The CorporateCounsel.net (subscription required) reported that many companies have received comment letters from the SEC’s Division of Corporation Finance on their board leadership structure and risk oversight disclosures with requests for changes in future filings. The post notes this illustrative comment:
Please expand your discussion of the reasons you believe that your leadership structure is appropriate, addressing your specific characteristics or circumstances. In your discussion, please also address the circumstances under which you would consider having the Chair and CEO roles filled by a single individual, when shareholders would be notified of any such change, and whether you will seek prior input from shareholders.
Other comments reportedly seek “detailed disclosure about how the board administers the risk oversight function and the role of the independent chair or lead independent director.”
Regulation S-K Item 407(h) requires disclosure of the company’s board leadership structure and, if the CEO and Chair roles are combined, whether the company has a lead independent director and the lead directors’ specific role. This provision also requires disclosure of the extent of the board’s role in risk oversight and the effect this has on the board’s leadership structure.
See also pages 115 – 116 of this DFIN/Morrison & Foerster “Proxy Season Field Guide” and additional resources posted on our Annual Meeting/Proxy Statement page.
This post first appeared in the weekly Society Alert!