Here’s an excerpt from this Wilson Sonsini memo in the section entitled “The plaintiff’s lawyers are reading: dot your “i’s” and cross your “t’s” in your proxy statement”:
“We continue to see plaintiff’s lawyers reviewing preliminary and definitive proxy statements to look for alleged disclosure deficiencies or compliance issues under Delaware law or SEC requirements—often followed by demand letters seeking curative disclosure and attorneys’ fees (which can sometimes be substantial) for the claimed corporate benefit they provided by ensuring compliant disclosure. Common issues we see raised include:
- noncompliant record date;
- incorrect voting standards;
- failure to describe the impact of broker non-votes and abstentions on each proposal;
- incorporation by reference to Form 10-K of executive compensation information that does not actually exist in the Form 10-K;
- failure to disclose late Section 16 filings;
- incorrect determination of board or board committee independence under stock exchange standards; and
- defective description of equity plan subject to a proposal.
In most cases, these deficiencies are preventable with careful reviews.”
