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Release No. 33-8655 Release No. IC-27218 Securities and Exchange CommissionExecutive Compensation and Related Party Disclosure
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| Name and Principal Position |
Year |
Total ($) | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Stock Incentive Plan Compen-sation ($) | All Other Compen- sation ($) |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
| PEO68 | ||||||||
| PFO69 | ||||||||
| A | ||||||||
| B | ||||||||
| C | ||||||||
Request for Comment
Should the Summary Compensation Table continue as it currently does to require disclosure of compensation for each of the companys last three fiscal years, or is only the last completed fiscal year necessary in light of the availability of historical data on compensation through the Commissions EDGAR system and other sources?
Should we require all of the proposed disclosures discussed below in addition to those in the Summary Compensation Table, or does the Summary Compensation Table itself provide an adequate picture of compensation? Is there some other combination of the Summary Compensation Table with other proposed disclosures that would fulfill our objectives?
a. Total Compensation Column
We propose to modify the Summary Compensation Table to provide a clearer picture of total compensation. We propose requiring that all compensation be disclosed in dollars and that a total of all compensation be provided.70 The new column disclosing total compensation would appear as the first column providing compensation information-- column (c).71 This column would aggregate the total dollar value of each form of compensation quantified in the columns that would follow it (columns (d) through (i)). The proposed "Total" column would respond to concerns that investors, analysts and other users of Item 402 disclosure cannot compute aggregate amounts of compensation using current disclosure in a manner that is accurate or is comparable across years or companies.
Request for Comment
Should we include a requirement to disclose a total compensation amount?
Will a total compensation number provide investors with meaningful information about compensation? If not, why? Would disclosure of a total compensation number result in any unintended consequences? If so, how can they be mitigated?
Should total compensation be calculated in a different manner from that proposed? For example, with respect to stock-based and option-based awards, should exercise or vesting date valuations be used instead?
Is the proposed new instruction which would direct that all compensation values are to be reported in U.S. dollars necessary? Are there particular circumstances we should address regarding disclosure of compensation in foreign currencies?
b. Salary and Bonus Columns
The next columns we are proposing are the salary and bonus columns (columns (d) and (e), respectively), which would be retained substantially in their current form. However, we propose certain changes that should give an investor a clearer picture of the total amount earned, the amount deferred for the year, and the total amount of deferred compensation that may be paid out at a later date.
Compensation that is earned, but for which payment will be deferred, would be included in the salary, bonus or other column, as appropriate.72 A new instruction, applicable to the entire Summary Compensation Table, would provide that if receipt of any amount of compensation is currently payable (which must be included in the appropriate column) but has been deferred for any reason, the amount so deferred must be disclosed in a footnote to the applicable column.73 As described below, the amount deferred would also generally be reflected as a contribution in the deferred compensationpresentation.74 The new footnote disclosure of amounts deferred would help to clarify the extent to which amounts disclosed in the proposed Nonqualified Defined Contribution and Other Deferred Compensation Plans Table described below represent compensation already reported, rather than additional compensation.
We are also proposing a change eliminating the delay that exists under current rules where salary and bonus for the most recent fiscal year are determined following compliance with Item 402 disclosure. Under our proposal, where salary and bonus cannot be calculated as of the most recent practicable date, a current report under Item5.02 of Form 8-K would be triggered by a payment, decision or other occurrence as a result of which such amounts become calculable in whole or part.75 The Form 8-K would include disclosure of the salary or bonus amount and a new total compensation figure including that salary or bonus amount.
Request for Comment
Is the proposed presentation of deferred compensation in the Summary Compensation Table and related footnotes, along with the proposals outlined below, the best means for communicating the portion of compensation that is deferred?
Are there ways that we could better clarify how the amounts that would be identified as deferred in a footnote to the Summary Compensation Table relate to the amounts that would be required in the Nonqualified Defined Contribution another Deferred Compensation Plans Table?
