Corporate Governance

Shearman & Sterling LLP SEC Proposes Significant Changes to Share Repurchase Disclosure and Rule 10b5-1 Requirements and Disclosure | 36 COMMENT LETTERS Numerous comment letters were submitted to the SEC on both the Share Repurchase Proposal and the Rule 10b5-1 Proposal, in many cases reflecting significant opposition to some of the more extreme changes in the proposing releases. A summary of some of the key opposing comments is set forth below: Share Repurchase Proposal • Daily reporting of share repurchases on Form SR is burdensome, costly and not useful to investors and may cause information overload. • Daily reporting on Form SR, and the corresponding absence when it stops, may cause market speculation that issuers cannot respond to. • Daily reporting on Form SR will advantage frequent high-speed traders and hedge funds who are able to speculate on the meaning of the filings or reverse engineer the issuer's trading plan to the disadvantage of long-term investors. • Costs and burdens may push companies to abandon stock buybacks for dividends or other capital returns to the detriment of shareholders. • The SEC should consider aggregated monthly reporting in lieu of daily reporting or even monthly reporting based on a materiality threshold. • Proposed disclosures on objectives and rationale for stock repurchases is burdensome for issuers and likely will lead to boilerplate disclosures. Management's Discussion and Analysis sections already contain principles- based requirements with respect to disclosure on capital allocation, cash flows and liquidity. • Issuers should not be required to disclose operational information about buyback programs, which may contain sensitive competitive information. • Foreign private issuers should be exempt and subject to home country disclosure requirements. • A longer phase in period is needed to allow issuers to adjust programs and prepare for and accommodate new disclosures. Rule 10b5-1 Proposal • The cooling-off period for issuers is unnecessary because of different motivations and execution than insiders who are selling. A number of commenters said it should be eliminated entirely. • The cooling-off period for issuers would adversely affect stock buybacks, keeping issuers out of the market for large portions of the year and increasing price volatility. • The 120-day cooling-off period for insiders is too long and seems unrelated to preventing the abuses mentioned in the release. Comment letters suggested a variety of solutions, such as 30 days in all cases or for plans implemented shortly after earnings announcements. Commenters also suggested exceptions for benefit plans and estate planning transactions. • Commenters suggested that it was inappropriate to treat any modification or amendment as a termination requiring a new cooling-off period. Instead, only material modifications should be considered terminations. • The restriction on overlapping plans is overly broad and doesn't allow for harmless but necessary overlaps such as sales to cover tax withholding obligations for vesting events or implementing a new buyback program at the end of a quarter. • The limitation on single trade plans to one each year is vague and ambiguous. It needs to be clarified to avoid preventing trades or plans executed in the absence of MNPI and that are not intended to rely on Rule 10b5-1. • Disclosures required about 10b5-1 plans should be clarified and limited to Section 16 officers and directors. Disclosures should not include pricing or share amounts that could allow front- running or cause market reactions. Termination disclosures should not be required because terminations may be related to sensitive confidential corporate events. • Disclosures about the timing of option and other equity grants in relation to SEC filings are gratuitous and redundant given the existing proxy disclosures and near real-time filings by executives and directors under Section 16.

• Cover