Checklist of Routine Annual Activities To Be Completed By NASDAQ-Listed Companies
Kelley Drye Client Advisory
This memorandum lists typical routine activities for a NASDAQ-listed company, its Board of Directors or its Audit, Compensation and Nominating/Governance Committee, especially in connection with the Annual Meeting of Stockholders. Please note that, in any particular situation, additional activities may need to be completed and not all of the activities mentioned apply to all situations, and that each company’s activities will depend on its governing documents. A NASDAQ-listed foreign private issuer or limited partnership, or a NASDAQ-listed company that is emerging from bankruptcy or a “controlled company” within the meaning of NASDAQ rules, may have fewer, additional or different requirements.
Board of Directors (prior to Annual Meeting)
Assessments.
- Complete Directors’ and Officers’ Questionnaires (for Proxy Statement) and Board and Committee Self-Assessment Questionnaires
- Update form of Questionnaire to request information about:
- Public company directorships held during the past five years
- Legal or regulatory proceedings for the past 10 years, including information relating to the expanded list of proceedings added in 2009 by the SEC
- Update form of Questionnaire to request information about:
- Conduct annual self-assessment of Board under leadership of Nominating/ Governance Committee
- Conduct annual assessment of Committee Charters (taking into account recommendations of Committees); approve changes
- Conduct annual self-assessment of Board Charter/Corporate Governance Guidelines; approve changes
- Conduct annual assessment of Code of Ethics; approve changes
- Conduct assessment regarding Board role in risk oversight and effect that risk oversight has on Board leadership structure
- Establish record date for Annual Meeting
- Establish date and time of Annual Meeting
- Establish location of Annual Meeting
- Recommend that stockholders vote at Annual Meeting for nominees of Board for election as directors
- Propose ratification by stockholders at Annual Meeting of selection of auditor by Audit Committee (optional)
- Recommend that stockholders vote at Annual Meeting for ratification of auditor (optional)
- Designate proxyholders for Annual Meeting (with full power of substitution)
- Authorize and direct proxyholders to vote at Annual Meeting on other business as recommended by the Board
- Appoint inspectors of elections at Annual Meeting (reserving power to the chair of the Annual Meeting to make changes to respond to developments)
- Approve Proxy Statement and form of Proxy for Annual Meeting and filing and mailing or other distribution thereof
- Approve Annual Report to Stockholders (if separate from Annual Report on Form 10-K) and filing and mailing or other distribution thereof within a reasonable time prior to the Annual Meeting
- Approve Annual Report on Form 10-K (based on recommendation of Audit Committee as to inclusion of Annual Financial Statements) and filing thereof
Board. Unless fixed by Articles or Certificate of Incorporation, establish size of Board (based on recommendation of Nominating/Governance Committee, and reserving power to change to respond to developments) to establish number of directors to be elected at Annual Meeting; if size is fixed by By-Laws and Board desires to change size, amend By-Laws
Nominations. Nominate individuals for election as directors at Annual Meeting (based on recommendation of Nominating/Governance Committee, and reserving power to change to respond to developments)
Other.
- Adopt general ratifying resolutions relating to the preceding items
- Adopt general enabling resolutions relating to the preceding items
Appointments.
- Appoint Chairperson of the Board, if any (based on recommendation of Nominating/Governance Committee)
- Appoint Committee members (based on recommendation of Nominating/Governance Committee)
- Establish annual schedule for regular Board meetings
- Establish annual schedule for regular executive sessions of non management directors
- Executive sessions should occur at least twice annually, and perhaps more frequently, in conjunction with regularly scheduled Board meetings
- If term of office expires annually, re-elect officers
- Elect new officers, if any
Ownership Guidelines. If necessary, approve stock ownership guidelines, as applicable, taking into account recommendations of Nominating/Governance Committee
Nominating/Governance Committee
Assessments.
