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I, along with Delta Air Lines Assistant General Counsel Stephanie Bignon, recently authored an article for Corporate Compliance Insights addressing the latest developments impacting SEC periodic reporting disclosure practices.

“Public companies have been monitoring and rapidly adapting to a wide array of developments impacting periodic reporting disclosure practices over the last year,” we wrote in the article.

In addition to various SEC rules changes that have been adopted over the last year, we provided an extensive overview of four key areas which are anticipated to impact periodic reporting for the remainder of 2021:Continue Reading Periodic Reporting for Public Companies in 2021: What Lies Ahead

Institutional investors and proxy advisory firms continue to develop and refine their policies regarding board diversity. While gender diversity on public company boards has been in focus for some time now, institutional investors and proxy advisory firms are also increasingly focusing on racial and ethnic diversity as part of their evolving approach to board diversity.

This post is a summary of published board diversity policies of certain institutional investors and proxy advisory firms into a singular resource for ease of reference. Below the initial breakdown, certain policies concerning board diversity shareholder proposals are described. Continue Reading A Summary of Certain Proxy Advisory Firm and Institutional Investor Board Diversity Policies

Bass, Berry & Sims attorneys Kevin Douglas, Eric Knox and Sehrish Siddiqui were co-presenters alongside Stephanie Bignon, Assistant General Counsel, Delta Air Lines and Priya Galante, Vice President, Assistant General Counsel & Assistant Secretary, AutoZone at the Society for Corporate Governance’s Southeastern Chapter webinar earlier this month.

This program, titled, “Preparing for the Upcoming Proxy…

Since the Bass, Berry & Sims Corporate & Securities Practice hosted its 2nd Annual Corporate & Securities Counsel Public Company Forum in December 2020, the Biden Administration has proposed a new Securities and Exchange Commission (SEC) Chairman. Below is an update from our 2021 Financial Reporting & Disclosure Considerations panel discussion, in which Bass, Berry & Sims member Scott Holley reviews some potential areas of focus for the SEC under the new administration.

On January 18, then-President-elect Biden announced that he intended to nominate Gary Gensler to serve as chair of the SEC. Gensler, a former Goldman Sachs executive, served as the chairman of the Commodity Futures Trading Commission during a portion of the Obama administration. Under Gensler’s leadership, it is expected that the SEC’s efforts will include an increased focus on enforcement efforts as well as disclosures relating to climate change risk and diversity and inclusion efforts of boards of directors. Gensler’s recent service as a professor at MIT, where he taught courses on blockchain technology, digital currencies and financial technology, could also shape his agenda at the SEC.Continue Reading Public Company Forum Update: Reg. S-X Investment Test & SEC Focus under New Administration

Following the Securities and Exchange Commission’s (SEC) issuance of interpretive guidance regarding the disclosure of key performance indicators and metrics (KPIs) early last year, we’ve been tracking SEC comments in this area as the SEC fully incorporates the guidance into its disclosure review program. We’ve highlighted a few of the comment letters previously, but several recently issued comment letters caught our attention.

Spotting a KPI

Under the SEC’s KPI guidance, a KPI is one of the key variables through which management evaluates a company’s performance or status, disclosure of which would be material to investors. The SEC guidance states as follows:

“Some companies also disclose non-financial and financial metrics when describing the performance or the status of their business. Those metrics can vary significantly from company to company and industry to industry, depending on various facts and circumstances. For example, some of these metrics relate to external or macro-economic matters, some are company or industry specific, and some are a combination of external and internal information. Some companies voluntarily disclose specialized, company-specific sales metrics, such as same store sales or revenue per subscriber. Some companies also voluntarily disclose environmental metrics, including metrics regarding the observed effect of prior events on their operations.”

The guidance reminds companies that when including metrics in their disclosure companies should consider existing MD&A requirements as well as the extent to which an existing regulatory framework applies, such as GAAP or, for non-GAAP financial measures, Regulation G or Item 10 of Regulation S-K.  Although the SEC guidance instructs companies to consider whether other regulatory disclosure frameworks apply, in practice the lines between a KPI metric and a non-GAAP financial measure can be blurred in some cases.  And because of the SEC Staff’s laser focus on non-GAAP financial measure disclosures the past several years, it is easy to see how some companies may choose to err on the side of categorizing a metric as a non-GAAP financial measure when the metric falls in this blurred area.Continue Reading Are You Sure That Metric is a Non-GAAP Financial Measure? SEC’s Focus on Key Performance Indicators Continues

Following up on our prior blog post regarding 2020 first quarter COVID-19 adjustments in connection with the presentation of non-GAAP financial measures, we surveyed 102 S&P 500 companies who presented Adjusted EBITDA in their earnings release filed from October 1, 2020, to December 31, 2020.

