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On May 11th, the staff of the SEC’s Division of Corporation Finance issued 45 Compliance and Disclosure Interpretations (CDIs), replacing previously published telephone interpretations on proxy rules and Schedule 14A. Most of the updates are non-substantive, as noted by the SEC, and therefore the updates are primarily helpful for consolidating the relevant guidance in one place. Twelve of the CDIs relate to Item 10 of Schedule 14A, which sets forth the disclosure rules when a…

It’s hard to believe it’s been a little over two years since the Securities and Exchange Commission (SEC) adopted the final rule for the CEO pay ratio disclosure as part of its implementation of the Dodd-Frank Act. As most readers will know, the CEO pay ratio rule requires public companies (with certain exceptions) to disclose the ratio of the annual total compensation of their Chief Executive Officer (CEO) to the annual total compensation of their…

Companies preparing CEO pay ratio disclosure for the 2018 proxy season should not assume they will be able to rely on the Privacy Exemption with regard to gathering information about non-US employees. For a summary of the key provisions of the SEC’s final CEO pay ratio disclosure rule and the limited exemptions provided for non-US employees, see Baker McKenzie’s recent client alert. Invoking these exceptions will likely be difficult in practice. Companies should, however, generally be…

A recent Delaware Court of Chancery decision builds on prior case law and provides useful insight for companies seeking to establish an effective director compensation limit in order to avoid expensive stockholder litigation. In the case, In Re Investors Bancorp, Inc. Stockholder Litigation (2017 BL 111738, Del. Ch., No. 12327-VCS, 4/5/17), plaintiff stockholders claimed that directors breached their fiduciary duties by awarding themselves “grossly excessive compensation” under a plan that, though approved by stockholders, included…