BoardroomDirect®: Update on current board issues

March 2013
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BoardroomDirect® e-newsletter

At a glance

This issue of BoardroomDirect® addresses board oversight of capital projects, PCAOB’s release of PwC’s Part II of 2008 and 2009 inspection reports, SEC’s use of high-tech tools to stop fraud, a petition to shorten the beneficial ownership filing deadline, and the commission’s plans to issue a disclosure paper in the next couple of months.

Read and download prior issues of PwC’s e-newsletter BoardroomDirect series, delivering our perspective and insights on board-level issues. Each edition delivers an in-depth perspective on one major issue, as well as information on other important governance topics.

BoardroomDirect - Update on the current board issues: March 2013

Inside this edition

Issue in focus: Capital projects: Is your board doing enough?

A PwC analysis of 52 capital project missteps at public companies has revealed that after a public announcement of a capital project delay or shutdown, a majority of companies experience a steady decline in share price. By the three-month mark following the announcement, the decline in share price averages 15 percent. In the most severe case of the companies analyzed, one experienced an almost 90 percent decline in share price.

Large capital projects — with their multi-year timelines, changing requirements, and complex procurement issues — are inherently risky. They require diligent oversight from management and the board because of their impact on the company’s financial health. PwC research found that most major capital projects are likely to exceed their budgets by at least 50%.

Lack of board oversight can result in severe consequences. For example, in the power sector, regulators have rejected substantial portions of capital funding requests in situations where they believe management and the board could have exercised better oversight of costs, schedules, and risks.

Read more.

 

This month's headlines

Issues in brief

Audit committee issues

Resources, webcasts and events

BoardroomDirect - February 2013

Inside this edition

Issue in focus: Therapy for “deal fever”: An objective, disciplined due diligence process

In this post-financial crisis environment, the mergers & acquisitions market is extremely competitive as both corporate and private equity investors have capital to invest but fewer quality deals in the marketplace to invest in. A competitive deal environment drives up bids and puts pressure on transaction timelines, increasing the potential for deal bias and conflicting interests.

These risks can be exacerbated when public companies are involved. Buyers may pay significant control premiums over the trading price of the stock but may have limited access to the information necessary to assess the deal strategy, risks, and value. The limitations imposed on receiving non-public information can arise from a variety of factors, including the dynamics of the sale process, regulatory considerations, and commercial sensitivity. Since there are virtually no contractual protections if something goes wrong in public deals, buyers are essentially taking the business “as is.”

Read more.

 

This month's headlines

Issues in brief

Audit committee issues

Resources, webcasts and events

BoardroomDirect - January 2013

Inside this edition

Issue in focus: Lagging economy, active regulatory environment on boards’ minds

Understanding key issues that affect the company is a critical element of a director’s responsibility. As part of their oversight, directors should ask questions that help them get their arms around those issues in an ever-changing world and governance environment.

PwC’s 2013 Key questions for board and audit committee members focuses on areas including strategy and risk management, anti-corruption and compliance, financial reporting, information technology, and shareholder and stakeholder communications. Read more.

 

This month's headlines

Issues in brief

Audit committee issues

Resources, webcasts and events

BoardroomDirect - December 2012

Inside this edition

Issue in focus: IT oversight – Leveraging the CIO

Many company directors and their chief information officers (CIOs) are struggling to understand each other's information technology needs. Directors are often challenged by IT’s complexity and related technical language. CIOs aren't always sure which information the board wants or how to simplify the discussion. Read more.

This month's headlines

Issues in brief

Audit committee issues

Resources, webcasts and events

BoardroomDirect - November 2012

This month's headlines

Issues in brief

Audit committee issues

Resources, webcasts and events

BoardroomDirect - September 2012

More US public company boards are making climate change issues a regular part of their strategic risk oversight.

The 2012 Carbon Disclosure Project (CDP) S&P 500 Climate Change Report, co-written by PwC and the CDP and released on September 12, shows that 92% of the 2012 S&P 500 respondents reported board or executive-level oversight over sustainability issues including carbon reduction, compared to 86% in 2011. Read more.

This month's headlines

Issues in brief

Audit committee issues

Resources, webcasts and events

BoardroomDirect - August 2012

This issue of BoardroomDirect® from PwC covers audit firm inspection reports, board declassification, proxy issues, virtual shareholder meeting guidelines, and FASB inputs on disclosure frameworks and a revised asset impairments model. Read more.

This month's headlines

Issues in brief

Audit committee issues

Resources, webcasts and events

BoardroomDirect - July 2012

This issue of BoardroomDirect covers the fraud risk management expectation gap between internal audit and company stakeholders, which includes empowering the chief audit executive. Don Keller, a partner in PwC's Center for Board Governance, shares a tool internal audit can use to enhance its brand. Read more.