Is the proposed change to Form 8-K to eliminate the delay in disclosing salary or bonus when they cannot be calculated as of the most recent practicable date appropriate?
c. Plan-Based Awards
The next three proposed columns -- Stock Awards, Option Awards and Non-Stock Incentive Plan Compensation -- cover plan-based awards.
i. Stock Awards and Option Awards Columns
The Stock Awards Column (proposed column (f)) would disclose stock-related awards that derive their value from the companys equity securities or permit settlement by issuance of the companys equity securities, such as restricted stock, restricted stock units, phantom stock, phantom stock units, common stock equivalent units or other similar instruments that do not have option-like features.76 Valuation would be based on the grant date fair value of the award determined pursuant to Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004),Share-Based Payment (FAS 123R) for financial reporting purposes. Stock awards subject to performance-based conditions would also be included in this column to ensure consistent reporting of stock awards and to ensure their inclusion in the proposed Summary Compensation Table.77
Awards of options, stock appreciation right grants, and similar stock-based compensation instruments that have option-like features (proposed column (g)) would be disclosed in a manner similar to the proposed treatment of stock and other stock-basedawards.78 Instead of the current disclosure of the number of securities underlying the awards, this column would require disclosure of the grant date fair value of the award as determined pursuant to FAS 123R for financial reporting purposes. In order to calculate a total dollar amount of compensation, the value rather than the number of securities underlying an award must be used. The FAS 123R valuation would be used whether the award itself is in the form of stock, options or similar instruments or the award is settled in cash but the amount of payment is tied to performance of the companys stock. We propose to eliminate the current requirement in the Options/SAR Grants in Last Fiscal Year Table to report the potential realizable value of each option grant under 5% or 10%increases in value or the present value of each grant (computed under any option pricing model),79 because these alternative disclosures would no longer be necessary if the grant date fair value of equity-based awards is included in the Summary Compensation Table.
A new instruction would require a footnote referencing the discussion of the relevant assumptions in the notes to the companys financial statements or to the discussion of relevant assumptions in the MD&A.80 The same proposed instruction would also provide that the referenced sections will be deemed to be part of the disclosure provided pursuant to Item 402. The referenced sections containing this disclosure are required in the companys annual report to shareholders that must precede or accompany the companys proxy statement.81 In the case of Internet disclosure of proxy materials, companies could provide hyperlinks from the proxy statement to the referenced sections contained in the annual report.82
Under FAS 123R, the compensation cost is initially measured based on the grant date fair value of an award.83 The key measurement principle behind the accounting standard, measuring stock-based payments at grant date fair value, is also followed in our proposals. Under FAS 123R, the compensation cost calculated as the fair value is generally recognized for financial reporting purposes over the period in which the employee is required to provide service in exchange for the award (generally the vesting period). Under our proposals, the compensation cost calculated as the grant date Fairdale will be shown as compensation in the year in which the grant is made. We believe that this approach is more consistent with the purpose of executive compensation disclosure. We are in effect proposing an approach that subscribes to the measurement method of FAS 123R based on grant date fair value, but that also provides for immediate disclosure of compensation as preferable for compensation reporting purposes to the timing of recognition of the compensation cost for the companys financial statement reporting purposes.
To consolidate related elements of compensation, the Stock Awards and Option Awards columns would also require disclosure of the earnings on outstanding awards in the respective categories.84 New instructions would require footnote identification and quantification of all earnings, whether the earnings were paid during the fiscal year, payable during the period but deferred, or payable by their terms at a later date but earned during the year.85 Previously awarded options or freestanding stock appreciation awards that the company reprised or otherwise materially modified during the last fiscal year would be disclosed based on the total fair value of the award as so modified.86
If the award has no performance conditions, but instead vests with the passage of time and continued employment, then the number of shares underlying the award and other details regarding the award would be disclosed in a separate table covering grants of equity awards supplementing the Summary Compensation Table. 87 If the award has a performance condition, then the details on the estimated future payouts will be disclosed in a second separate supplemental table covering grants of performance-based awards.88
Request for Comment
Is the proposed presentation of stock awards that do not have option-like features in the Summary Compensation Table the best means for presenting restricted stock and similar awards?