- Conduct annual performance self-evaluation of Committee and lead annual self-assessment of Board
- Conduct annual assessment of Committee Charter; update for changes to accounting or SEC rules references; recommend to Board any changes
- Review criteria for nomination of candidates for election as director; approve changes
- Review potential candidates (including incumbents who may be candidates for re-election)
- Establish (if desired) or annually review and change (as appropriate) any categorical standards under which a director is deemed to be independent
- Affirmatively determine:
- Whether candidate would be independent director under NASDAQ rules, including that candidate who would be independent director has no relationship that would interfere with the exercise of independent judgment in carrying out a director’s responsibilities (to be ratified by Board)
- Whether candidate would satisfy independence requirement for Audit Committee membership under SEC/NASDAQ rules, and financial literacy and finance or accounting expertise requirements for Audit Committee membership under NASDAQ rules
- Whether candidate would qualify as “audit committee financial expert” under SEC rules
- That, if candidate may become a member of Audit Committee and already serves on more than three public company audit committees, service on the other audit committees will not impair Audit Committee service, if required by company’s governing documents
- Consider whether and, if so, how Board or Nominating/Governance Committee considers diversity in identifying director nominees, and whether to implement a policy considering diversity in identifying director nominees
- Select (or recommend to Board) nominees for election as directors (taking into account requirement that a majority of directors must be independent) and nominee for Chairperson of the Board, considering the specific experience, qualifications, attributes and skills that led to the conclusion that the nominee should serve as a director, in light of company’s business and structure
Board Size. If necessary, recommend to Board the size of Board
Committees. Recommend to Board appointment of Committee Members (taking into account requirement that all Audit, Compensation and Nominating/Governance Committee members must be independent, with limited exceptions under NASDAQ rules, and all Audit Committee members must satisfy additional requirements)
Presiding Director. If necessary, recommend a Presiding Director to non-management directors
Retention Policies. If necessary, review document retention policies and procedures
Schedule. Establish annual schedule for regular Committee meetings
Compensation Committee
Assessments.
- Conduct annual performance self-evaluation of Committee
- Conduct annual assessment of Committee Charter; update for changes to accounting or SEC rules references; recommend to Board any changes
- Review actual and proposed incentive and equity-based compensation of CEO for prior year and, to the extent discretionary, approve proposed incentive compensation or achievement of related targets
- Establish base and proposed incentive and equity-based compensation of CEO for current year
- Evaluate prior year’s performance, including performance against prior year’s targets
- Establish current year’s targets, if any
- To the extent discretionary, approve (or recommend to Board approval of) proposed incentive compensation or achievement of related targets, for prior year, of other executive officers and employees, consistent with oversight responsibility and appropriate historical or new practices, policies and procedures
- Approve (or recommend to Board approval of) proposed incentive compensation (including related targets, if any) and equity-based compensation, for current year, of other executive officers and employees, consistent with oversight responsibility and appropriate historical or new practices, policies and procedures
Employee Compensation. Review and determine whether risks exist that relate to employee compensation policies and practices that are reasonably likely to have a material adverse effect, and consider whether to implement (or amend) risk assessment procedures
Affiliate Transactions. Discuss compensation or other benefits received by directors or executive officers from affiliated entities and review such compensation to confirm compliance with Code of Ethics and applicable law, if required by company’s governing documents
Proxy Statement.
- Approve Report of Compensation Committee in Proxy Statement
- Approve Compensation Discussion and Analysis in Proxy Statement
Audit Committee
Assessments.
- Conduct annual performance self-evaluation of Committee
- Conduct annual assessment of Committee Charter; update for changes to accounting or SEC rules references; recommend to Board any changes
Report of Committee. Approve Report of Audit Committee in Proxy Statement
Financials. Approve Annual Financial Statements for inclusion in Annual Report on Form 10-K and recommend such inclusion to Board
Schedule. Establish annual schedule for regular Committee meetings
Related Party Transactions. Review related party transactions
Other Activities
Annual Report on Form 10-K. File Annual Report on Form 10-K with SEC
Annual Report to Stockholders.
- Stockholders. Make available to stockholders an Annual Report of Stockholders containing audited consolidated financial statements, which may be satisfied by:
- mailing the Annual Report on Form 10-K to stockholders, or
- satisfying the requirements for internet availability of proxy materials contained in Exchange Act Rule 14a-16, or
- posting it on the website (along with a prominent undertaking in the English language to provide stockholders, on request, a hard copy free of charge) and simultaneously with the website posting issuing a press release indicating that it has been filed with the SEC or other appropriate regulatory authority and is available on the website (including the website address) and that stockholders may receive a hard copy free of charge on request (and must provide such hard copies within a reasonable period of time following the request)
- SEC. Furnish Annual Report to Stockholders to SEC not later than the date on which it is first sent, given or made available to stockholders
- NASDAQ. File Annual Report to Stockholders with NASDAQ (satisfied by electronic filing of Annual Report on Form 10-K or equivalent with SEC through EDGAR)
- Preliminary.