Also highlighted in this month's edition: latest on conflict minerals disclosure rules, the closing of an online shareholder voting platform, the SEC staff release of its long-awaited report on IFRS, and FASB's decision to remove the loss contingencies project from its agenda.

Issues in brief

Audit committee issues

Resources, webcasts and events

Boardroom Direct alert: US Supreme Court upholds Affordable Care Act

The US Supreme Court on June 28 upheld the 2010 Affordable Care Act (ACA). The Court ruled that a core provision of the healthcare law — the requirement that every American have health insurance — is constitutional since the Court considers it to be a tax.

The PwC publication Implications of the US Supreme Court ruling on healthcare briefly outlines the implications for hospitals and healthcare providers, insurers, pharmaceutical companies, and employers from every sector. In particular, directors may wish to focus on the "Path forward" sections that are relevant to their companies.

Also inside this edition:

BoardroomDirect - June 2012

Issue in focus: To achieve diversity, boards may have to shake things up

This issue of BoardroomDirect covers diversity, compensation clawbacks, say on pay, the JOBS Act, and FASB private company standard council. Read more.

Download a PDF version of BoardroomDirect -- June 2012

This month's headlines

BoardroomDirect - Spring 2012

Download BoardroomDirect: Update on current board issues - Spring 2012

Issue in focus: Political spending disclosure movement picking up steam

In a year in which a new president could be elected in November, and with the campaign process narrowing to two candidates (observers suggesting the likely Republican candidate will be Mitt Romney versus the incumbent Democrat President Obama), political spending disclosure shareholder proposals take on even more importance for companies that make political contributions.

Such shareholder proposals have been among the most popular this proxy season.

As of April 16, shareholders have filed 119 proxy proposals requiring corporate political spending disclosure.

Also inside this edition:

  • Issues in brief
    • SEC allows proxy access proposal exemptions
    • Companies embracing exclusive forum bylaw provisions
    • ISS adds review board
    • Conflict minerals disclosure rules delayed
    • Splitting Chair/CEO proposals still popular
    • Decision in merger case raises conflict of interest issues
  • Audit committee issues
    • Related parties, financial relationships concern PCAOB
    • Standard setters have different approaches on leases
  • Resources, webcasts and events

BoardroomDirect - Winter 2012

Download BoardroomDirect: Update on current board issues - Winter 2012

Isssue in focus: Proxy access private ordering -- Phase 1: What it means for directors

Shareholder proxy access as originally proposed may be dead, but the alternate version known as "private ordering" is something boards should be watching during the 2012 proxy season.

A number of institutional and individual investors have gotten an early start on the proxy season by filing shareholder proxy access proposals seeking to amend company bylaws to allow shareholder director nominations to be included in the annual proxy statement. While it is not surprising who filed the proposals, what is noteworthy is the number of companies targeted (16) thus far. Read more.

Also inside this edition:

  • Audit committee issues
    • Committee member concerns and year-end questions
    • Auditing standard on communications with audit committees 2.0
    • Concept release on auditor independence and audit firm rotation
    • Proposed ethics rules could impact audit committees
    • SEC delays IFRS decision
  • Issues in brief
    • Evaluating pay-for-performance alignment
    • Upcoming proxy season hot button issues
    • Social media, cloud computing and mobile devices
  • Resources, webcasts and events

BoardroomDirect - Fall 2011

Download BoardroomDirect: Update on current board issues - Fall 2011

Issue in focus: What works best in the boardroom

The economic crisis has been a catalyst for change in the governance landscape. The changes include new regulations enacted as a result of the Dodd-Frank Act, increased regulatory enforcement activities, and increased influence by shareholders and proxy advisory firms. How can directors measure their own effectiveness in this environment? This edition of BoardroomDirect highlights recommendations based on new research we performed and describe in our report, Board Effectiveness - What works best, 2nd edition. Read more.

Also inside this edition:

  • Issues in brie
    • Dodd-Frank: One year later
    • Proxy access: Potential for shareholder proposals
    • The lead director role: Improving effectiveness
  • Audit committee issues
    • PCAOB: Auditor reporting model and audit firm rotation concept releases
    • Focus on audit quality
    • FASB and IASB convergence projects: Revenue recognition, leasing and financial instruments
    • IFRS: SEC decision expected by year-end
  • Resources, webcasts, and events

BoardroomDirect - Summer 2011

Download BoardroomDirect: Update on current board issues - Summer 2011

Issue in focus: The 2011 proxy season - what should directors do now?

Not surprisingly, the most-watched shareholder votes this proxy season were the mandatory say on pay vote and the related say on frequency vote. Most companies received strong majority shareholder support for their say on pay vote, and there was a strong preference by shareholders for an annual voting policy. So, what should directors be thinking about now? Read more.

