Release No. 33-6486

Release No. 34-20220

Release No. 35-23069

Release No. IC-13529

September 23, 1983

Disclosure of Executive Compensation

ACTION: Final Rules

SUMMARY: The Commission today announced the adoption of an amended and retitled Item of Regulation S-K, Item 402, which provides for uniform disclosure of the compensation paid to certain executive officers and directors, and the adoption of conforming amendments. The Commission also announced the conditional adoption of coordinating amendments to Form S-18 17 CFR 239.28, a simplified registration statement form under the Securities Act of 1933. These actions are being taken as part of the Commissions Proxy Review Program, which includes a comprehensive reexamination of the disclosure requirements and procedural provisions relating to the solicitation of proxies. The adoption of amended Item 402 is intended to simplify the current disclosure requirements, reduce compliance burdens and allow registrants greater flexibility in selecting a presentation format while providing investors and security holders with more comprehensible information concerning executive compensation. In addition, the Commission today announced the rescission of four interpretive releases issued pursuant to old Item 402.

EFFECTIVE DATE: Revised Item 402 and the conforming amendments, including the conditional amendments to Form S-18, are effective for all documents filed on or after December 31, 1983. A registrant may comply with these provisions prior to that date, but if it elects to do so, it must comply with all applicable provisions and continue to do so in any subsequent filings.

Interested persons will have until (30 days from publication in the Federal Register) to comment on the coordinating amendments to Form S-18, after which the Commission will review the comments and make such changes, if any, that it deems necessary and appropriate.

If no material changes are necessitated by the comments, the changes to Form S-18 will become final for all registration statements filed on Form S-18 on or after December 31, 1983.

ADDRESSES: Comments on the conditional adoption of coordinating amendments to Form S-18 should be submitted in triplicate to George A. Fitzsimmons, Secretary, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549. All comment letters should refer to File No. S7-958. All comments received will be available for public inspection and copying in the Commission Public Reference Room, 450 5th Street, N.W., Washington, D.C. 20549.

FOR FURTHER INFORMATION CONTACT: With respect to Item 402, prior to the effective date, contact Elliot M. Pinta (202) 272-2589, Office of Disclosure Policy, Division of Corporation Finance, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549. After the effective date, Ann Glickman (202) 272-2573, Office of Chief Counsel, Division of Corporation Finance, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549. With respect to Form S-18, contact H. Steven Holtzman, Special Counsel, (202) 272-2644), Office of Small Business Policy, Division of Corporation Finance, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission today announced the adoption of amendments to Item 402 of Regulation S-K (17 CFR 229.402) containing uniform requirements for the disclosure of registration statements, periodic reports and proxy statements under the Securities Act of 1933 15 U.S.C. 77a et seq. (1976 and Supp. IV 1980) ("Securities Act") and the Securities Exchange Act of 1934 15 U.S.C. 78a et. seq. (1976 and Supp. IV 1980) ("Exchange Act") of the compensation paid to the registrants executive officers and directors. In addition, the Commission adopted conforming amendments to Items 9, 10 and 11 of Schedule 14A (17 CFR 240.14a-101) and revised the following rules and forms to reflect the change from the term "management remuneration" to "executive compensation": Item 404 of Regulation S-K; Securities Act Rules 601 and 610(a); Item 11(k) of Form S-1; Items 3 and 22 of Form S-11; Exchange Act Rules 12(g)(3) and 14a-101; Item 6 to Form 10; Item 11 to Form 20-6; Item 11 of Form 10-K; Investment Company Act Rule 30(d); Items 9, 10 and 11 of Form N-1; Items 28, 36, 37 and 38 of Form N-8B-4; Items 10 and 11 of Form N-1R 17 CFR §229.404, 229.601, 230.610a, 239.11, 239.18, 240.12g3-2, 240.14a-101, 240.210, 249.220(6), 249.310, 270.30(d)-1, 273.11, 274.14, 274.101.

The Commission also announced the conditional adoption of coordinating amendments to Form S-18 17 CFR 239.28, a simplified registration Form under the Securities Act designed for initial offerings by smaller issuers. The amendments revise Item 20 of Form S-18 to simplify and streamline the disclosure of compensation to executive officers and directors in a manner consistent with the changes to Item 402 of Regulation S-K.

The amendments to Item 402 adopted today relate to proposals that were published for comment in January 1983, (the "Proposing Release") as the fourth Commission rulemaking initiative pursuant to its Proxy Review Program. ¹ The comments received on the proposals generally were favorable, and the Item and accompanying amendments are being adopted substantially as proposed. Several changes have been made in the proposal, however, including: (1) retitling the Item; (2) altering the composition of the disclosure group; and (3) retaining the current requirement to disclose the net value realized on the exercise of stock options and stock appreciation rights ("SARs"). Additional minor modifications have been made pursuant to the comments received.

This release focuses primarily on the changes made from the proposal and the basis for those changes. As background for this discussion, the release briefly recounts the development of revised Item 402. Readers are directed to the text of the amendments and to the Proposing Release for a more complete statement of the history of Item 402 and the proposed amendments.

Table of Contents

I. Background

Current Item 402 has been faulted as being overly complex and inordinately detailed. In addition, while the detail of the current provision was designed to alleviate many of the interpretive issues that had arisen under earlier provisions, numerous interpretive questions continued to arise. ² Consequently, the Commission determined that a substantially new Item 402, rather than minor adjustments to existing Item 402, was necessary to achieve the goals of improving the effectiveness of executive compensation disclosure and reducing the burdens of preparation New Item 402 was designed to implement these objectives by focusing on compensation actually paid or vested and eliminating the disclosure of contingent compensation; by limiting the compensation table, for the most part, to cash paid or distributed, as contrasted to all amounts expensed for financial reporting purposes; by allowing registrants to disclose other compensation and compensation paid pursuant to plans in a narrative, tabular or other format; and by focusing on those members of management who perform policy making functions for the registrant.

Proposed Item 402 was divided into five paragraphs: (a) disclosure, in tabular form, of cash amounts paid or earned during the last fiscal year; (b) disclosure of compensation paid or to be paid pursuant to various plans which would be made in connection with the description of such plans; (c) disclosure of other compensation not covered by proposed paragraphs (a) or (b), such as perquisites, which would be disclosed in a narrative, tabular or other format subject to a designated threshold amount; (d) disclosure of standard and other arrangements for the compensation of directors; and (e) disclosure of compensation plans or arrangements relating to termination of employment or a change in control of the registrant.

II. Overview of Comments

The proposals generated a substantial amount of commentary. ³ Overall, the commentators supported the Commissions efforts to simplify disclosure requirements relating to executive compensation, while, at the same time, providing investors and security holders with meaningful information relating to the registrants executive compensation practices.

The commentators were virtually unanimous in their approval of several initiatives contained in the proposal, including: the focus on compensation actually received or vested; the simplification of the cash compensation table; and the increased flexibility afforded registrants in disclosing amounts paid pursuant to plans.

