SEC Announces Small and Emerging Companies Advisory Committee Agenda

The SEC has announced the agenda for a meeting of its Advisory Committee on Small and Emerging Companies being held this Friday, February 1st.
The Committee will consider recommendations about:
• trading spreads for smaller exchange-listed companies,
• creation of a separate U.S. equity market limited to sophisticated investors for small and emerging companies, and
• disclosure rules for smaller reporting companies.
The meeting will begin at 9:30 a.m. in the multi-purpose room at the SEC’s Washington D.C. headquarters. Public seating will be on a first-come, first-served basis. The event will be webcast live on the SEC website and will be archived for later viewing.
For information about providing written comments, see the SEC’s press release available at

Say What? Smaller Reporting Companies Subject to Say-on-Pay in 2013.

Smaller reporting companies are subject to say-on-pay and say-on-frequency votes for the first time this year.  In January 2011, the SEC adopted final rules implementing the say-on-pay and say-on-frequency requirements of the Dodd-Frank Act. Under such rules, public companies are required to conduct shareholder advisory votes (i) to approve the compensation of executives, as disclosed pursuant to Item 402 of Regulation S-K, and (ii) to determine how often an issuer will conduct a shareholder advisory vote on executive compensation. Public companies, other than smaller reporting companies, were required to conduct such votes starting with the 2011 proxy season. Smaller reporting companies did not have to conduct such votes until their first annual or other meeting of shareholders occurring on or after January 21, 2013.

In drafting their proxy statements for this year’s annual meeting, smaller reporting companies should look to strategies utilized by other public companies during the past two proxy seasons to avoid a failed say-on-pay vote. For example, public companies have been using their proxy statements, especially their Compensation Discussion and Analysis section, as an opportunity to explain their executive compensation practices to shareholders. Although smaller reporting companies are not required to include a CD&A in their proxy statements, they may want to include disclosure similar to the CD&A or, at a minimum, a summary of executive compensation practices in their proxy statements this year to discuss the company’s compensation philosophy and how executive compensation is aligned with performance.