Table of Contents
I. Who Manages the D&O Questionnaire Process
- What is the D&O Questionnaire? 1-3
- Who Prepares (& Updates) the Questionnaire? 1-3
- No Need for Director Involvement in Preparing Questionnaire Form 1-3
II. What is the D&O Questionnaire Process Timeline
- When are Questionnaires Typically Distributed? 1-3
- Distribution of Last Year’s Responses to Insiders 1-4
- When are Questionnaires Typically Returned? 1-4
- Setting Up Interviews to Review Responses Not Realistic 1-4
- Drafting Disclosures While Questionnaires Being Completed 1-5
- How Should Questionnaire Responses Be Reviewed? 1-5
- How to Handle Incomplete Questionnaires 1-5
- Circulation of Certain Responses to Directors 1-6
III. Who Receives D&O Questionnaires
- Which Current Officers Receive Questionnaires? 1-6
- Which Former Officers Receive Questionnaires? 1-7
- Which Current Directors or New Nominees Receive Questionnaires? 1-8
- Should Potential Director Nominees Receive Questionnaires? 1-8
- Should Former Directors & Current Directors Not Standing for Re-Election Receive Questionnaires? 1-10
- Should 5% Shareholders Receive Questionnaires? 1-10
IV. How to Send D&O Questionnaires—& Receive Responses
- How Should Questionnaires Be Sent? 1-11
- Should Questionnaires Be Sent to a Director’s Assistant? 1-11
- Should Questionnaires Be Sent as Online Survey or iPad App? 1-12
- How Should Questionnaire Responses Be Returned? 1-13
V. What Should Be Included in D&O Questionnaire Forms
a. Questionnaire Philosophy 1-13
- Making Questionnaire User-Friendly 1-13
- Try to Minimize Non-Responses 1-14
- Provide Ample Room to Respond to Questions 1-14
- Whether to Pre-Populate D&O Questionnaires 1-14
- Asking More Than Just Proxy Disclosure Items: Soft Relationships 1-15
- Carefully Consider Any “Demographics” Questions 1-15
b. Applicable to Executive Officers, Directors & New Director Nominees 1-16
- Obtain Biographical Information 1-16
- Obtain Legal Proceedings Information 1-17
- Obtain Beneficial Ownership Information 1-17
- Obtain Change-in-Control Information 1-17
- Obtain Hedging Information 1-17
- Obtain Section 16 Reporting Information 1-19
- Obtain Related Person Transaction Information 1-19
- Obtaining Related Person Transaction Information More Frequently 1-22
- Obtain Related Person Information for Auditing Standard #18 Purposes 1-22
- Auditing Standard #18: Auditors May Require Quarterly Information 1-23
- Auditors Don’t Typically Review D&O Questionnaire 1-24
- Consider Whether to Obtain Conflicts of Interest Information (Even Though Collected Throughout Year) 1-24
- Obtain Compensation Committee Interlocks Information 1-25
- Obtain Compensation Information 1-26
- Obtain FCPA Information 1-26
- Whether to Obtain Competition-Related Information 1-27
c. Applicable Only to Non-Executive Directors & New Director Nominees 1-28
- Obtain Independence Information 1-28
- Obtain Audit Committee Related Information 1-28
- Obtain Compensation Committee Related Information 1-29
VI. Whether to Conduct Diligence on D&O Questionnaire Responses
- Diligence Beyond D&O Questionnaire Limited 1-30
- Director Nominee Background Verification 1-30
- Process for Vetting Officers Asked to Serve on Other Boards 1-30
VII. What are Regulatory Consequences for Misleading D&O Questionnaire Responses
- Companies Should Use Questionnaires as Part of Disclosure Controls & Procedures 1-31
- Directors & Officers Can Be Charged for Failure to Respond Accurately 1-31
VIII. Retention Periods for D&O Questionnaire Responses
Appendix A—Sample Annotated D&O Questionnaire
