SEC Amends Disclosure Rules for Executive Compensation and Corporate Governance


The U.S. Securities and Exchange Commission (SEC) recently adopted amendments to its rules affecting disclosure of executive compensation and corporate governance matters.

Summary of Key Changes
The executive compensation amendments require disclosure of:

  • The relationship between compensation practices and risk management, if the risks arising from compensation practices are reasonably likely to have a material adverse effect on the company
  • Stock and option awards at the aggregate grant date fair value in the fiscal year granted, rather than the dollar amount recognized each fiscal year for financial statement purposes
  • Fees paid to compensation consultants and their affiliates in certain circumstances

The corporate governance amendments require disclosure of:

  • The qualifications of directors and nominees, including directorships held by directors and nominees in the past five years, and legal actions in the past ten years involving directors, nominees and executive officers
  • How diversity is considered in the director nomination process
  • The board’s leadership structure (e.g., separation of chairman and CEO roles)
  • The board’s role in the oversight of risk
  • Shareholder voting results on Form 8-K within four business days after the vote

Effective Dates
The amendments will generally apply to disclosure for the 2010 proxy season. If a company’s fiscal year ends on or after December 20, 2009, its Form 10-K and proxy statement filed on or after February 28, 2010 must meet the new disclosure requirements.

To read the full text of the alert click on the PDF linked below. For more information, please contact any of the following members of the Securities/Capital Markets practice groups.

Bruce Newsome

Rick A. Werner


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