SEC Proposes Rule Amendments to Executive Compensation and Corporate Governance Disclosure

08/07/2009

On July 10, 2009, the U.S. Securities and Exchange Commission (the “SEC”) proposed a series of amendments to its executive compensation and corporate governance disclosure rules in Regulation S-K. See Release Nos. 33-9052, 34-60280, and IC-28817.1

Comments on the proposed rules are due September 15, 2009. If the proposed amendments are adopted, the SEC anticipates that they will be effective for the 2010 proxy season.

Executive Summary

The proposed amendments would:

  • add a new section to Compensation Discussion & Analysis (“CD&A”) requiring disclosure about a company’s overall compensation policies and their impact on risk taking;
  • require the reporting of stock and option awards at grant date fair value, rather than the dollar amount recognized for financial reporting purposes for the fiscal year;
  • require disclosure about the fees paid to, and additional services provided by, compensation consultants and their affiliates when they play any role in determining or recommending the amount or form of executive and director compensation, if they also provide other services to the company;
  • expand the required disclosure regarding the qualifications of directors and nominees, past directorships held by directors and nominees, and lengthen from five to ten years the time frame for disclosure of legal proceedings involving directors, nominees and executive officers;
  • require disclosure of a company’s leadership structure and why the company believes it is the best structure for it;
  • require disclosure about the board’s role in the company’s risk management process; and
  • require that results of shareholder votes be reported within four business days on Form 8-K, rather than in the next Form 10-Q or Form 10-K filing.

The proposing release also includes certain proposed amendments to the SEC’s proxy rules promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), which are not discussed in this Corporate/Securities Alert.

1 This alert discusses the proposed amendments as presently described in the SEC’s release, though the amendments are still subject to change.

To continue reading the alert, please click on the linked PDF below.

For more information concerning this issue, please contact one of the attorneys listed at the end of the alert.

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