14. Bringing on new leadership and new skill sets throughout the agency–Mary Schapiro, SEC Chairman July 16, 2009
15. Key SEC Agenda Items Reinvigorating SEC Enforcement Strengthening Examination and Oversight Improving Transparency and Investor Protection Combating Abusive Short-Selling Enhancing regulation of Credit Rating Agencies Strengthening Shareholder Rights Improving Money Market and Mutual Fund Regulation Filling Regulatory Gaps/Legislative Reforms Securing appropriate SEC Resources
16. Recent SEC Proposed Rules Facilitating Shareholder Director Nominations (6/11/2009) Shareholder Approval of Executive Compensation of TARP Recipients (7/1/2009) Political Contributions by certain Investment Advisors (“Pay to Play” restrictions”) (7/22/2009) Proxy Disclosure & Solicitation Enhancements (7/10/2009) NYSE proposal for discretionary proxy voting by broker/dealers - Approved
17. Proxy Disclosure and Solicitation Enhancement Proposal Areas Compensation Disclosure & Analysis Summary Compensation Table Enhanced Director & Nominee Disclosure Disclosures on Company Leadership Structure and Board’s Role in Risk Management New disclosures for compensation consultants Report voting results on Form 8-K Proxy Solicitation process
19. Staff focus is on market conditions The SEC staff is focused on the adequacy of disclosures related to the impact of current market conditions, including disclosures of: The impact of market events Updated and/or new risk factors The risks that compensation plans encourage executives to take Consider the impacts on: Customers Consumers Suppliers Creditors Financing sources Counterparties Capital spending/business development
20. SEC comment letter trends are impacted by the economy Management’s Discussion & Analysis Liquidity and capital resources Debt covenant compliance Segment reporting Restructuring/impairments Pensions Income taxes Executive compensation Litigation contingencies Non-GAAP measures
21. Comment letter trends: MD&A Increased transparency, more in-depth analysis, and plain English: Executive overview Quantify significant reasons underlying variances Discuss critical accounting estimates Judgments, estimates, variables, sensitivities Fair value estimates (impact of credit risk) Discuss trends, which may have a material impact on future operating results and liquidity Focus on liquidity Disclose items that impact the availability of credit Compliance with covenants Likelihood of covenant defaults Tabular presentation of financial covenants versus actual ratios Counterparty risks
22.
23. Does the current environment impact analysis of economic similarities