Is FAS 123R the appropriate approach for valuing equity-based awards, including restricted stock, restricted stock units, phantom stock, phantom stock units, common stock equivalent units, options, stock appreciation rights and other similar awards for purposes of Item 402 disclosure? If not, why not and what other valuation methods would be appropriate? Would any other valuation method provide the same comparability? If a different approach were used, would investors be confused by differences between the grant date fair value for financial reporting purposes and the value in the compensation tables?89
Should the expected term assumption used in computing the grant date fair value for financial statement purposes under FAS 123R also be used in measuring the value of an individual named executive officers compensation for the purposes of Item 402? Or, should an expected term assumption used to determine an individual named executive officers compensation be used if it differs from the expected term assumption used for FAS 123R purposes?90 Should companies use the full term rather than an expected term assumption for calculations for named executive officers? Would the complexity of such an approach for investors or the additional burden on companies outweigh any advantages, such as possible increased comparability among companies, of adjusting assumptions?
Is the timing of reporting stock-based compensation in our proposals the best approach? Should stock-based compensation instead be reflected in Item 402according to the same time schedule by which it is recognized for a company's financial statement reporting purposes?
Should the valuation method and all of the assumptions regarding the valuation also be disclosed in the proxy statement when they are required to be disclosed, described and analyzed elsewhere in a document furnished to shareholders, including in the notes to the financial statements?
We propose treating a modification of an award as a new award and requiring disclosure of the total grant date fair value at the time of modification. Would it be more appropriate to require only disclosure of incremental compensation as is the approach under FAS 123R?
Should we eliminate as proposed the current instruction allowing performance based stock awards to be reported at the companys election as incentive plan awards? If not, please explain whether the availability of this election is helpful to and not confusing to investors.
ii. Non-Stock Incentive Plan Compensation Column
We propose that the Non-Stock Incentive Plan Compensation column (proposed column (h)) would report the dollar value of all other amounts earned during the fiscal year pursuant to incentive plans.91 This column would be limited to awards where the relevant performance measure under the incentive plan is not based on the price of the company's equity securities or the award may not be settled by issuance of a company's equity securities; those awards would instead be disclosed in the Stock Awards and Option Awards columns discussed above.92 Performance-based compensation under along-term plan that is not tied to the performance of the companys stock (but instead is tied to other measures such as a return on assets, return on equity, performance of a division, or other such measures) would be disclosed in the Summary Compensation Table in the year when the relevant specified performance criteria under the plan are satisfied and the compensation earned, whether or not payment is actually made to the named executive officer in that year. The grant of an award (providing for future compensation if such performance measures are satisfied) under such a plan would be disclosed in the supplemental Grants of Performance-Based Awards Table in the year of grant, which would generally be some year prior to the year in which performance-based compensation under the plan is reported in the Summary Compensation Table.93 Because there is not one clearly required or accepted standard for measuring the value at grant date of these non-stock based performance-based awards that reflects the applicable performance contingencies, as there is for equity-based awards with FAS 123R, we do not propose to include such a value in the Summary Compensation Table, but instead would continue the current disclosure format of reflecting these items of compensation when earned.94
As with the Stock Awards and Option Awards columns, earnings on outstanding awards of other incentive plans would also be included in the Non-Stock Incentive Plan Compensation column.
Request for Comment
Since there is not one clearly required or accepted standard for measuring the value at grant date of those cash awards that reflect performance contingencies, is our approach to include the amounts in the Summary Compensation Table when earned appropriate? Are there particular models or standards that would provide a bases for measuring the value of these types of awards at grant date that we should consider incorporating into our rules?
Should earnings on outstanding awards be reported as proposed in the applicable award column or should they be reported in another way, such as in separate or different columns?
d. All Other Compensation Column
The final column in the Summary Compensation Table would disclose all other compensation not required to be included in any other column. This approach would allow the capture of all current compensation in the Summary Compensation Table and also would allow a total compensation calculation. We confirm that disclosure of all compensation would clearly be required under the proposals. 95
We propose to clarify the disclosure required in the All Other Compensation Column (proposed column (i)) in two principal respects:
consistent with the requirement that the Summary Compensation Table disclose all compensation, we would state explicitly that compensation not properly reportable in the other columns reporting specified forms of compensation must be reported in this column; and
to simplify the Summary Compensation Table and eliminate confusing distinctions between items currently reported as "Annual" and "Long Term" compensation, we would move into this column all items currently reportable as" Other Annual Compensation."96
We also propose that each item of compensation included in the All Other Compensation column that exceeds $10,000 be separately identified and quantified in a footnote. We believe that the $10,000 threshold balances our desire to avoid disclosure of clearly de minimis matters against the interests of investors in the nature of items comprising compensation. Each item of compensation less than that amount would be included in the column (other than aggregate perquisites and other personal benefits less than $10,000 as discussed below), but would not be required to be identified by type and amount.97 Items that would be disclosed in the All Other Compensation column would include, but would not be limited to, the items discussed below.