We focused on Adjusted EBITDA in this survey (recognizing that such measure is utilized more frequently in some industries than others) because such measure is commonly utilized by public companies to measure their operational performance and frequently includes adjustments for items that are believed not to reflect the ongoing operational performance of the company.  While we limited our survey to S&P 500 companies that presented Adjusted EBITDA, we believe that the survey results have relevance for companies that present other types of non-GAAP performance measures that are adjusted for special items or items outside of the ordinary course of business.

Survey Results

Of the surveyed companies, 16 companies, or approximately 16%, included an adjustment in their calculation of Adjusted EBITDA related in some form to the COVID-19 pandemic, and 84% did not. The companies that included a COVID-19 adjustment in their Adjusted EBITDA calculation span across various industries, including, but not limited to, oil & gas, real estate, telecom services, lodging/hotel, and medical/scientific instruments.
Continue Reading Adjusting for COVID-19 in Non-GAAP Financial Measures: A Survey of 2020 Fourth Quarter Disclosure Practices

On November 19, the Securities and Exchange Commission (SEC) continued its brisk pace of end-of-year rulemaking by approving amendments to Items 301, 302 and 303 of Regulation S-K, which collectively govern the disclosures of Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) as well as other selected financial data.  These amendments were initially proposed in January 2020 as part of the SEC’s ongoing effort to improve and modernize the current disclosure regime for both investors and companies.

The amendments will become effective 30 days after they are published in the Federal Register, which means they will probably be effective around the end of January assuming the typical timing for rule publication. At that time voluntary compliance is permitted, so long as registrants provide disclosure responsive to an amended item in its entirety. Compliance is not mandatory until a registrant reports on its first fiscal year ending on or after 210 days following publication, which means that for a calendar year-end filer, the Form 10-K filed in 2022 with respect to the fiscal year ended December 31, 2021.  However, we expect that many companies will welcome the new rules (particularly the elimination of the contractual obligations table and five-year selected financial table, among others) and begin complying sooner.Continue Reading SEC Adopts Amendments to MD&A and Other Financial Disclosures

From a focus on climate change to a push for diverse corporate boards, ESG matters – those related to environmental, social and corporate governance – have become the focus of corporations and investors alike.  Regarding ESG-related disclosure standards in particular, investors and corporations are both anxious to adopt and challenged to choose a standard that is both comprehensive and relevant to the respective company or industry.

Though the CDP (formerly the Carbon Disclosure Project), Climate Disclosure Standards Board (CDSB), Global Reporting Initiative (GRI), International Integrated Reporting Council (IIRC) and Sustainability Accounting Standards Board (SASB) have gained a great amount of attention and influence in recent years, they often appear to be multiple attempts toward the shared goal of integrated and comprehensive sustainability reporting.  Investors and corporations alike have called for simplifying corporate reporting in this space.

In September 2020, all five of these framework and standard-setting institutions issued a joint statement reflecting a vision to develop a comprehensive global corporate reporting system for sustainability disclosure.  While that statement did not specify the precise form of such collaboration and did not include a specific timeframe, a recent announcement brought this vision one step closer to actualization.Continue Reading One Step Closer Toward Consolidating Corporate Sustainability Reporting Standards

Register NowJoin our corporate and securities attorneys for our 2nd Annual Corporate & Securities Counsel Public Company Forum. This virtual program will feature timely and practical guidance on the latest developments in corporate and securities matters impacting public company in-house counsel.

Panels will include speakers from AutoZone, BNY Mellon, Brown-Forman, Farmer Brothers…

Bass, Berry & Sims invites you to join us for our 2nd Annual Corporate & Securities Counsel Public Company Forum.

Although we are unable to meet in-person due to ongoing concerns resulting from the COVID-19 pandemic, we are excited to host this year’s forum virtually.

This complimentary program will feature timely and practical guidance on the latest developments in corporate and securities matters impacting public company in-house counsel.

Panel and breakout discussion topics will include:

  • Financial reporting and disclosure considerations.
  • Insights from public company general counsel.
  • 2021 proxy season developments.
  • Restaurant & hospitality industry trends.
  • ESG considerations.

We are also pleased to welcome Myron T. Steele, former Chief Justice of the Delaware Supreme Court, as a featured speaker. Bass, Berry & Sims partner Leigh Walton will lead a fireside chat with former Chief Justice Steele about recent areas of focus for the Delaware judiciary, including COVID-19 related emergency orders, directors’ considerations for multiple stakeholder interests when discharging fiduciary duties, and corporate governance around ESG and diversity. Their discussion will also review the impact of federal elections on corporate law.

The program will take place on December 8, 2020, from 1:00-4:00PM CT and is intended for in-house counsel, public company finance and SEC reporting personnel, compliance officers, and other interested professionals.Continue Reading [REGISTER NOW] Corporate & Securities Counsel Public Company Forum | December 8, 2020

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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