Corporate Practice Series Portfolio No. 12-5th, Annual Meeting of Shareholders, describes the process of planning and conducting an annual shareholders' meeting for a public corporation. After discussing the general statutory basis for the meeting, the portfolio explains the legal requirements for an annual meeting and discusses various practical and logistical issues to consider before, during, and after the meeting. The portfolio also examines in depth the federal proxy rules, describing the information required to be disclosed, the filing requirements, the procedural rules on shareholder proposals, and the procedural and substantive grounds for excluding shareholder proposals from the proxy materials. The portfolio also discusses the role of proxy solicitors and other third parties who are involved with annual meetings.

Portfolio 12-5th: The Annual Meeting of Shareholders

I. Introduction
    A. In General
    B. About This Portfolio
    C. Practice Notes

II. Legal Overview
    A. State Corporate Law
    B. Federal Securities Law
    C. Stock Exchange Rules
    D. Corporate Charter and Bylaws
    E. Corporate Governance Guidelines
    F. The Dodd-Frank Wall Street Reform and Consumer Protection Act
         1. “Say-on-pay”: Nonbinding shareholder votes on executive compensation
         2. Nonbinding shareholder votes on “golden parachute” compensation
         3. Compensation committee independence
         4. Independence and role of compensation consultants and advisers
         5. Executive compensation disclosures
         6. Compensation clawback
         7. Disclosure of employee and director hedging
         8. Broker voting of securities
         9. Proxy access
         10. Disclosures regarding board chairperson and CEO positions

III. Federal Proxy Rules Applicable to Annual Meetings of Shareholders
    A. Application of the Proxy Rules
         1. Background
         2. Solicitation
              a. Exempt solicitations
              b. Actions excluded from the definition of solicitation
         3. Solicitation before furnishing a proxy statement
         4. Electronic shareholder forums
    B. The Proxy Statement
         1. Notice of the meeting
         2. Voting information
         3. Information about directors, director nominees, and executive officers
         4. E-proxy related disclosures
         5. SEC corporate governance disclosures
              a. Director independence
              b. Board meetings and committees; annual meeting attendance
              c. Nominating committee
              d. Audit committee
              e. Code of ethics
              f. Compensation committee
              g. Shareholder communications
              h. Additional governance disclosures
                   (1). Disclosure of leadership structure
                   (2). Disclosure of the board's role in the risk oversight
                   (3). Independence and role of compensation consultants and advisers
                   (4). Disclosure of employee and director hedging
         6. Stock exchange corporate governance rules
              a. NYSE corporate governance disclosures
              b. Nasdaq corporate governance disclosures
         7. Executive officer and director compensation disclosure
              a. Introduction
              b. Compensation committee report
              c. Compensation Discussion and Analysis
              d. Additional compensation-related disclosures
                   (1). Narrative disclosures concerning risk management
                   (2). New disclosures concerning compensation consultants
              e. Summary Compensation Table
                   (1). Salary and bonus
                   (2). Stock awards and option awards
                   (3). Non-equity incentive plan compensation
                   (4). Change in pension value and nonqualified deferred compensation earnings
                   (5). All other compensation (including perquisites)
                   (6). Total
              f. Grants of Plan-Based Awards Table
              g. Narrative disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
              h. Outstanding Equity Awards at Fiscal Year-End Table
              i. Option Exercises and Stock Vested Table
              j. Pension Benefits Table
              k. Nonqualified Deferred Compensation Table
              l. Potential payments upon termination or change-in-control
              m. Compensation of directors
              n. Information about compensation plans
              o. Processes and procedures for the consideration and determination of executive officer and director compensation
          8. Say-on-pay items and related disclosures
              a. Shareholder advisory (or “say-on-pay”) vote
              b. Shareholder approval of the frequency of say-on-pay voting
              c. Shareholder approval and disclosure of golden parachute arrangements
         9. Beneficial ownership information
         10. Related person transaction disclosure
         11. Information concerning independent public accountants and ratification of auditors
         12. Audit committee report
         13. Section 16 disclosure
         14. Disclosure of shareholder proposal deadlines
    C. Form of Proxy
    D. The Annual Report
    E. Filing of Proxy Material
         1. Preliminary proxy material filing requirements
         2. Definitive proxy material filing requirements
         3. EDGAR
    F. Distribution of Proxy Material to Shareholders
         1. Background of e-proxy rules
         2. Notice and access option
         3. Adoption of e-proxy rules
              a. Notice only option
              b. Full set delivery option
         4. Amendments to the e-proxy rules
         5. Householding