- SEC. If necessary, file preliminary Proxy Statement and Form of Proxy with SEC at least 10 calendar days prior to the date definitive copies of such material are first sent, given or made available to stockholders
- NASDAQ. NASDAQ suggests that copies of preliminary proxy or other material concerning matters subject to the NASDAQ Voting Rights Policy set forth in IM-5640 be furnished to NASDAQ for review prior to formal filing
- Definitive. File definitive Proxy Statement and Form of Proxy with SEC no later than the date they are first sent, given or made available to stockholders
- E-Proxy Compliance.
- Compliance. Comply with e-proxy rules (which became mandatory starting January 1, 2009), which require companies to follow either:
- the “notice-only” method, by posting their proxy materials (Proxy Statement, form of Proxy and Annual Report to Stockholders) on a cookie-free website, mailing stockholders a Notice of Internet Availability explaining how they can access materials posted online, and sending full sets of materials to stockholders on request, or
- the “full set delivery” method, by mailing proxy materials and posting them on a cookie-free website, and informing stockholders of the internet availability by sending holders a Notice of Internet Availability (or including such notice in the proxy materials sent to them)
- Notice of Internet Availability. Effective March 29, 2010, the SEC has removed the requirement to include a boilerplate legend, and instead has given issuers and other soliciting persons additional flexibility in formatting and selecting the language to be used in the Notice of Internet Availability
- Compliance. Comply with e-proxy rules (which became mandatory starting January 1, 2009), which require companies to follow either:
- NASDAQ. Submit Proxy Statement to NASDAQ no later than mailing of Proxy Statement to stockholders (requirement satisfied by electronic filing of Proxy Statement with SEC)
- Change to Broker Voting Rules. In light of the amendment to NYSE Rule 452 to eliminate the ability of brokers holding “street name” shares to vote those shares in uncontested director elections absent specific voting instructions, and the amendment’s implications for quorums for annual meetings, consider whether to:
- increase solicitation efforts
- make sure to include at least one “routine” proposal (e.g., auditor ratification) on the proxy card so that broker non-votes or “no-instruction” comments will still be counted for quorum purposes
- Proxy Disclosure. Beginning in 2010, companies are required to, among other things:
- Risks. Make disclosures regarding extent of Board’s role in risk oversight and effect that risk oversight has on Board leadership structure; discuss overall employee compensation policies and practices if risks arising from such policies or practices are reasonably likely to have a material adverse effect
- Compensation. Make enhanced disclosures relating to compensation, compensation consultants and their potential conflicts of interest
- Director Nominees. Disclose specific experience, qualifications, attributes and skills that led to the conclusion that each director nominee should serve as a director, in light of the business and structure at filing time
- Extended Look-Backs. Make disclosures relating to public company directorships held during the past five years, legal proceeding disclosure from the past 10 years, and disclosure as to all fraud (including mail or wire fraud-related) proceedings
- Diversity. Make disclosures regarding whether (and, if so, how) Board or Nominating/Governance Committee considers diversity in identifying director nominees
- Board Leadership Structure. Make disclosures about Board leadership structure, such as whether same person serves as both Chairman and CEO, and if one person serves as both Chairman and CEO, whether there is a lead independent director and what specific role the such lead independent director plays in Board leadership, including why company determined that its leadership structure is appropriate given its specific characteristics or circumstances
- Posting. If at any time a change is made to Charter of most important Committees (including at least Audit, Compensation and Nominating/Governance Committees), post such change on website
- Proxy Statement. If current copy of Audit, Compensation or Nominating/ Governance Committee Charter is not so posted and available to holders on website (or Proxy Statement does not disclose whether current copy of such Charter is available on website and provide website address), attach such Committee Charter as appendix to Proxy Statement every third year (or sooner if such Charter is materially amended since beginning of last fiscal year) and identify in Proxy Statement the prior fiscal year’s proxy in which such Charter was last attached, if not that year
- Guidelines. If at any time a change is made to Board Charter/Corporate Governance Guidelines, post change on website (and disclose availability thereof on website in Annual Report on Form 10-K)
- Section 16 Filings. If at any time a Form 3, 4 or 5 is filed under Exchange Act Section 16(a) as to equity securities, unless there is no website, post such form on website by the end of the business day after the filing, and keep such filing accessible on the website for at least 12 months