Other initiatives garnering substantial commentator support included: limiting the disclosure group to "executive officers"; rescinding currently required disclosure of interest paid on deferred compensation and of dividends awarded on restricted stock; simplifying the disclosure of stock options and SARs; establishing a disclosure threshold for perquisites; and retaining a separate provision for disclosure of change of control arrangements.

Many of the commentators also suggested ways in which they believed the proposals could be further improved or modified. Some of these suggestions were offered in response to Commission requests for specific comment. These suggestions and specific comments focused primarily on four areas: (1) the category and number of individuals with respect to whom disclosure of compensation is appropriate; (2) the scope of disclosure relating to stock options and SARs; (3) the valuation standard for perquisites; and (4) the provisions regarding change of control disclosure. Several of the specific comments and suggestions mentioned above, as well as others, are reflected in Item 402 as adopted. These comments, as well as others not reflected in Item 402, are discussed below.

III. Discussion of Item 402

The Commission has changed the title of new Item 402, replacing the title "Management Remuneration" with "Executive Compensation." This change recognizes that the phrase Executive Compensation is currently more widely employed and recognized by registrants, shareholders and investors than is the phrase used in the existing title.

A. Item 402(a)--Cash Compensation

Proposed paragraph (a) of Item 402, which sets forth the scope and format for disclosure of cash compensation paid to specified individuals and to a designated group, has been adopted, in most respects, as proposed, but with the modifications discussed below.

The Item retains the provision limiting to five the number of individuals with respect to whom individual disclosure is required. While the proposal did not alter the current provisions regarding the number or description of the individuals to be specifically identified in the Cash Compensation Table, the Proposing Release did contain a specific request for comments regarding the executive officers and directors with respect to whom individual disclosure is appropriate. The Proposing Release posited four alternative standards upon which an individual disclosure requirement could be based: (1) individuals holding certain specified positions; (2) individuals performing certain designated functions; (3) management directors only; or (4) a straight numerical approach. A variety of responses were received, several of which combined two or more of the suggested approaches. The greatest number of commentators favored employing a straight numerical standard and, of these, the majority favored retention of five as the appropriate level for individual disclosure. The Commission has determined to retain that standard inasmuch as it has been the subject of considerable administrative experience and commentators have neither expressed great dissatisfaction with the standard nor presented a clearly superior alternative.

With respect to those persons who must be included in the disclosure group, current Item 402(a) requires disclosure of the aggregate compensation paid to a group comprising all officers and directors of the registrant and its subsidiaries. Proposed Item 402(a) limited the groups composition to only executive officers and directors. The commentators generally agreed with limiting the officers included in the group to executive officers. They stated that this would provide a better indication of the cost of a registrants top management than does the current Items requirements ⁴ and that this would be consistent with the requirement for individual disclosure, which is already so limited.

Several commentators suggested further that directors be deleted from the group inasmuch as their level of compensation does not, under normal circumstances, comprise a significant percentage of overall executive compensation. These commentators suggested that including directors in the group could give a misleading picture of the registrants real cost of management. The Commission agrees and has limited group disclosure to all executive officers. ⁵ The Commission believes that deletion of directors from the paragraph (a)(1)(ii) disclosure group will provide shareholders and investors with more meaningful information regarding the cost of management. Moreover, information with respect to the compensation paid directors will continue to be required pursuant to paragraph (d) of Item 402. The Commission also notes that, in almost all instances, management directors will come within the definition of the term executive officer, so that their compensation will be disclosed pursuant to paragraph (a)(1)(i).

Second, proposed Item 402(a) would have required identification in the Cash Compensation Table of "all capacities" served by the named individuals. Several commentators suggested that this requirement was over-inclusive and likely to result in confusing and immaterial data. The Commission agrees and has modified Item 402(a) to require enumeration of only those principal capacities served by the named individual. The Commission emphasizes, that while only the principal capacities served need be listed in the Cash Compensation Table, the calculation of cash compensation received requires aggregation of amounts paid for services rendered in all capacities.

Finally, in response to commentator suggestion, the Commission has amended Instruction 1 to paragraph (a) to allow registrants to separately identify salaries, bonuses, deferred compensation and other forms of cash compensation if they so choose. The Commission believes that according greater flexibility in presentation of this information will benefit registrants, shareholders and investors alike.

B. Item 402(b)--Compensation Pursuant to Plans

Paragraph (b) requires disclosure regarding all plans pursuant to which the registrant has paid or proposes to pay in the future any form of compensation to the named individuals and group specified in paragraph (a) of the Item. The proposal received a generally favorable response from the commentators and is adopted with the modifications discussed below.

First, the Item was changed to eliminate any problem relating to double counting--where compensation is reported in one year as vested pursuant to a plan and reported again in a subsequent year when it is actually paid or distributed. ⁶ Specifically, the language of paragraph (b)(1)(vi) is clarified to provide that amounts previously disclosed pursuant to paragraph (b)(1)(vii) or a predecessor provision as having been accrued or vested need not be disclosed again upon distribution.

Second, the Commission requested specific comment regarding the proposals to eliminate disclosure of interest paid on deferred compensation and dividends awarded on restricted stock. The commentators agreed that no disclosure should be required of either item, asserting that such amounts are essentially non-compensatory, do not represent a real cost of management, and are no different from interest or dividends received from non-registrant sources. The Commission agrees and has included a new instruction, General Instruction 3, to exclude disclosure of this data, subject to the certain conditions. With respect to interest on deferred compensation, the Instruction states that such amounts may be excluded from disclosure provided that the rate of interest accrued or provided for by a deferred compensation plan does not exceed prevailing market interest rates at the time of accrual or at the time the plan pursuant to which the compensation is deferred was established.

With respect to dividends on restricted stock, the Instruction provides that such dividends may be excluded provided the stock is not of a particular class available only to certain employees, such as executive officers, on a discriminatory basis.

Third, the Commission has not adopted the proposal to modify the benefit computation basis for those deferred benefit and actuarial plans within paragraph (b)(2) of the Item. The current Item requires a benefit computation basis of "estimated credited years of service". The Commission proposed to modify that to require a benefit calculation as of "normal retirement age". This modification was proposed in the belief that this calculation would be less burdensome for registrants. The commentator responses, however, indicated that the modification would produce no real efficiencies and, indeed, may present new interpretive problems. In view of this, the Commission determined not to adopt the proposal, and the Item retains the current benefit computation basis of "estimated credited years of service".

Fourth, the Commission has adopted a modification of its proposal to limit the scope of disclosure regarding stock options and SARs. The Commission has adopted the proposal deleting the requirements to disclose the aggregate amount of securities underlying all unexercised options or SARs and the potential (unrealized) value of such unexercised options or rights. At the same time, the Commission has retained the requirement to disclose the net value realized from the exercise of stock options and SARs during the fiscal year.

The commentators, generally supportive of the Commissions efforts to simplify disclosure regarding stock options and SARs, were divided with respect to the need to retain the requirement to disclose the net value realized on the exercise of such options or rights. Those favoring deletion of that requirement asserted that such amounts are unrelated to the performance of services to the registrant. Conversely, commentators in favor of retaining disclosure of this information noted that such gains often comprise a material part of an individuals overall compensation and the stockholders and investors have a legitimate interest in disclosure of that information. In addition, a number of these commentators asserted that the exercise of an option or SAR may also involve a compensation cost to the registrant.