Also inside this edition:

  • Audit committee issues
    • PCAOB considers auditor rotation and new reporting model
    • IFRS: SEC staff paper explores one possible method to incorporate IFRS in the U.S.
    • Leases: FASB and IASB reverse earlier decision; now support a single lease approach
    • Revenue recognition: FASB and IASB re-expose proposal, make significant changes
  • Issues in brief
    • SEC finalizes whistleblower rules
    • A director's role in IT strategy and cyber-security risk
    • Emerging markets: Doing deals in China
  • Resources, webcasts, and events

BoardroomDirect Alert: Federal Appeals Court rejects proxy access rule

Download BoardroomDirect Alert: Federal Appeals Court rejects proxy access rule

On July 22, 2011, the U.S. Court of Appeals for the D.C. circuit decided to reject the SEC's proxy access rule that would require a company to include in its proxy statement a shareholder's, or group of shareholders', director nominees that meet certain requirements. This supplement to our BoardroomDirect quarterly update series alerts directors to this important development. Read more.

BoardroomDirect Alert: SEC issues final whistleblower rules

Download BoardroomDirect Alert: SEC issues final whistleblower rules

BoardroomDirect serves as a quarterly update designed to provide you with highlights of recent key developments affecting directors. However, we have also committed to notify you between quarters when important events unfold. The SEC's issuance of final whistleblower rules on May 25, 2011, is just such an event. As a director, you may be impacted by these rules, and we want to ensure you have the information you need. Read more.

BoardroomDirect — Spring 2011

Download BoardroomDirect: Update on current board issues — Spring 2011

Issue in focus: Understanding critical trends and the CEO's agenda

One of a director's most important obligations is to engage in meaningful strategy discussions with the CEO and other senior executives. These discussions should include understanding critical trends, their impact, and how they could create opportunities for growth. The results of PwC's 14th Annual Global CEO Survey can help directors gain perspective and understand what issues are on CEOs' agendas, which will enhance the quality of those discussions. Find out what over 1,200 business leaders had to say: read more.

Also inside this edition:

  • Audit committee issues
    • Convergence: FASB and IASB redeliberating priority projects;  timetable extended
    • PCAOB considering changes to the auditor's reporting model
    • Dodd-Frank proposed rule on disclosure of conflict minerals
    • Internal audit: A greater role in your organization?
  • Issues in brief
    • Trends in say on pay voting
    • SEC proposes rules on compensation committees and their advisors
    • SEC enforcement actions against directors
    • Federal spending and tax policy legislation
  • Resources, webcasts, and events

 

BoardroomDirect — Winter 2011

Download BoardroomDirect: Update on current board issues — Winter 2011

Issue in focus: SEC proposed whistleblower bounty program — Companies speak out

Companies, business organizations, academicians, auditors, lawyers, whistleblower attorneys, and others have expressed their views about the new whistleblower rule proposed by the SEC in November 2010 in response to the Dodd-Frank mandate for a whistleblower program. With the comment period behind us, the SEC has received nearly 1,200 comment letters, including 950 form letters. Find out what respondents had to say: read more.

Also inside this edition:

  • Audit committee issues
    • Year-end questions for audit committees
    • Convergence: FASB and IASB continue to modify strategy
    • Loss contingencies: FASB to reconsider fix
    • SEC / PCAOB: AICPA Conference update
    • European Commission: Green Paper on audit policy
  • Issues in brief
    • ISS: Say on pay in upcoming proxies and other guidance
    • Dodd-Frank for nonfinancial services companies
    • M&A: Drivers for 2011
    • Risk: Information security
  • Resources, webcasts, and events

BoardroomDirect — Fall 2010

Download BoardroomDirect: Update on current board issues — Fall 2010

Issue in focus: Proxy access rule delayed

Proxy access continues to be a contentious issue. After years of debate, the SEC adopted a proxy access rule on August 25, 2010. The Commissioners voted 3-2 along party lines to enact the rule, expressing strongly divergent views about its appropriateness. The rule was to be effective for the upcoming proxy season, with a three-year deferral period for smaller companies. Read more.

Also inside this edition:
  • Audit committee issues
  • Executive compensation: Limited provisions of Dodd-Frank effective this proxy season
  • M&A: Avoiding earnings surprises
  • Resources, webcasts, and events

BoardroomDirect — Summer 2010

Issue in focus: Financial regulatory reform

The Dodd-Frank Wall Street Reform and Consumer Protection Act is comprehensive in scope and will significantly reshape regulation of the financial markets with broad implications for all public companies, especially those in the financial services industry. Read more.

Also inside this edition:
  • Audit committee issues
  • Healthcare reform: What is, and what’s to come
  • Competitive advantage: Leveraging distinction
  • Risk management: The role of directors
  • Resources, webcasts and events
Download BoardroomDirect: Update on current board issues — Summer 2010

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