Request for Comment
Should all compensation no matter how de minimis be required to be disclosed? Will companies be able to track this information without undue burden? Is$10,000 the appropriate threshold for separate identification and quantification?
i. Earnings on Deferred Compensation
We propose requiring disclosure in the All Other Compensation column of all earnings on compensation that is deferred on a basis that is not tax-qualified, including on-tax qualified defined contribution retirement plans.98 Currently, these earnings must be disclosed only to the extent of any portion that is "above-market or preferential."99This limitation has generated criticism that Item 402 permits companies to avoid disclosure of substantial compensation.100
Separate footnote identification and quantification of all such earnings would be required if the amount exceeds $10,000.101 A company would be permitted to identify by footnote the portion of any earnings that it considered to be paid at an above-market rate, provided that the footnote explained the companys criteria for determining the portion considered "above-market."102
Request for Comment
Should we require, as proposed, disclosure of all earnings on compensation that is deferred on a basis that is not tax-qualified or should we require disclosure only of above-market or preferential earnings? If the latter, please explain why such an approach is more useful or informative for investors than our proposed approach.
ii. Increase in Pension Value
We propose requiring in the All Other Compensation Column the aggregate of increase in actuarial value to the executive officer of defined benefit and actuarial plans including supplemental plans) accrued during the year.103
An instruction would specify that this disclosure applies to each plan that provides for the payment of retirement benefits, or benefits that will be paid primarily following retirement, including but not limited to tax-qualified defined benefit plans and supplemental employee retirement plans, but excluding defined contribution plans.104The retirement section, discussed below, would provide more information regarding these covered plans.105 In contrast to defined contribution plans, for which the Summary Compensation Table requires disclosure of company contributions,106 Item 402 does not currently require disclosure of the annual increase in value of defined benefit plans, such as pension plans, in which the named executive officers participate.107 The annual increase in actuarial value of these plans may be a significant element of compensation that is earned on an annual basis, thus we believe it is appropriate to include these values in the computation of total compensation.
Such disclosure is necessary to permit the Summary Compensation Table to reflect total compensation for the year. Such disclosure would also permit a full understanding of the companys compensation obligations to named executive officers, given that defined benefit plans guarantee what can be a lifetime stream of payments and allocate risk of investment performance to the company and its shareholders. In addition, commentators have noted that the absence of such a disclosure requirement creates an incentive to shift compensation to pensions, results in the understatement of nonperformance-based compensation, and distorts pay comparisons between executives and between companies.
Request for Comment
Is disclosure of any additional information necessary to provide investors with meaningful information about the compensation earned annually through these plans?
Is there any particular form of defined benefit or actuarial plan for which the proposed disclosure format is not suitable? If so, how could the proposed disclosure requirement be adapted for such plans?
Should this disclosure instead be provided as a separate column in the Summary Compensation Table?
Is the aggregate increase in accrued actuarial value the best measure for disclosing annual compensation earned under defined benefit and actuarial plans? If not, why? What other method should be used?
Rather than requiring disclosure of the value based on the executive officer's benefit, should we require disclosure based on the companys cost for the plan? Under our proposals, disclosure of assumptions would be considered by companies in the narrative disclosure following the Summary Compensation Table and supplementary tables. Are there other preferable approaches? Should we otherwise require disclosure of any of the details of the calculation?