The Commission has decided to retain the requirement to disclose the net value realized upon the exercise of stock options and SARs during the preceding fiscal year. The Commission has concluded that in deleting the currently required disclosure of the aggregate amount of securities underlying all unexercised options or SARs and the potential unrealized value of such unexercised options or rights, the revised Item significantly improves the clarity of disclosure provided and reduces the compliance burden on registrants. In view of these deletions, the Commission has concluded that disclosure of net value realized continues to be of value to investors and shareholders.

Finally, the adopted Item includes, as proposed, non-discriminatory relocation plans among those non-discriminatory plans specifically exempted from disclosure under paragraph (b). Several commentators suggested that the list be expanded to exclude generically all but those plans heavily weighted in favor of management. The Commission does not believe it would be appropriate to adopt such a broad exemption at this time.

C. Paragraph (c)--Other Compensation

Paragraph (c), effecting certain changes from the current disclosure requirements regarding non-cash compensation, was favorably received by the majority of commentators. Several commentators, noting that the proposal did not contain instructions for valuing compensation within this paragraph, requested that the Commission prescribe a specific valuation method. ⁷ The Commission has added an instruction to paragraph (c) specifying that the registrants aggregate incremental cost is the valuation method to be employed. The Commission believes this valuation standard to be appropriate in view of the Items focus on disclosure of the cost of management to registrants. At the same time, the Commission has adopted a disclosure threshold of 10% of the compensation reported in the Cash Compensation Table or $25,000, whichever is less. This threshold is identical to the existing Items trigger for footnote disclosure of personal benefits. The Commission believes that this threshold, in combination with an aggregate incremental cost valuation standard, relieves registrants of unnecessary compliance burdens while providing shareholders and investors with meaningful information regarding personal benefits.

D. Paragraph (d)--Compensation of Directors

Proposed paragraph (d), derived from current Item 402(c), requires disclosure of both standard and other compensatory arrangements between the registrant and its directors. The Commission proposed only a minor language change to the text of the current Item, ⁸ but also requested specific comment regarding the need to disclose payments or arrangements for payments to be made to a director in the year after the director has resigned. The majority of commentators suggested that such information was not material to shareholder suffrage. The Commission agrees and has adopted the Item as proposed, with no requirement respecting year after resignation payments.

The Commission rejected the suggestion posited by several commentators that a disclosure threshold similar to that provided in paragraphs (a) or (c) be imposed on this paragraph. The Commission has concluded, in view of the unique role played by directors, that imposition of a disclosure threshold would not be appropriate.

E. Paragraph (e)--Change of Control Arrangements

As proposed, this paragraph, modeled on existing Item 402(i), required disclosure by the registrant of compensatory plans or arrangements with an individual identified under paragraph (a) which are triggered by such individuals resignation, retirement or termination of employment. The Commission invited specific comment regarding the need for a separate disclosure provision for such plans and arrangements as well as whether the scope of the proposed disclosure should be expanded.

The commentators were divided on the need for a separate paragraph dealing with such arrangements. Those finding such a provision unnecessary suggested that the disclosed matters either already were, or by amendment could be, encompassed by paragraph (b). Those favoring retention of a separate disclosure provision asserted that termination provisions are distinct from other plans in both intent and scope and moreover, are of particular interest to shareholders. The Commission agrees with the latter comments and has determined to retain a separate disclosure provision for such arrangements.

As proposed, paragraph (e) would apply only to plans or arrangements triggered by the individuals resignation, retirement or any other termination of employment with the registrant or subsidiaries. Some commentators suggested that the triggering circumstances be expanded to include such things as a change in control of the registrant or a change in the individuals responsibilities following a change in control. These suggestions were consistent with the Report of Recommendations of the Advisory Committee on Tender Offers ("Advisory Committee Report"). ⁹ The Commission has decided to effect this suggestion and expand the paragraphs coverage accordingly. This change also necessitated a retitling of the paragraph.

In addition, the Commission has decided to follow a recommendation made both by commentators and the Advisory Committee Report and codify an administrative interpretation of the current Item, clarifying that plans or arrangements within paragraph (e) are to be disclosed annually. ¹⁰

The Commission requested specific comment regarding the need for additional requirements in this area, such as whether the plans or arrangements received shareholder approval. The commentators uniformly rejected the need for such additional disclosure, noting that shareholder approval of such plans or arrangements is not generally required by applicable state law. While the Commission has decided not to require such disclosure at this time, it notes that the Advisory Committee Report recommended that change of control related policies and compensation be submitted to the shareholders for a non-binding advisory vote. Thus, the issue will be considered by the Commission in the context of its consideration of the Advisory Committee Report.

IV. Coordinating Amendments

In addition to the conforming changes to the rules and forms noted in the introduction to this release necessitated by the new title, the coordinating amendments to Items 9, 10, and 11 of Schedule 14A proposed in the Proposing Release have been adopted by the Commission with some modifications. The Commission requested specific comments as to whether a reference to incentive stock options within Section 422A of the Internal Revenue Code should be added to Item 9 to permit registrants not to state the average option price per share of such options. The commentators generally favored inclusion of such reference and the Commission has followed that suggestion. Finally, changes have been adopted to conform the text of Items 9, 10 and 11 to the requirements adopted in Item 402(a) respecting individual and group disclosure.

V. Amendments to Form S-18

The Commission also has adopted, on a conditional basis, coordinating amendments to Form S-18. Form S-18 is a simplified registration form specifically designed to facilitate access to the public capital markets by certain smaller domestic and Canadian issuers. Form S-18 does not cross-reference the Executive Compensation item in Regulation S-K, but, instead, contains a separate item for the disclosure of executive compensation which is tailored to the type of disclosure generally made by first-time public issuers. Since certain aspects of the revised Item 402 of Regulation S-K appear appropriate for the simplified disclosure provisions in Form S-18, the Commission has conditionally adopted coordinating changes to Item 20 of Form S-18. The conditional amendments simplify the S-18 disclosure requirements and do not call for any information not required by old Item 20. Further, the conditional amendments are consistent with the Commissions efforts to conform S-18 to the disclosure requirements of other Forms, to the extent appropriate, while preserving the advantages of Form S-18 for smaller companies.

The amendments constitute a substantially new Item 20, titled "Executive Compensation." These changes, made to conform to Item 402 of Regulation S-K, are as follows: (1) compensation paid to executive officers and directors are now required to be stated separately; (2) cash compensation paid to executive officers must be presented in tabular form, while compensation pursuant to plans and other compensation may be presented separately in a narrative, tabular or other format, at the option of the registrant; (3) disclosure of individual compensation is required for only the five most highly compensated executive officers, rather than officers and directors; (4) the threshold for the disclosure of individual compensation was raised from $50,000 to $60,000, calculated on the basis of cash compensation; and (5) group disclosure is limited to executive officers, rather than all officers and directors.

