financial Corporation (Nasdaq: STFC) does a great job of stressing both the gender and ethnic diversity of its board. State Auto Financial used their most recent proxy statement to celebrate a ten person board comprised of 50% female or ethnically diverse members, three women and two African Americans.

Age diversity in the boardroom is also important and although we hear less about it, diversity in any form can positively change the dynamics in the boardroom. While our data showed that the average age of a board member is 58.5 years and has not moved much in the past year, there are companies that boast age diverse boards, such as Famous Dave's of America, Inc. (Nasdaq: DAVE), with six out of eight board members under the age of 50, and TripAdvisor, Inc. (Nasdaq: TRIP), with 50% of board members under the age of 50.

Progress does not stop with adding one or two women to a corporate board. "The business case for gender parity has been made, and further progress toward that goal is going to depend on tone at the top," said Ellig. "The CEO, the board chair, and the nominating/governance chair at a company have to be intentional about adding women to boards, and intentional about opening the pool of candidates beyond the usual names and beyond the CEO position to find highly qualified women for board seats."

To recognize public companies that are leading the way in reaching gender parity, in November, Ellig and The Women's Forum of New York will hold their fourth biennial Breakfast of Corporate Champions, saluting F1000 and S&P 500 companies that have reached the 25%, 30%, and 40% mark and those that have already reached gender parity on their boards.


Read Fearless Girl—SHE is the Future and the Future is NOW >>

Watch Janice Ellig's CNBC interview discussing how companies can promote gender equality in the workplace and in the boardroom >>


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In the News
SEC Names Brett Redfearn as Director of the Division of Trading and Markets
Publication Date: October 19, 2017

The SEC announced that Brett Redfearn has been named Director of the agency's Division of Trading and Markets. The SEC's Division of Trading and Markets oversees the major securities market participants and infrastructure including broker-dealers, self-regulatory organizations (including stock exchanges), alternative trading systems, and transfer agents. Mr. Redfearn joins the SEC from J.P. Morgan, where he was Global Head of Market Structure for the Corporate & Investment Bank.


SEC Proposes Rules to Modernize and Simplify Disclosure
Publication Date: October 19, 2017

The Securities and Exchange Commission proposed amendments to modernize and simplify certain disclosure requirements in Regulation S-K, and related rules, in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors. Among other things, the proposed amendments would revise the property description requirement to emphasize materiality, add flexibility in discussing historical periods in Management's Discussion and Analysis, require data tagging for items on the cover page of certain filings and require hyperlinks for information that is incorporated by reference and available on EDGAR.


Read the Proposed Rules >>

Read the FAST Act Report >>

Treasury Releases Second Report on the Administration's Core Principles of Financial Regulation
Publication Date: October 11, 2017

The U.S. Department of the Treasury released a report outlining ways to streamline and reform the capital markets. The report contains proposals to address the decline in publicly-traded companies, reform today's regulatory environment, and end the current one-size-fits-all market structure, including recommendations to increase the minimum ownership amount required for shareholder proposals and for the SEC to further study and evaluate proxy advisory firms.

Read Treasury Press Release >>

Read the Treasury Report >>

Read more from Nasdaq >>

SEC Provides Regulatory Relief for Hurricane Victims
Publication Date: October 2, 2017

The Securities and Exchange Commission announced that it is providing regulatory relief to publicly traded companies, investment companies, accountants, transfer agents, municipal advisors and others affected by Hurricane Harvey, Hurricane Irma, and Hurricane Maria. To address compliance issues caused by these hurricanes, the Commission issued an order that conditionally exempts affected persons from certain requirements of the federal securities laws for periods following the weather events, including extensions for companies to file Exchange Act annual and quarterly reports.


Read the SEC Order >>

Results of 2017-2018 ISS Global Policy Survey
Publication Date: September 28, 2017

Institutional Shareholder Services ("ISS") has released the results of its Governance Principles Survey for 2017-2018. The survey, which was open to institutional investors, corporate executives, board members and any other interested constituencies, covered key topics including voting rights, gender diversity on boards, virtual meetings, and pay ratio disclosures.


Weinberg Center and Center for Audit Quality to Host Panel on Board's Role in Disclosure
Publication Date: September 26, 2017

What is the Board's role in telling a company's story through disclosure oversight and engagement? To answer this question, the John L. Weinberg Center for Corporate Governance and the Center for Audit Quality are convening a panel, Telling Your Company's Story: The Board's Role in Disclosure, on October 24. This event is free and open to the public.

Learn More and Register >>

SEC Adopts Interpretive Guidance on Pay Ratio Rule
Publication Date: September 26, 2017

The Securities and Exchange Commission approved interpretive guidance to help companies comply with the upcoming pay ratio disclosure requirements. Companies are required to begin making pay ratio disclosures in early 2018. The guidance address the use of estimates and statistical sampling, and clarifies that a company may use appropriate existing internal records, such as tax or payroll records. According to SEC Chairman Jay Clayton, the guidance "is intended to assist companies with their compliance efforts and reduce the costs associated with preparing disclosures."

Read SEC Press Release >>

Read Interpretive Guidance >>

Nasdaq and the U.S. Chamber release their 3rd annual Proxy Season Update
Publication Date: September 21, 2017

The U.S. Chamber of Commerce's Center for Capital Markets Competitiveness and Nasdaq partnered this fall for a survey of public companies regarding their interaction with proxy advisory firms during the proxy season. Over 140 companies responded to help policymakers better understand the relationship between public companies, proxy advisory firms, and institutional investors.


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