Is it possible to provide meaningful disclosure about total compensation absent tabular disclosure of the compensation earned annually through these plans? If so, how? Would such an approach be preferable?
iii. Perquisites and Other Personal Benefits
Perquisites and other personal benefits would be included in the All Other Compensation column. We propose changes to disclosure of perquisites and other personal benefits to improve disclosure and facilitate computing a total amount of compensation. We propose to require the disclosure of perquisites and other personal benefits unless the aggregate amount of such compensation is less than $10,000. We realize this may result in the total amount of compensation reportable in the Summary Compensation Table being slightly less than a complete total amount of compensation, but we believe $10,000 is a reasonable balance between investors need for disclosure of total compensation and the burden on a company to track every benefit, no matter how small. The current provision permits omission of perquisites and other personal benefits if the aggregate amount of such compensation is the lesser of either $50,000 or 10% of the total of annual salary and bonus.108 We believe this current rule permits the omission of too much information that investors may consider material.
We propose requiring footnote disclosure that identifies perquisites and other personal benefits. We propose modifying the current requirement that only perquisites and other personal benefits that are 25% of the total amount for each named executive officer are required to be identified and quantified. We propose modifying this requirement so that, unless the aggregate value of perquisites and personal benefits is less than $10,000, any perquisite or other personal benefit is identified and, if it is valued at the greater of $25,000 or ten percent of total perquisites and other personal benefits, its value would be disclosed.109 Consistent with our objective to streamline the Summary Compensation Table, the revised threshold is intended to avoid requiring separate quantification of perquisites having de minimis value. As is the case today, tax "grossups"or other reimbursement of taxes owed with respect to any compensation, including but not limited to perquisites and other personal benefits, would be separately quantified and identified in the tax reimbursement category described below, even if the associated perquisites or other personal benefits are eligible for exclusion or would not require identification or footnote quantification under the proposal. Where perquisites are subject to identification, they must be described in a manner that identifies the particular nature of the benefit received. For example, it is not sufficient to characterize generally as "travel and entertainment" different company-financed benefits, such as clothing, jewelry, artwork, theater tickets and housekeeping services.110
For decades questions have arisen as to what is a perquisite or other personal benefit required to be disclosed. We continue to believe that it is not appropriate for Item402 to define perquisites or personal benefits, given that different forms of these items continue to develop, and thus a definition would become outdated. Further, we are concerned that sole reliance on a bright line definition in our rules might provide an incentive to characterize perquisites or personal benefits in ways that would attempt to circumvent the bright lines.111
In todays proposals, perquisites and personal benefits are required to be disclosed for both named executive officers and directors. This discussion regarding perquisites and personal benefits therefore applies in the context of disclosure for both named executive officers and directors.112 The concepts of perquisites and personal benefits should not be interpreted artificially narrowly to avoid disclosure. Based on our long experience with disclosure in this area, we are providing interpretive guidance that among the factors to be considered in determining whether an item is a perquisite or other personal benefit are the following:
an item is not a perquisite or personal benefit if it is integrally and directly related to the performance of the executives duties.
otherwise, an item is a perquisite or personal benefit if it confers a direct or indirect benefit that has a personal aspect, without regard to whether it may be provided for some business reason or for the convenience of the company, unless it is generally available on a non-discriminatory basis to all employees.
The concept of a benefit that is "integrally and directly related" to job performance is a narrow one. As discussed below, it may extend, among other things, to office space at a company business location, a reserved parking space that is closer to business facilities but not otherwise preferential or additional clerical or secretarial services devoted to company matters. It does not extend to items that facilitate job performance, such as use of company-provided aircraft, yachts or other watercraft, commuter transportation services, additional clerical or secretarial services devoted to personal matters, or investment management services. The fact that the company has determined that an expense is an "ordinary" or "necessary" business expense for tax or other purposes or that an expense is for the benefit or convenience of the company is not responsive to the inquiry as to whether the expense provides a perquisite or other personal benefit for disclosure purposes. Whether the company should pay for an expense relates principally to questions of state law regarding use of corporate assets; our disclosure requirements are triggered by different and broader concepts.
Applying the concepts that we outline above, examples of items requiring disclosure as perquisites or personal benefits under Item 402 include, but are not limited to: club memberships not used exclusively for business entertainment purposes, personal financial or tax advice, personal travel using vehicles owned or leased by the company, personal travel otherwise financed by the company, personal use of other property owned or leased by the company, housing and other living expenses (including but not limited to relocation assistance and payments for the executive or director to stay at his or her personal residence), security provided at a personal residence or during personal travel, commuting expenses (whether or not for the companys convenience or benefit), and discounts on the companys products or services not generally available to employees on a non-discriminatory basis.