The amendments to Item 20 divide the disclosure requirements into four paragraphs. Paragraph (a) requires disclosure, in tabular form ("Cash Compensation Table"), of all cash compensation paid during the registrants last fiscal year to each of the registrants five most highly compensated executive officers whose cash compensation exceeds $60,000, naming each individual. The registrant also must disclose the aggregate amount of cash compensation paid to all executive officers as a group, stating the number of individuals in the group without naming them.

The format of new Item 20 reflects technical revisions to title the tabular presentation "Cash Compensation Table," and to amend the headings to Columns B and C. The amended heading to Column B reads "Capacities in which served" rather than "Capacities in which Remuneration Received," and Column C includes only "Cash Compensation," instead of "Aggregate Compensation."

Paragraph (a) of new Item 20 differs substantially from old Item 20 in that tabular presentation of information is required for cash compensation only, rather than for all compensation. In addition to cash compensation actually paid, new Item 20 requires disclosure of cash bonuses to be paid for services rendered during the last fiscal year, unless such amounts have not been allocated at the time of filing. This provision addresses the situation in which a bonus was earned during fiscal year but has not yet been paid. If the registrant knows the bonus amounts to be paid to the named individuals and group, those amounts must be included in the Cash Compensation Table. In the instance in which the registrant has not allocated bonus amounts at the time of the filing, such amounts would not be reported for the year in which they were earned, but in the year in which they were paid. The registrant also must disclose compensation that would have been paid in cash but for the fact that such payment has been deferred.

The disclosure of personal benefits and stock, retirement, pension and other plans was removed from paragraph (a) and placed in paragraphs (b) and (c). In addition, the instructions applicable to such benefits and plans were revised and moved to new paragraphs, or deleted.

Paragraph (b) requires the disclosure of compensation paid or distributed during the registrants last fiscal year, or proposed to be paid in the future, to the named individuals or group specified in paragraph (a), pursuant to plans. This paragraph is derived from paragraphs (a) and (b) old Item 20. Certain compensation paid pursuant to plans which previously was reported in tabular form under paragraph (a) now may be described in narrative, tabular or any other form chosen by the issuer pursuant to paragraph (b). As in old Item 20, no disclosure need be provided for nondiscriminatory group life, health, hospitalization, or medical reimbursement plans. The amendments added nondiscriminatory relocation plans to the compensation which need not be disclosed, consistent with previous staff interpretations. Likewise, information relating to pension or retirement benefits need not be disclosed if the amounts to be paid are computed on an actuarial basis under any plan which provides for fixed benefits in the event of retirement at a specified age or after a specified number of years of service.

With respect to stock option plans, in addition to the disclosure required for other plans, information must also be disclosed for options granted or exercised within the last fiscal year. As previously required, the registrant must disclose the title and aggregate amount of securities subject to options granted during the last fiscal year. Instead of disclosing the purchase price of the securities and the expiration dates of the options, however, the registrant must disclose only the average per share exercise price of the options. The market price of the security now is required only if the option exercise price was less than 100 percent of the market value of the security on the date of the grant, whereas old Item 20 required the market value in all circumstances as of the latest practicable date. In addition, for any options exercised during the last fiscal year, the net value realized upon the exercise of any options must be disclosed. The net value realized is calculated by subtracting the exercise value from the market price.

Paragraph (c) requires disclosure of all compensation not included in paragraphs (a) and (b), such as personal benefits, securities or property paid during the registrants last fiscal year to the named individuals and group specified in paragraph (a). This disclosure previously was contained in paragraph (a) of old Item 20. Such disclosure need not be included for any named individual if the aggregate amount of such compensation is less than $25,000 or 10 percent of the compensation reported in the Cash Compensation Table. Old Item 20 allowed exclusion only if the specific amount of personal benefits could not be ascertained without unreasonable effort and the issuer reasonably believed, in any event, that the aggregate amount did not exceed $10,000. With respect to the group, disclosure of other compensation is not required if the aggregate amount is less than $25,000 times the number of persons in the group or 10 percent of the Cash Compensation Table for the group. This constitutes a change from the prior rule, which allowed the exclusion only if the specific amount could not be ascertained without unreasonable effort and the registrant reasonably believed the amount was less than $10,000 for each person in the group. The compensation reported in paragraph (c) is to be valued on the basis of the registrants and subsidiaries incremental cost.

Paragraph (d) requires a brief description of all compensation received by directors of the registrant for all services as a director. This is a significant change from old Item 20, which grouped directors and officers in the disclosure of management compensation.

VII. Summary of Regulatory Flexibility Analysis

A summary of the Regulatory Flexibility Analysis with respect to the conditional amendments to Form S-18 is attached as an Appendix to this release.

VIII. Statutory Authority and Findings

The Commission hereby adopts Item 402 of Regulation S-K, the conditional amendments to Form S-18 and other conforming amendments pursuant to its statutory authority in Sections 6, 7, 8, 10 and 19(a) of the Securities Act and Sections 12, 13, 14, 15(d) and 23(a) of the Exchange Act. As required by Section 23(a) of the Exchange Act, the Commission has considered the impact that these rulemaking actions would have on competition and has concluded that they would impose no significant burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act.

List of subjects in 17 CFR 229, 239 and 249.

Reporting Requirements

Securities

IX. Text of Amendments

In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES ACT OF 1933 AND SECURITIES EXCHANGE ACT OF 1934--REGULATION S-K

1. By revising §229.402 to read as follows:

§229.402 (Item 402) Executive Compensation

(a)(1) Cash compensation. Furnish, in substantially the tabular form specified, all cash compensation paid to the following persons through the latest practicable date for services rendered in all capacities to the registrant and its subsidiaries during the registrants last fiscal year:

(i) Five executive officers. Each of the registrants five most highly compensated executive officers whose cash compensation required to be disclosed pursuant to this paragraph exceeds $60,000, naming each such person; and

(ii) All executive officers. All executive officers as a group, stating the number of persons in the group without naming them.

(2) Bonuses and deferred compensation. The Cash Compensation Table also shall include:

(i) All cash bonuses to be paid to the named individuals and group for services rendered in all capacities to the registant and its subsidiaries during the last fiscal year unless such amounts have not been allocated at such time as compensation disclosure is filed;

(ii) All cash bonuses paid during the last fiscal year for services rendered in all capacities to the registrant and its subsidiaries in a previous fiscal year, less any amount relating to the same contract, agreement, plan or arrangement included in the Cash Compensation Table for a prior fiscal year and less any amount that would have been so included but for the fact that the individual was not included in the Cash Compensation Table, as a named individual or as a member of the group, for such prior fiscal year; and

(iii) All compensation that would have been paid in cash to the named individuals and group for services rendered in all capacities to the registrant and its subsidiaries during the last fiscal year but for the fact that the payment of such compensation was deferred.                                

 Instructions to Item 402(a).

1. Cash Compensation Table. (A) The registrant may include additional columns in the Cash Compensation Table. For example, the registrant may segregate cash bonuses and deferred compensation from cash salaries and fees.

