Corporate Governance Regulation - Comment Letters

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Gavel.png FINAL RULE: This page refers to proposed rulemaking. The mine safety disclosure final rule was passed by the SEC on Dec. 21, 2011. Comments on the rule proposal can be found below.
Dodd-Frank Timeline, Proxy Access, SEC
Comment Deadline Final Rule Issue Effective Date
February 16, 2010 September 20, 2011 September 20, 2011 VACATED BY COURT ORDER
Dodd-Frank Timeline, Conflict Minerals, SEC
Final Rule Issue Effective Date First Report Due
September 12, 2012 November 13, 2012 May 31, 2014
Dodd-Frank Timeline, Mine Safety Disclosure, SEC
Proposal Date Final Rule Issue Effective Date
February 3, 2011 December 29, 2011 January 27, 2012
European Commission Timeline, EU Corporate Governance Framework
Submission Date Comment Deadline Final Recommendations
April 5, 2011 July 22, 2011 Fall 2011
European Commission Timeline, EU Corporate Governance in Financial Institutions
Submission Date Comment Deadline Proposed Recommendations
June 2, 2010 Sept. 1, 2010 First Qtr 2011

Corporate governance includes executive compensation topics. Comment letters for shareholder approval of executive compensation and golden parachute compensation, incentive-based compensation arrangements, and listing standards for compensation committees can be found here.

Facilitating Rights Of Shareholders To Nominate Directors (Proxy Access Rule)[edit]

Managed Funds Association - December 22, 2010[edit]

Reporting of Proxy Votes on Executive Compensation
December 22, 2010

From the comment letter:

"As proposed, the Rule would seem to apply to a Section 14A shareholder vote in which an institutional investment manager has voting power, but elects not to vote its shares. We believe reporting information with respect to such non-votes would be of minimal use to investors, would be burdensome for managers, and is not required by Section 951. As such, we recommend that the Rule require that a manager report information only when the manager has instructed an intermediary to vote its shares...

We also recommend that the proposed Rule be modified to take into account the complex mechanics of proxy voting for institutional managers."

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Financial Services Roundtable - November 18, 2010[edit]

Reporting of Proxy Votes on Executive Compensation
November 18, 2010

The Financial Services Roundtable states that the SEC should not use specific language for a proxy vote or use such a prescriptive approach in framing the shareholder vote on executive compensation. The letter explains that the Commission's rules surrounding which issuer shares that are entitled to a say-on-pay vote and the frequency of that vote have become to specific. Rather, state law should apply in the majority of these cases, and the Commission's rules should state this.

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Fidelity Investments - November 18, 2010[edit]

Reporting of Proxy Votes on Executive Compensation
November 18, 2010

  • "Fidelity does not believe that requiring funds and managers to disclose vote information in a standardized order or format is necessary. As currently reported, voting records are clearly labeled and we are not aware of shareholders having any difficulty deciphering or locating the data.
  • Fidelity believes that the Proposed Rule would not provide adequate lead time for managers to file initial Forms N-PX. In addition, mutual funds will not have adequate time to comply with the Commission’s extensive proposed amendments to Form N-PX, particularly the requirements concerning quantitative vote disclosure. We suggest that the Commission delay compliance until 2012, and extend the current 60 day lag between period-end and filing date.
  • Fidelity believes that the Commission should provide managers flexibility in how they report Section 14A Votes. In the spirit of preventing duplicative reporting and enhancing operational efficiencies, SEC rules should permit affiliated managers to file jointly even where they do not share power to vote."
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Investment Company Institute - November 18, 2010[edit]

Reporting of Proxy Votes on Executive Compensation
November 18, 2010

The Investment Company Institute discusses their opposition to several parts of the proxy access rule, specifically saying:

"We oppose expanding the types of disclosure that funds are required to provide on Form NPX to include the precise number of shares they were entitled to vote and the precise number of shares that were actually voted. This data is not required by Section 951, would be difficult to compile (and in fact, may be impossible to produce with the degree of precision required), is of no value to most fund investors, and is generally unnecessary to achieve the purposes of proxy vote disclosure."

If the SEC moves forward with the rules, ICI recommends that it limit the scope of voting disclosure rules.

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Investment Adviser Association - November 16, 2010[edit]

Reporting of Proxy Votes on Executive Compensation
November 16, 2010

In its comment letter, the Investment Adviser Association highlights cases in which there is shared proxy-voting decision-making through a corporatewide proxy voting committee, and recommends that a parent company file annual reports. The association also suggests that SEC take a more flexible approach proxy vote reporting in general.