In addition, as noted, business purpose or convenience does not affect the characterization of an item as a perquisite or personal benefit where it is not integrally and directly related to the performance by the executive of his or her job. Therefore, for example, a companys decision to provide an item of personal benefit for security purposes does not affect its characterization as a perquisite or personal benefit. Accompany policy that for security purposes an executive (or an executive and his or her family) must use company aircraft or other company means of travel for personal travel, or must use company or company-provided property for vacations, does not affect the conclusion that the item provided is a perquisite or personal benefit.
Examples of items that would not be perquisites or personal benefits would include, among other things, travel to and from business meetings, other business travel, business entertainment, security during business travel, and itemized expense accounts the use of which is limited to business purposes.
In seeking to interpret current rules, some legal advisers have put forward to the Commission staff examples of arrangements that they believe raise issues requiring more detailed bright line guidance regarding the definition of perquisites. These examples include larger offices or a level of secretarial service not available to employees generally. We believe that the factors enumerated above provide sufficient guidance in these areas. For example, an office at the job location, even if larger than that of other employees, is integrally and directly related to performance of the executives job, as is secretarial service used for business purposes, even if at a higher level than other employees. On the other hand, provision of additional secretarial services, such as a second secretary, that is not directly related to performance of an executives job would be a perquisite or personal benefit.
Beyond these examples, we assume companies and their advisors, who are more familiar with the detailed facts of a particular situation and who are responsible for providing materially accurate and complete disclosure satisfying our requirements, can assess whether particular arrangements require disclosure as perquisites or personal benefits. In light of the importance of the subject to many investors, all participants should approach the subject of perquisites and personal benefits thoughtfully.113
Finally, we observe that the proposal calls for aggregate incremental cost to the company and its subsidiaries as the proper measure of value of perquisites and other personal benefits.114 The amount attributed to such benefits for federal income tax purposes is not the incremental cost for purposes of our disclosure rules unless, independently of the tax characterization, it constitutes such incremental cost. Therefore, for example, the cost of aircraft travel attributed to an executive for federal income tax purposes is not generally the incremental cost of such a perquisite or personal benefit for purposes of our disclosure rules.115
Request for Comment
Is $10,000 the proper minimum below which disclosure of the total amount of perquisites and personal benefits should not be required? Should there be no minimum? Should the minimum be a higher amount, such as $25,000 or$50,000? Should the current minimum of the lesser of $50,000 or 10% of total salary and bonus be retained? Would some other ratio be more appropriate?
Should all perquisites be required to be separately identified when the $10,000aggregate threshold is exceeded, as proposed?
Is the greater of $25,000 or 10% of the total amount of perquisites and personal benefits the proper minimum below which perquisites and personal benefits should not be required to be separately identified and their value reported?
Should there be a lower minimum, such as $10,000, or no minimum? Should the current minimum of 25% of the total amount be retained?
Should perquisites and personal benefits below the proposed threshold be separately identified by category, even if not separately quantified? Alternatively, is separate identification and quantification of all perquisites and personal benefits so significant to investors that no threshold should apply for either purpose?
We propose to retain the current standard for valuing perquisites and other personal benefits, based on the aggregate incremental cost to the company and its subsidiaries which has applied since 1983.116 We believe that this approach is consistent with the approach we are taking otherwise in valuing compensation, including in respect of share-based compensation. Nevertheless, we realize that there may be an issue whether the retail value of what is received by the executive officer or director, rather than the aggregate incremental cost to the company, better measures the compensation provided by perquisites and other personal benefits. Therefore we request comment as to whether we should require perquisites and other personal benefits to be valued based on the retail price of the item or, if none, the retail price of a commercially available equivalent. In determining the commercially available equivalents, for example, for travel on the company's aircraft, the retail price of a commercially available equivalent would be the retail price to charter the same model aircraft. First-class airfare would not be considered equivalent to travel on a private aircraft.
Would the proposed valuation standard facilitate Item 402 compliance while providing meaningful compensation disclosure? Is there any other valuation methodology that is preferable for valuing perquisites and other personal benefits? If so, why?