(B) Amounts deferred pursuant to Section 401(k) of the Internal Revenue Code are to be included in paragraph (a) for the fiscal year during which they are accrued.

(C) Registrants need list in Column (B) of the Cash Compensation Table only those principal capacities served by each of the identified individuals. The cash compensation disclosed, however, must include cash compensation received in all capacities.

2. Persons covered. (A) Paragraph (a) of this section applies to any individual who was an executive officer of the registrant at any time during the last fiscal year. Information need not be disclosed, however, for any portion of the period during which such individual was not an executive officer of the registrant, provided a statement to that effect is made. With respect to an individual who becomes for the first time an individual whose compensation is to be reported in the Cash Compensation Table, it is not necessary to report compensation that would have been reported in the Table had the individual been included in prior years.

(B) Registrants should be flexible in determining which individuals should be named in the Cash Compensation Table in order to ensure that disclosure is made with respect to key policy making members of management. Consideration should be given to the question of whether an individuals level of executive responsibilities, viewed in conjunction with such individuals actual level of cash compensation is such that the registrant reasonably may conclude that the person is among its five most highly compensated, key policy making executive officers. Under this standard, it may be appropriate, in certain circumstances, to include an executive officer of a subsidiary in the Cash Compensation Table.

(C) In certain circumstances, it may be appropriate for a registrant not to include in the Cash Compensation Table an individual who is one of the registrants five most highly compensated executive officers. Among the factors that should be considered in determining not to name an individual are: (i) The distribution or accrual of an unusually large amount of cash compensation (such as a bonus or commission) that is not part of a recurring arrangement and is unlikely to continue; and (ii) the payment of amounts of cash compensation relating to overseas assignments that may be attributed predominantly to such assignments.

(b)(1) Compensation pursuant to plans. Described briefly all plans, pursuant to which cash or non-cash compensation was paid or distributed during the last fiscal year, or is proposed to be paid or distributed in the future, to the named individuals and group specified in paragraph (a) of this section. Information need not be given with respect to any group life, health, hospitalization, medical reimbursement or relocation plans that do not discriminate, in scope, terms, or operation, in favor of officers or directors of the registrant and that are available generally to all salaried employees. The description of each plan shall include the following, except that the description of any defined benefit or actuarial plans need not include the information specified in paragraphs (b)(1)(vi) and (b)(1)(vii) of this section and the description of any stock option and stock appreciation right plan need not include the information specified in paragraph (b)(1)(vii) of this section:

(i) A summary of how the plan operates and who is covered by the plan;

(ii) The criteria used to determine amounts payable, including any performance formula or measure;

(iii) The time periods over which the measurement of benefits will be determined;

(iv) Payment schedules;

(v) Any recent material amendments to the plan;

(vi) Amounts paid or distributed pursuant to the plan to the named individuals and the group during the last fiscal year less any amount relating to the same plan which previously has been disclosed as accrued pursuant to paragraph (b)(1)(vii) of this section or a predecessor provision; and

(vii) Amounts accrued pursuant to the plan for the accounts of the named individuals and group during the last fiscal year, the distribution or unconditional vesting of which are not subject to future events.

(2) Pension table. As to defined benefit and actuarial plans, other than any defined benefit or actuarial plan under which benefits are not determined primarily by final compensation (or average final compensation) and years of service, include, as the payment schedule required by paragraph (b)(1)(iv) of this section, a separate Pension Table showing estimated annual benefits payable upon retirement (including amounts attributable to any defined benefit supplementary or excess pension award plans) to persons in specified compensation and years-of-service classifications. In addition, in furnishing the information required by paragraphs (b)(1)(i)-(v) of this section, include:

(i) The compensation covered by the plan, including the relationship of such covered compensation to the compensation reported in the Cash Compensation Table pursuant to paragraph (a) of this section, and state the current compensation covered by the plan for any individuals named in the Cash Compensation Table whose covered compensation differs substantially (by more than 10 percent) from that set forth in the Cash Compensation Table;

(ii) The estimated credited years of service for each of the individuals named in the Cash Compensation Table; and

(iii) A statement as to the basis upon which benefits are computed (e.g., straight life annuity amounts) and whether or not the benefits listed in the Pension Table are subject to any deduction for Social Security or other offset amounts.

Example of Pension Table

 Years of Service

SEC_CODE_REF_0090001192884

(3) Alternative pension plan disclosure. In furnishing the information required by paragraphs (b)(1)(i)-(v) of this section with respect to defined benefit or actuarial plans under which benefits are not determined primarily by final compensation (or average final compensation) and years of service, include:

(i) The formula by which benefits are determined; and

(ii) The estimated annual benefits payable upon retirement at normal retirement age for each of the individuals named in the Cash Compensation Table pursuant to paragraph (a) of this section.

(4) Stock option and stock appreciation right plans. In addition to providing the information required by paragraphs (b)(1)(i)-(vi) of this section, furnish:

(i) With respect to stock options granted during the last fiscal year: (A) the title and aggregate amount of securities subject to options; (B) the average per share exercise price; and (C) if such option exercise price was less than 100 percent of the market value of the security on the date of grant, such fact and the market price on such date. The title and aggregate amount of such securities subject to options, if any, which are in tandem with stock appreciation rights should be set forth separately.

(ii) With respect to the exercise or realization of options or stock appreciation rights held in tandem with options, state the net value of securities (market value less any exercise price) or cash realized during the last fiscal year.

(iii) With respect to plans pursuant to which stock appreciation rights not in tandem with options were granted during the last fiscal year: (A) the number of rights granted; and (B) the average per share base price thereof.

(iv) With respect to the exercise or realization of stock appreciation rights not in tandem with options, state the net value of the shares (market price) or cash realized during the last fiscal year.

Instructions to Item 402(b).

1. Format. With the exception of those pension plans disclosed pursuant to paragraph 402(b)(2), the registrant may use either a narrative, tabular or other format or combination of formats provided the information so disclosed is clear and understandable. Disclosure required by paragraph (b)(2), pertaining to certain defined benefit and actuarial plans, is required to be presented in the Pension Table format set forth in that paragraph.

2. Cash paid pursuant to plans. The cash compensation paid pursuant to a plan need not be disclosed as amounts paid or distributed pursuant to paragraph (b)(1)(vi) of this section if such compensation was included in the Cash Compensation Table pursuant to paragraph (a) of this section and a statement to that effect is made. Similarly, the cash compensation deferred under a deferred compensation plan need not be disclosed as amounts accrued pursuant to paragraph (b)(1)(vii) of this section if such compensation was included in the Cash Compensation Table and a statement to that effect is made.

3. Definition of "plan". The term "plan" includes, but is not limited to the following: any plan, contract, authorization or arrangement, whether or not set forth in any formal documents, pursuant to which the following may be received: cash, stock, restricted stock, phantom stock, stock options, stock appreciation rights, stock options in tandem with stock appreciation rights, warrants convertible securities, performance units and performance shares. A plan may be applicable to one person.