Guidance for rules related to institutional managers and for a compliance timeline is also provided.

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Conflict Minerals[edit]

Ford Motor Company - March 2, 2011[edit]

Conflict Minerals
March 2, 2011

In the comment letter, Ford requests (among other things) that:

  • "the Staff require the annual disclosure regarding Conflict Minerals to be included in a separate form to be submitted to the Staff within a defined period after the end of a registrant's fiscal year;
  • [the Staff allow] registrants to become accustomed to preparing Conflict Minerals Reports before evaluating whether mandatory 'block' or 'detailed' XBRL tagging would enhance the usefulness of these new disclosures;
  • the Conflict Minerals Report should contain a statement from the registrant that the registrant has obtained an independent third-party audit as required by statute; and
  • registrants 'furnish' rather than 'file' the Conflict Minerals Report, which the Staff asserts, and we agree, contains information qualitatively different from the financial information required to be disclosed in registrants' periodic reporting."
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United States Steel Corporation - March 4, 2011[edit]

Conflict Minerals
March 4, 2011

US Steel Corp. limits its comments in the letter to those concerning cassiterite, the raw material used to manufacture tin.

From the comment letter:

"We feel that when a recycled material is used in the manufacturing process there is no need or practical way to inquire into the use, if any, of a conflict material in the original production of the recycled material. Indeed a requirement to try to trace the original source of a recycled would have the effect of discouraging recycling which would have the impact of requiring more conflict minerals to be mined, increasing the value of conflict minerals from in Congo region. We also do not feel that the legislation was addressed to trace materials. Once again using steel as an example iron units, whether natural ore or pellets, and steel scrap may contain minute amounts of hundreds if not thousands of elements and there is no way to effectively identity them let alone determine when and how they got into the mix."

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AT&T - March 9, 2011[edit]

Conflict Minerals
March 9, 2011

AT&T argues in its comment letter that the proposed rules regarding the reporting of conflict minerals are too broad and will negatively affect retailers who are minimally involved in the manufacturing process.

The company also suggests that the SEC revise its definition of "contract to manufacture" so that the rules do not include every function of the manufacturing process, particularly retailers who have no direct control.

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Verizon - June 24, 2011[edit]

Conflict Minerals
June 24, 2011

Verizon provides in its letter the following comments regarding the use of conflict minerals and proposed rules surrounding that use:

  • "The legislative goals of the provision are at risk of being frustrated;
  • The Commission should phase-in full CMR reporting only after DRC zone countries are able fully to participate in "Conflict Free Smelter" programs; and
  • The Commission has statutory authority to adopt this approach."

Verizon argues that reform procedures in the Democratic Republic of the Congo (DRC) should be completed before the SEC moves to enforce the proposed rules.

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Center for Capital Markets Competitiveness - July 18, 2011[edit]

Conflict Minerals
July 18, 2011

The U.S. Chamber of Commerce's Center for Capital Markets Competitiveness states in its letter that the proposed rules concerning conflict minerals should have been withdrawn in February 2011.

"We continue to believe there was more than adequate reason to justify withdrawing the proposed rule in February, and recent events have only made that justification stronger. The July 11,2011 Executive Order requests independent agencies to be much more rigorous and diligent in identifying burdens, costs and complexities in developing a rule. Agencies should then choose the least burdensome approach.

This proposed rulemaking has a wide impact upon the vast swaths of the American economy and manufacturing base. A rigorous and thorough analysis, as contemplated by Executiye Order 13563, should be undertaken by the SEC and we again request that the SEC submit the proposed rule for OIRA review. Once those costs and burdens are more fully understood, then a working group should be established to address the various issues that need to be addressed by the proposed rule making."

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Mine Safety Disclosure[edit]

Rio Tinto - March 1, 2011[edit]

Mine Safety Disclosure
March 1, 2011

From the comment letter:

"Rio Tinto believes in establishing a strong culture of mine safety. Rio Tinto further supports enhancing disclosures that are material to the investor, add clarity and are relevant and do not pose an unnecessary burden on the reporting issuer. We thus welcome the Commission's rulemaking and/or interpretative guidance on each of these issues to facilitate, to the maximum extent possible, the foregoing aspirations."

In addition to the statement listed above, Rio Tinto provides separate comments for 26 different items related to the mine safety disclosure rules.

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