Under the proposals a "gross-up" or other reimbursement of taxes owed with respect to perquisites and other personal benefits would be required to be included in the table and separately quantified and identified in the tax reimbursement category if it meets the relevant threshold, even if the associated perquisites or other personal benefits would not be required to be included in the table or separately quantified. Is separate identification of items such as tax gross-up material to investors even if it is clear the amount must be included in the All Other Compensation column?
Should Item 402 include a definition of perquisites or other personal benefits? If so, how should perquisites or other personal benefits be defined? How can we assure that new perquisites will not be developed in a manner intended to avoid the definition and therefore disclosure? If such a definition is principles-based, what principles in addition to those described in this release should be considered?
We are providing interpretive guidance above regarding perquisites and personal benefits. Are there any areas regarding perquisites and personal benefits where we should consider providing additional or different interpretive guidance? Should any of our interpretive guidance be codified?
iv. Additional All Other Compensation Column Items
The proposals also would specify that items disclosed in the All Other Compensation column would include, but not be limited to, the following items:117
amounts paid or accrued pursuant to a plan or arrangement in connection with any termination (or constructive termination) of employment or a change in control;118
annual company contributions or other allocations to vested and unvested defined contribution plans;119
the dollar value of any insurance premiums paid by the company with respect to life insurance for the benefit of a named executive officer;120
"gross-ups" or other amounts reimbursed during the fiscal year for the payment oftaxes;121 and
for any security of the company or its subsidiaries purchased from the company or its subsidiaries (through deferral of fees or otherwise) at a discount from the market price of such security at the date of purchase, unless that discount is available generally either to all security holders or to all salaried employees of the company, the compensation cost computed in accordance with FAS 123R.122
Request for Comment
Are there other items that should be specifically enumerated for inclusion in the All Other Compensation Column? If so, what are they and how should they be valued and reported?
Will the combination of the current Other Annual Compensation Column and the All Other Compensation Column result in too many compensation items being aggregated and separately identified within one column of the table? Is there another reason to continue to show the two groups of items separately?
Should we retain the treatment of securities purchased at a discount in current Item 402(b)(2)(iii)(C)(5), which requires inclusion in the Other Annual Compensation column of the dollar value of the difference between the price paid by a named executive officer for any security of the company or its subsidiaries purchased from the company or its subsidiaries (through deferral of salary or bonus, or otherwise), and the fair market value of such a security at the date of purchase? If so, why?
Because so many different types of compensation would be reportable in the "All Other Compensation" column, would this disclosure be clearer if it were presented as a supplemental table in the following or similar format:
| Name | Perqu-isites and Other Personal Benefits | Earnings on Deferred Comp-ensation | Tax Rei-mburse-ments | Dis-counted Sec-urities Purchases | Pay-ments/ Accruals on Termina-tion Plans | Reg-istrant Contribu-tions to Defined Contribu-tion plans | Increase in Pension Actuarial Value | Ins-urance Pre-miums | Other |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| PEO | |||||||||
| PFO | |||||||||
| A | |||||||||
| B | |||||||||
| C |
e. Captions and Table Layout
Currently a portion of the table is labeled as "annual compensation" and another portion as "long term compensation." These captions create distinctions that may be confusing to both users and preparers of the Summary Compensation Table. Today's proposal would not separately identify some columns as "annual" and other columns as" long term" compensation. In eliminating this distinction, we also propose to revise the definition of "long term incentive plan" to eliminate any distinction between a "longterm" plan and one that may provide for periods shorter than one year, because, like the captions, the current approach creates distinctions that may be confusing to users and preparers. The proposals would thus define an "incentive plan" as any plan providing compensation intended to serve as incentive for performance to occur over a specifiedperiod.123 Consistent with this change, as described above, we propose to merge the current Other Annual Compensation column into the proposed All Other Compensation column, and include current information regarding incentive plan compensation in the appropriate column for the relevant form of award.
Request for Comment
Will these changes improve the table? Are there any other changes to the captions and table layout that would improve the table?