4. Pension levels. Compensation set forth in the Pension Table pursuant to paragraph (b)(2) of this section shall allow for reasonable increases in existing compensation levels; alternatively registrants may present as the highest compensation level in the Pension Table an amount equal to 120 percent of the amount of covered compensation of the most highly compensated individual named in the Cash Compensation Table pursuant to paragraph (a) of this section.

5. Definition of "normal retirement age". The term "normal retirement age" means normal retirement age as defined in a pension or similar plan or, if not defined therein, the earliest time at which a participant may retire without any benefit reduction because of age.

(c) Other Compensation. Describe, stating amounts, any other compensation not covered by paragraphs (a) or (b) of this section that was paid or distributed during the last fiscal year to the named individuals and group specified in paragraph (a) of this section unless:

(1) With respect to any named individual, the aggregate amount of such other compensation is the lesser of $25,000 or 10 percent of the compensation reported in the Cash Compensation Table for such person pursuant to paragraph (a) of this section or

(2) With respect to the group, the aggregate amount of such other compensation is the lesser of $25,000 times the number of persons in the group or 10 percent of the compensation reported in the Cash Compensation Table for the group pursuant to paragraph (a) of this section and a statement to that effect is made.

Instructions to Item 402(c)

1. Scope. Compensation to be disclosed pursuant to this paragraph may include among other things: (a) personal benefits or; (b) securities or property that were paid or distributed other than pursuant to a plan. It does not, in any event, include cash, which is to be disclosed pursuant to either paragraph (a) or (b).

2. Threshold. If the amount of other compensation for a named individual or the group exceeds the established thresholds, the entire amount of such other compensation must be disclosed pursuant to this paragraph.

3. Valuation. Compensation within paragraph (c) shall be valued on the basis of the registrants and subsidiaries aggregate incremental cost.

(d) Compensation of directors.

(1) Standard arrangements. Describe any standard arrangement, stating amounts, pursuant to which directors of the registrant are compensated for all services as a director, including any additional amounts payable for committee participation or special assignments.

(2) Other arrangements. Describe any other arrangements pursuant to which any director of the registrant was compensated during the registrants last fiscal year for services as a director, stating the amount paid and the name of the director.

(e) Termination of Employment and Change of Control Arrangement. Describe any compensatory plan or arrangement, including payments to be received from the registrant, with respect to any individual named in the Cash Compensation Table pursuant to paragraph (a) of this section for the latest or then next preceding fiscal year if such a plan or arrangement results or will result from the resignation, retirement or any other termination of such individuals employment with the registrant and its subsidiaries or from a change in control of the registrant or a change in the individuals responsibilities following a change in control and the amount involved, including all periodic payments or installments exceeds $60,000.

General Instructions to Item 402

1. Foreign private issuers. A non-Canadian foreign private issuer may respond to all of Item 402 by indicating the aggregate payments or benefits paid or to be paid to all executive officers as a group unless such registrants disclose to their security holders or otherwise make public the information specified in this section for individually named executive officers, in which case such information also shall be disclosed.

2. Transactions with third parties. This section includes transactions between the registrant and a third party where the primary purpose of the transaction is to furnish compensation to any named individual or the group specified in paragraph (a) of this section. No information need be given in response to any paragraph of this section as to any such transaction if the transaction has been reported in response to Item 404 of Regulation S-K (§229.404 of this chapter).

3. Exclusions. No information need be given pursuant to this Item with respect to interest on deferred compensation provided that the rate of interest does not exceed prevailing market interest rates either: (1) at the time the interest is accrued or (2) at the time the plan pursuant to which the compensation is deferred was established. Similarly, dividends awarded on restricted stock need not be disclosed provided that the restricted stock is not of a particular class available only to certain employees on a discriminatory basis.

2. By removing the word "remuneration" in two places in paragraph 1 in the Instructions to §229.404 and inserting in those places the word "compensation".

3. By removing the word "remunerative" twice in paragraph (b)(10)(iii)(A), once in the introductory sentence to paragraph (b)(10)(iii)(B), once in paragraph (b)(10)(iii)(B)(4), twice in paragraph (b)(10)(iii)(B)(5), and once in paragraph (b)(10)(iii)(B)(6) of §229.601 and inserting in those places the word "compensatory." In addition, the Instruction to paragraph (b)(10)(iii)(B) is amended by removing the word "remuneration" and inserting in its place the word "compensation."

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

4. By removing the word "remuneration" twice in paragraph (10)(b) of §230.610a and inserting in those places the word "compensation."

PART 231--INTERPRETIVE RELEASES RELATING TO THE SECURITIES ACT OF 1933 AND GENERAL RULES AND REGULATIONS THEREUNDER

5. By deleting Releases Nos. 5856, 5904, 6159 and 6166.

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

6. By removing the words "management remuneration" in Part 1, Item 11(K) of §239.11 and inserting in their place the words "executive compensation."

7. By removing the word "remuneration" once in Item 3(b)(4), and once in Item 24(b)(6) of §239.18 and inserting in those places the word "compensation"; and by removing the words "management remuneration" in Item 22 of §239.18 and inserting in their place the words "executive compensation."

8. By revising Item 20 of Form S-18, §239.28, to read as follows:

Item 20. Executive Compensation.

(a)(1) Cash compensation. Furnish, in substantially the tabular form specified, all cash compensation paid to the following persons through the latest practicable date for services rendered in all capacities to the registrant and its subsidiaries during the registrants last fiscal year.

(i) Each of the registrants five most highly compensated executive officers whose cash compensation required to be disclosed pursuant to this paragraph exceeds $60,000, naming each person; and

(ii) All executive officers as a group, stating the number of persons in the group without naming them.

Instruction. 1. The Cash Compensation Table shall include: (i) all cash bonuses to be paid for services rendered during the last fiscal year unless such amounts have not been allocated at such time as the registration statement is filed; and (ii) all compensation that would have been paid in cash but for the fact the payment of such compensation was deferred.

2. Paragraph (a) applies to any person who was an executive officer of the registrant at any time during the period specified. However, information need not be given for any portion of the period during which such person was not an executive officer of the registrant, provided a statement to that effect is made.

(b)(1) Compensation pursuant to plans. Describe briefly all plans, pursuant to which cash or non-cash compensation was paid or distributed during the last fiscal year, stating such amounts, and all plans pursuant to which cash or non-cash is proposed to be paid or distributed in the future, to the named individuals and group specified in paragraph (a) of this section. Information need not be given with respect to any group life, health, hospitalization, medical reimbursement or relocation plans that do not discriminate, in scope, terms, or operations in favor of officers or directors of the registrant and that are available generally to all salaried employees. Information relating to pension or retirement benefits need not be disclosed if the amounts to be paid are computed on an actuarial basis under any plan which provides for fixed benefits in the event of retirement at a specified age or after a specified number of years of service.

(2) Stock option plans. In addition to providing the information required by paragraph (b)(1) of this section, furnish:

(i) With respect to stock options granted during the last fiscal year: (A) the title and aggregate amount of securities subject to options; (B) the average per share exercise price; and (C) if such option exercise price was less than 100 percent of the market value of the security on the date of grant, such fact and the market price on such date.