- SEC Filings. If accelerated filer, make available free of charge on or through website Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Forms 8-K and amendments thereto as soon as reasonably practicable after filed or furnished (or if not so posted on website, disclose in Annual Report on Form 10-K that no posting made and why not (and whether will voluntarily provide electronic or paper copies of filings free of charge upon request))
- Initial Form. File initial NASDAQ Corporate Governance Certification Form
- Updated Form. File updated NASDAQ Corporate Governance Certification Form if there is change in status that results in prior certification no longer being accurate, including:
- Independent Sessions. Ceasing to have regularly scheduled meetings at which only independent directors are present
- Audit Committee. Failing to have at least three Audit Committee members (each of whom meets NASDAQ Audit Committee independence requirements) including at least one Audit Committee member who is a financial expert as required; failing to have formal written Audit Committee Charter specifying independence and “audit committee financial expert” requirements; or failing to have Audit Committee review and assess Charter’s adequacy on annual basis as required
- Code of Conduct. Failing to have required Code of Conduct or of such Code to be publicly available
- Nominations. Failing to have written charter or Board resolutions addressing nomination process and such related matters as may be required under federal securities laws
- Change in Exempt Status. Ceasing to be controlled company or foreign private issuer, for a company that indicated on its Certification that it was not subject to a requirement due to such status
- Notice of Non-Compliance. Provide NASDAQ with prompt notification after an executive officer becomes aware of material noncompliance with NASDAQ corporate governance requirements
- Letter to Listing Qualifications Analyst
- Charter Amendment. If at any time Articles/Certificate of Incorporation are amended (including by Board resolution or Certificate of Designations of Preferred Stock) or By-Laws are amended (including by Board resolution), file Current Report on Form 8-K within four business days
- If amendment to Articles/Certificate of Incorporation relates to change of company’s name, comply with NASDAQ fee and filing requirements relating thereto
- Waivers.
- Board Approval. Ensure that Board approves any waiver granted from Code of Conduct for directors or executive officers
- Form 8-K. If at any time waiver is granted from Code of Conduct, file Current Report on Form 8-K disclosing the waiver within four business days as required by NASDAQ rules (and as to any waiver that extends beyond one year, make at least annual disclosure thereof)
- Note that website posting in lieu of Form 8-K filing sufficient under SEC rules but not NASDAQ rules
- Posting/Disclosure.
- Posted. If current copy of Code of Ethics is posted on website, disclose in Annual Report on Form 10-K the website address and fact that Code of Ethics is so posted
- Not Posted. If current copy of Code of Ethics portion of Code of Conduct is not posted on website, either (a) file with SEC a copy of Code of Ethics that applies to principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as exhibit to Annual Report on Form 10-K or (b) undertake in Annual Report on Form 10-K to provide to any person without charge, upon request, a copy of such Code of Ethics and explain manner in which such request may be made
- Compensation Changes. If at any time compensation arrangements for one or more executive officers are entered into, adopted or changed (including entry into, adoption of or changes to agreements or plans, grants of or changes to equity-based compensation and adoption of or changes to incentive compensation performance targets), file Current Report on Form 8-K within four business days
- Annual Meeting Voting Results. File Current Report on Form 8-K within four days after Annual Meeting to disclose stockholder voting results
- Direct Registration Eligibility. Confirm that all securities listed or proposed to be listed on NASDAQ (other than book-entry only securities) are eligible for a direct registration system (DRS) operated by a securities depository
- XBRL. Plan to adopt XBRL, which was required for companies with over $5 billion in worldwide market capitalization for fiscal periods ending on or after June 15, 2009, and will become required for accelerated filers for their first reports after June 15, 2010 (and smaller companies and foreign companies that use IFRS for their first reports after June 15, 2011)
- Release of Material Information. Provide NASDAQ’s Market Watch Department with at least 10 minutes’ notification prior to releasing material information (if release is made outside of NASDAQ market hours, notification must be before 6:50 a.m. ET the next trading day), through the electronic disclosure submission system available at www.nasdaq.net (or in emergency situations via telephone or facsimile)
- Climate Change. Assess whether any enacted climate change legislation or regulation is reasonably likely to have a material effect on the financial condition or results of operations and whether significant physical effects of climate change may affect operations and results