The New Enhanced Proxy Disclosure Rules – Ready, Set, Change and Now

Abstract

The attached article is on the new enhanced proxy disclosure rules concerning corporate governance. The article focuses on the SEC's un- or understated governance policy objectives, the tension with Delaware law and suggestions for how to start a deliberative process now so that companies can craft disclosure that complies with the letter and spirit of the new rules. While most companies will not have to make the new disclosure about corporate governance policies, practices and structures until next proxy season, the rules contemplate that boards will re-evaluate all of those governance issues sufficiently in advance and with sufficient deliberation so that disclosure of the reasons behind their policies etc. can be described (a greater intrusion for better or worse than past disclosure rules have required). Boards and their advisors have to start that process now -- something a lot of companies haven't yet realized. Last minute attention will likely result in less than optimal disclosure with consequences from the SEC and shareholder activists.