(ii) With respect to stock options exercised during the last fiscal year, regardless of the year such options were granted, the net value realized upon such exercise, calculated by subtracting the exercise price from the market value.

(c) Other compensation. Describe, stating amounts, any other compensation not covered by paragraphs (a) or (b) of this section, such as personal benefits, securities or property, that was paid or distributed during the last fiscal year to the named individuals and group specified in paragraph (a) of this section unless:

(1) With respect to any named individual, the aggregate amount of such other compensation is the lesser of $25,000 or 10 percent of the compensation reported in the Cash Compensation Table of such person pursuant to paragraph (a) of this section or

(2) With respect to the group, the aggregate amount of such other compensation is the lesser of $25,000 times the number of persons in the group or 10 percent of the compensation reported in the Cash Compensation Table for the group pursuant to paragraph (a) of this section and a statement to that effect is made.

Instruction. Compensation within paragraph (c) shall be valued on the basis of the registrants and subsidiaries aggregate incremental cost.

(d) Compensation of directors. Describe briefly, stating amounts, all compensation received by directors of the registrant for all services as a director.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934

9. By removing the word "remuneration" from paragraph (b)(3) of §240.12g3-2 and inserting in its place the word "compensation."

10. By revising paragraphs (b) and (d) and Instructions 1 and 3 of Item 9; paragraphs (b) and (d) and Instruction 1 of Item 10; and paragraphs (b) and (c) and Instruction 1 of Item 11 of §240.14a-101 to read as follows:

§240.14a-101 Schedule 14A--Information required in proxy statement.

* * * * *

Item 9. Bonus, profit sharing and other compensation plans. * * *

(b) State separately the amounts which would have been distributable under the plan during the last fiscal year of the issuer to (1) all current executive officers as a group, (2) all other current officers and directors as a group, and (3) all employees if the plan has been in effect.

* * * * *

(d) Furnish such information, in addition to that required by this item and Item 402 of Regulation S-K (§229.402 of this chapter), as may be necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other compensation or incentive plans, now in effect, or in effect within the past five years, for: (1) Each executive officer named in answer to Item 402(a) of Regulation S-K (§229.402(a) of this chapter) who may participate in the plan to be acted upon, (2) all current executive officers of the issuer as a group, if any executive officer may participate in the plan, (3) all other current officers and directors of the issuer as a group, if any other officer and director may participate in the plan, and (iv) all employees, if employees may participate in the plan.

* * * * *

Instructions. 1. The term "plan" as used in this item means any plan as defined in Instruction 3 to Item 402(b) of Regulation S-K (§229.402(b) of this chapter).

* * * * *

3. The following instructions shall apply to paragraph (d):

(a) Information need only be given with respect to benefits received or set aside within the past five years.

(b) Information need not be included as to payments made for, or benefits to be received from, group life or accident insurance, group hospitalization, group relocation or similar group payments or benefits.

(c) If action is to be taken with respect to any plan in which directors or executive officers may participate, furnish the following information for the last five fiscal years of the issuer and any period subsequent to the end of the latest such fiscal year in aggregate amounts for the entire period for each such person and group: (1) As to options granted during the specified period, state the title and aggregate amount of securities subject to options, the average per share exercise price, and, if the option price was less than 100 percent of the market value of the security on the date of the grant, such fact and the market price on such date (The title and aggregate amount of such securities subject to options, if any, which are in tandem with stock appreciation rights should be set forth separately); and (2) As to the exercise or realization of options or stock appreciation rights held in tandem with options granted during the specified period or prior thereto, state the net value of securities (market value less any exercise price) or cash realized during the specified period. If any named person, or any other director or executive officer, purchased securities through the exercise of options during such period, state the aggregate amount of securities of that class sold during the period by such named person and by such named person and such other directors and executive officers as a group. If other officers or employees may participate in the plan to be acted upon, state the aggregate amount of securities called for by all options granted to such other officers or employees, respectively, during the five-year period and, if the options were other than for "qualified" stock options, incentive stock options or options granted pursuant to an "employee stock purchase plan", as the quoted terms are defined in Sections 422 through 423 of the Internal Revenue Code, state that fact and the weighted average option price per share.

* * * * *

Item 10. Pension and retirement plans. * * *

(b) State (1) The approximate total amount necessary to fund the plan with respect to past services, the period over which such amount is to be paid and the estimated annual payments necessary to pay the total amount over such period; (2) the estimated annual payment to be made with respect to current services; and (3) the amount of such annual payments to be made for the benefit of (i) executive officers, (ii) all other officers and directors and (iii) employees.

* * * * *

(d) Furnish such information. In addition to that required by this item and Item 402 of Regulation S-K (§229.402 of this chapter), as may be necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation or other compensation or incentive plans, now in effect or in effect within the past five years, for (1) Each executive officer named in answer to Item 402(a) of Regulation S-K (§229.402(a) of this chapter) who may participate in the plan to be acted upon; (2) all current executive officers of the issuer as a group, if or executive officer may participate in the plan; (3) all other current officers and directors of the issuer as a group, if any other officer or director may participate in the plan; and (4) all employees, if employees may participate in the plan.

* * * * *

Instructions 1. The term "plan" as used in this item means any plan as defined in Instruction 3 to Item 402(b) of Regulation S-K (§229.402(b) of this chapter). Instruction 2 to Item 9 shall apply to this item.

* * * * *

Item 11. Options, warrants or rights. * * *

* * * * *

(b) State separately the amount of options, warrants, or rights received or to be received by the following persons, naming each such person: (1) Each executive officer named in answer to Item 402(a) of Regulation S-K (§229.402(a) of this chapter); (2) each nominee for election as a director, (3) each associate of such directors, executive officers or nominees; and (4) each other person who received or is to receive 5 percent of such options, warrants or rights. State also the total amount of such options, warrants or rights received or to be received by all directors and executive officers of the issuer as a group, without naming them.

(c) Furnish such information, in addition to that required by this item and Item 402 of Regulation S-K (§229.402 of this chapter), as may be necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other compensation or incentive plans, now in effect or in effect within the past five years, for (1) each executive officer named in answer to Item 402(a) of Regulation S-K (§229.402(a) of this chapter) who may participate in the plan to be acted upon; (2) all current executive officers of the issuer as a group, if any executive officer may participate in the plan; (3) all other current officers and directors of the issuer as a group, if any other officer or director may participate in the plan; and (4) all employees, if employees may participate in the plan.

Instructions 1. The term "plan" as used in this item means any plan as defined in Instruction 3 to Item 402(b) of Regulation S-K (§229.402(b) of this chapter).

11. By removing the word "remuneration" in the title of Item 7 and once in clause (ii) of Item 7, §240.14a-101, and by inserting in those places the word "compensation"

12. By deleting the phrase "management remuneration" from the title of Item 6 to Form 10, §240.210, and inserting in its place the phrase "executive compensation".

PART 241--INTEPRETIVE RELEASES RELATING TO THE SECURITIES EXCHANGE ACT OF 1934 AND RULES AND REGULATIONS THEREUNDER.

