On October 31, 2016, Glass Lewis submitted a letter to the SEC in response to an August 25, 2016 request for comment on the disclosure requirements covered under Subpart 400 of Regulation S-K. The items that comprise Subpart 400 generally require disclosure about a registrant’s directors, executive officers, certain security holders, compensation practices and corporate governance, among other matters. The purpose of this request for comment was to solicit input on existing requirements in these rules as well as on potential disclosure issues that commenters believe the rules should address.
Our suggestions promote clear, consistent and concise disclosure of material information. As a guiding principle, we believe that the disclosure required by the SEC should be intelligible to investors regardless of their level of sophistication. We emphasize plain explanations, visual representations of data and a minimum of overly broad boilerplate language. In our view, encouraging clarity and simplicity in disclosure helps promote mutually beneficial dialogue between investors and registrants.
In summary, we made the following suggestions to the SEC to require registrants to:
Information about Directors and Executive Officers
- Establish a framework for diversity disclosure;
- Standardize disclosure for the public company directorships of directors; and
- Provide rationale for the registrant’s classification of a non-employee director as not independent.
- Reconcile figures between GAAP and non-GAAP;
- Make certain revisions to the format of certain compensation tables; and
- Enhance the principles underlying the narrative discussion of certain tables to emphasize clear explanations
- Disclose the aggregate voting power held by certain beneficial owners with respect to registrants which have more than one class of voting shares;
- Standardize disclosure of related party transactions and expand reportable transactions to all those in excess of $120,000 or 2% of the outside company’s consolidated gross revenues;
- Display specific attendance records of the aggregate board and committee meetings attended by each director;
- Disclose the chairs (or lack thereof) of a board’s key committees; and
- Discuss shareholder engagement and the vote results of the registrant’s previous annual meeting.
The full Glass Lewis submission is available by clicking the link below, and is also hosted on the SEC’s website.
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