IV. Shareholder Proposals
    A. Introduction
    B. Procedural Rules
    C. Substantive Grounds for Omission of Shareholder Proposals
         1. Not a proper subject for action by security holders under state law
         2. Proposals in violation of law
         3. Proposals in violation of the proxy rules
         4. Personal grievances or proposals to further a personal interest
         5. Matters related to less than 5 percent of the corporation's business
         6. Matters beyond the corporation's power or authority
         7. Matters relating to ordinary business operations
              a. ‘Cracker Barrel'
              b. Executive compensation
              c. Environmental and health issues
         8. Proposals relating to elections to office
         9. Proposals that conflict with management's proposal
         10. Proposals substantially implemented
         11. Duplicative proposals
         12. Proposals dealing with re-submissions
         13. Specific dividend amounts
    D. Responses to Shareholder Proposals, Including SEC No-Action Letters
    E. Proxy Access Shareholder Proposals

V. Working with Proxy Solicitors and Other Third-Party Actors
    A. Overview
    B. Proxy Advisory Services
    C. Proxy Solicitors
         1. Determining whether to engage the services of a proxy solicitor
              a. Routine vs. non-routine matters
              b. Management-sponsored anti-takeover provision-related proposals
              c. Shareholder proposals
         2. Types of services provided by proxy solicitors
              a. Shareholder composition and analysis
              b. Strategic consulting
              c. Vote projection
         3. The role of the proxy solicitor in the solicitation process
              a. Soliciting registered holders
              b. Soliciting institutional holders
                   (1). Internal voting guidelines
                   (2). A note on the influence of third-party voting advisory firms
              c. Soliciting retail holders
                   (1). NOBO vs. OBO holders
                   (2). Telephone/Internet voting
    D. Third-Party Resources for E-Proxy Compliance

VI. Planning and Preparing for the Meeting
    A. Timetable and Responsibility Checklist
    B. Legal Considerations
         1. Shareholder proposals and timing considerations
         2. Meeting date, record date, and notice of meeting
         3. Coordination with plan administrators and other third parties
         4. Directors' and officers' questionnaires
         5. Due diligence regarding proxy material and annual report information
         6. Filing of proxy material
    C. Logistical Considerations
         1. Location
         2. Physical arrangements
         3. Attendance
         4. Security
    D. Briefing Books and Meeting Script

VII. The Meeting
    A. Introduction
    B. Pre-Meeting Inspection
    C. Procedural Rules for the Conduct of the Meeting
    D. Transaction of Business at the Meeting
    E. Responding to Unexpected Proposals, Disruptive Shareholders, and Other Extraordinary Events
    F. Business Update and Shareholder Questions
    G. Report on the Voting

VIII. Post-Meeting Activities

IX. The Continuing Evolution of the Annual Meeting

Portfolio 12-5th: The Annual Meeting of Shareholders

Wks. 1 Sample Charter/Bylaw Provisions Relating to Meetings of Shareholders

Wks. 2 Notice and Proxy Statement

Wks. 3 Sample Timetable and Responsibility Checklist

Wks. 4 Sample Proxy Card (Notice and Access)

Wks. 5 Sample Proxy Card (Full Set Delivery)

Wks. 6 Sample of Notice of Internet Availability (Notice and Access Option)

Wks. 7 Sample Affidavit of Mailing

Wks. 8 Sample Directors' and Officers' Questionnaire (annotated for use by NYSE or NASDAQ reporting companies)

Wks. 9 Sample Agenda for Annual Meeting of Shareholders

Wks. 10 Sample Script for Annual Meeting of Shareholders

Wks. 11 Sample Shareholders' Questions

Wks. 12 Sample Rules of Procedure

Wks. 13 Sample Documents for Appointment, Oath, and Report of Inspector of Elections

Wks. 13 Sample Documents for Appointment, Oath and Report of Inspector of Elections

Wks. 14 Sample Annual Meeting Ballot

Wks. 15 Sample Minutes of Annual Meeting of Shareholders

Wks. 16 Regulation S-K—Item 401, Directors Executive, Officers, Promoters and Control Persons

Wks. 16a Executive Compensation Shareholder Proposal

Wks. 17 Regulation S-K—Item 402, Executive Compensation

Wks. 18 Regulation S-K—Item 404, Transactions with Related Persons, Promoters and Certain Control Persons

Wks. 19 Regulation S-K—Item 407, Corporate Governance

Wks. 20 Excerpts from New York Stock Exchange Listed Company Manual and Related Frequently Asked Questions

Wks. 21 NASDAQ Listing Rule Section 5600, Corporate Governance Requirements

Wks. 22 Sample 1934 Act Disclosure of Voting Results

Wks. 23 Excerpt from Exchange Act Release No. 56,135 (July 26, 2007), Shareholder Choice Regarding Proxy Materials

Wks. 24 Shareholder Proposal on Advisory Vote on Executive Compensation (“Say on Pay”)

Wks. 25 [Reserved]

Wks. 26 Shareholder Proposal on Greenhouse Gas Emissions

Wks. 27 Shareholder Proposal on Health Care Reform

Wks. 28 Shareholder Proposals: 17 C.F.R. § 240.14a-8

Darren C. Baker
Schiff Hardin LLP
Chicago, Illinois

Richard T. Miller
Schiff Hardin LLP
Chicago, Illinois

Alexander B. Young
Schiff Hardin LLP
Chicago, Illinois