13. By deleting Release Nos. 13872, 5904, 16419, 18302.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

14. By removing the word "remuneration" in the title and text of paragraphs (a) and (a)2 of Item 11 to Form 20-F, §249.220f, and by inserting in those places the word "compensation."

15. By deleting the phrase "management remuneration" from the title of Part III to Item 11 of Form 10-K, §249.310, and by inserting in its place the phrase "executive compensation."

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

16. By removing the word "remuneration" from paragraph (c)(1) of §270.30d-1 and inserting in its place the word "compensation."

PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

17. By removing the word "remuneration" once in the title and twice in the table of Item 11 of Form N-1, §274.11, and inserting in their place the word "compensation."

18. By removing the word "remuneration" in the title of Item 28, in the title preceding Item 34, in the title of Item 36, in paragraphs (a), (a)(2), and (a)(3) of Item 36, in column (B) of the chart in Item 36, three times in Instruction 1, twice in Instruction 2 and once in Instruction 4 to Item 36, once in paragraph (c) of Item 36, in the title, text and table in Item 37 and twice in the text of Item 38, all of Form N-8B-4, §274.14, and inserting in their place the word "compensation."

19. By removing the word "remuneration" in the title of Item 10 of Form N-1R, twice in the text of paragraph (a), once each in columns (A), (C) and (D) of the table to paragraph (a) of Item 10, once in paragraph (b), once each in columns (A) and (B) of the table to paragraph (b) of Item 10, once in paragraph (C) and once each in columns (A) and (B) of the table to paragraph (C) of Item 10, once in the title to the Instruction to Item 10, twice in the fourth paragraph and once in the fifth paragraph to the Instruction to Item 10, once in the title to Item 11 of Form N-1R, and once in the Instruction to Item 11, §274.101, and inserting in their place the word "compensation."

By the Commission.

George A. Fitzsimmons

Secretary

____________________

APPENDIX

Summary of Regulatory Flexibility Analysis

The Commission has prepared an Initial Regulatory Flexibility Analysis in accordance with 5 U.S.C. 603 regarding the revisions to Form S-18 proposed herein.

The analysis notes that the Commission adopted Form S-18 to be used by certain smaller companies in an effort to alleviate some of the cost and compliance burdens traditionally associated with registration on Form S-1, the standard registration form. The Commission took this step in recognition of its statutory authority to vary disclosure requirements depending upon the issuer and other considerations, and with the designated purpose of facilitating small business capital formation.

Specifically, as compared to Form S-1, Form S-18 provides for reduced narrative disclosure requirements, reduced and less burdensome financial statement requirements, and permits regional filing and processing of the registration statement, all of which result in a more timely and less expensive registration process for smaller issuers seeking access to the public capital markets.

In order to further reduce the expenses incurred by small issuers registering their securities under the Securities Act, the Commission permits registrants which filed on Form S-18, and thereby became subject to section 15(d) of the Exchange Act, to include the Forms simplified financial statements and narrative disclosures in their initial annual report filed with the Commission.

The Commission believes these steps have served to alleviate the burdens on small business consistent with its statutory mandate to protect investors and foster continued confidence in the securities markets.

The amendments adopted on a conditional basis herein are designed to conform the disclosure of executive compensation in Form S-18 to that required by other registration forms, while preserving the simplified disclosure format of Form S-18.

A copy of the Initial Regulatory Flexibility Analysis may be obtained by contacting Elliot M. Pinta, (202) 272-2589, Office of Disclosure Policy, Division of Corporation Finance, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549.

¹ Release No. 33-6449 (January 17, 1983) 48 FR 3625). The first initiative under the Commissions Proxy Review Program was the adoption of a new uniform Regulations S-K item relating to the disclosure of certain relationships and transactions involving management (Release No. 33-6441 (December 2, 1982) 47 FR 55661). The second was the adoption of amendments to various rules relating to the process by which issuers communicate with the beneficial owners of securities registered in the name of a broker, bank or other nominee (Release No. 34-20021 (July 28, 1983) 48 FR 350821). The third was the adoption of amendments to the Commissions shareholder proposal rule, Rule 14a-8 (Release No. 34-20091 (August 16, 1983) 48 FR 38218).

² Beginning with the provisions in effect in 1977 and continuing through the current disclosure provisions, the Commission has had to issue several interpretive releases regarding the disclosure of management remuneration. See Release No. 33-6364 (December 3, 1981) 46 FR 60421; Release No. 33-6166 (December 12, 1979) 44 FR 74808; Release No. 33-6027 (February 22, 1979) 44 FR 16368; Release No. 33-5904 (February 6, 1978) 43 FR 6060; Release No. 33-5856 (August 18, 1977) 42 FR 43058. In view of the substantial revision of Item 402, the Commission is rescinding the above-referenced interpretive releases.

³ The Commission received 115 comment letters in response to the proposal. A copy of the letters of comment and a summary of comments are available for public inspection and copying at the Commissions Public Reference Room, 450 5th Street, N.W., Washington, D.C. 20549. (See File No. S7-958).

⁴ Pursuant to Rule 405 under the Securities Act 17 CFR 230.405 and Rule 3b-7 under the Exchange Act 17 CFR 240.3b-7, the term "executive officer" is defined, when used in reference to a registrant, "as the registrants president, any vice president of the registrant in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function or any other person who performs similar policy making functions for the registrant. Executive officers of subsidiaries may be deemed executive officers of the registrant if they perform such policy making functions for the registrant."

⁵ A similar change has been made in Item 402(a)(1)(i), limiting individual disclosure to the registrants five most highly compensated executive officers.

⁶See footnote 27 to the Proposing Release.

⁷ The current Item provides that personal benefits shall be valued on the basis of the registrants and subsidiaries aggregate actual incremental costs; however, if such aggregate costs are significantly less than the aggregate amounts the recipient would have had to pay to obtain the benefits, appropriate disclosure, including the aggregate value to the recipient, shall be made in a footnote to the table. The registrant may choose to disclose such aggregate value rather than aggregate incremental costs in the table, in which event such footnote disclosure is not required.

⁸ The proposed change was intended to make clear that payments made to a director during the last fiscal year as compensation for a number of years services, including services in the last fiscal year, would be required to be disclosed.

⁹ The Advisory Committee on Tender Offers ("Advisory Committee") was established by the Commission in accordance with the provisions of the Federal Advisory Committee Act, as amended, 5 U.S.C. App. 1 (1976 and Supp. V 1981) on February 25, 1983 to examine the tender offer process and other techniques for acquiring control of public issuers and to recommend to the Commission legislative and/or regulatory changes the Committee considered necessary or appropriate. See Release No. 34-19528 (February 25, 1983) 48 FR 9111. The Committee was composed of 18 members, including members of the business and financial community, legal and accounting professions and academia. The Advisory Committee submitted its Report to the Commission on July 8, 1983.

¹⁰ The Advisory Committees recommendations in this regard went beyond the scope of this Item and suggested that change of control arrangements between the registrant and any party be disclosed annually in a new "change of control" section of the proxy statement. The Commission expresses no opinion with regard to these recommendations at this time.