In 2011, public companies conducted their first shareholder
advisory votes on executive compensation and also asked
shareholders how often the company should conduct future say-on-pay
votes. Companies were required to report the results of their
shareholders meetings in a Current Report on Form 8-K within four
business days after each meeting. In addition, each company was
required to inform shareholders whether future say-on-pay votes
would occur every one, two, or three years until it holds its next
frequency vote.
Many companies either disclosed their frequency decision in their
original Form 8-K or subsequent Form 10-Q filing.
In an action that has caused confusion, representatives of the
SEC's Division of Corporation Finance recently announced, in
the Practising Law Institute's "The SEC Speaks in
2012" conference, that a number of issuers "forgot"
to report their frequency decision in accordance with the SEC's
rules and interpretations. A company's failure to file a Form
8-K disclosing its say-on-pay frequency decision (as opposed to
just the voting result) arguably results in loss of eligibility to
use a Form S-3 registration statement for approximately one
year.
However, if your company is in this position, all is not lost. We
and others have urged the SEC staff to be flexible here, and the
SEC Staff has indicated that it will likely grant Form S-3
eligibility waivers for this technical "foot fault" if
(1) the company first amends its Form 8-K to disclose the frequency
the company has chosen for future say-on-pay votes, and (2) its
frequency decision matches the frequency recommended by its
shareholders in the frequency vote.
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