2. Supplemental Annual Compensation Tables
Following the Summary Compensation Table, we propose requiring two supplemental tables. These two tables are intended to help explain information in the Summary Compensation Table and would be derived from two tables currently required.
a. Grants of Performance-Based Awards Table
The first table that would supplement the Summary Compensation Table would include information regarding non-stock grants of incentive plan awards, stock-based incentive plan awards and awards of options, restricted stock and similar instruments under plans that are performance-based (and thus provide the opportunity for future compensation if conditions are satisfied).124 This would ensure consistent reporting treatment of these performance-based awards, disclosing information equivalent to that currently required for grants of other long-term incentive plan awards. For purposes of this table, awards would be considered performance-based if they are subject to either a performance condition, or a market condition, as those terms are defined in FAS 123R.125
Disclosure in this table of grants of incentive plan awards would complement Summary Compensation Table disclosure of grant date fair value of stock awards and option awards, and the disclosure of annual amounts earned under non-stock based incentive compensation. This supplemental table would show the terms of grants made during the current year, including estimated future payouts, with separate disclosure for each grant.126
GRANTS OF PERFORMANCE-BASED AWARDS
| Name | Perform-ance-Based Stock and Stock-based Incentive Plans: number of shares, units or other rights (#) | Perform-ance-Based Options: number of securities underlying Options (#) | Non-Stock Incentive Plan Awards: number of units or other rights (#) | Dollar amount of consid-eration paid for award, if any ($) | Grant Date for Stock or Option Awards | Perform-ance or other period until vesting or payout and Option Expira-tion Date | Estimated future payouts | ||
| Threshold ($) or (#) | Target ($) or (#) | Maxi-mum ($) or (#) | |||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| PEO | |||||||||
| PFO | |||||||||
| A | |||||||||
| B | |||||||||
| C | |||||||||
Request for Comment
Will the proposed Grants of Performance-Based Awards Table effectively supplement the equity awards and non-stock incentive plan compensation information to be disclosed in the Summary Compensation Table? In particular, should tabular disclosure be required of any additional information relating to performance-based equity awards and non-stock incentive plan awards?
Is the information required by columns (b), (c) and (d) of this proposed table redundant with the information required in the Grants of Performance-Based Awards Table describing estimated future payouts to be required in columns (h), (i) and (j) of the Table, such that any of these columns should be eliminated? Is any other tabular information needed to describe estimated future payouts in addition to the information that would be required in proposed columns (h), (I) and (j)?
Are the references to the definitions of "performance condition" and "marketcondition" in FAS 123R appropriate in defining performance-based awards?
b. Grants of All Other Equity Awards Table
The second table supplementing the Summary Compensation Table would show the equity-based compensation awards granted in the last fiscal year that are not performance-based, such as stock, options or similar instruments where the payout or future value is tied to the companys stock price, and not to other performance criteria.127
GRANTS OF ALL OTHER EQUITY AWARDS
|
Name |
Number of Securities Underlying Options Granted (#) | Exercise or Base Price ($/Sh) | Expiration Date | Number of Shares of Stock or Units Granted (#) | Vesting Date |
Grant Date |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) |
| PEO | ||||||
| PFO | ||||||
| A | ||||||
| B | ||||||
| C |
Instructions would require options and stock appreciation rights granted in connection with a repricing transaction to be included in the table, and footnote descriptions of any material terms of a grant. 128 Because the Summary Compensation Table would disclose grant date fair value of the options, stock appreciation rights or similar instruments, the columns in the current Option/SAR Grants in Last Fiscal Year table requiring disclosure of that value or, alternatively, potential realizable value at assumed five percent and ten percent annual rates of return, would be eliminated.129This table would also supplement the Summary Compensation Table disclosure of the aggregate grant date fair value of stock, units and similar instruments with disclosure relating to the number of underlying securities and other material terms of the grants.
Request for Comment
Will the Grants of All Other Equity Awards Table, as proposed, effectively supplement the option and stock grants information to be disclosed in the Summary Compensation Table? In particular, should tabular disclosure be required of any additional information relating to these grants?
Is this table or any aspect of it too repetitive?
Will it be clear to investors how the two supplemental tables relate to the Summary Compensation Table? If not, how could we make that more clear?
Are all plan-based awards covered by the two supplemental tables? What additional provisions would we need to add to cover all such awards?
Instead, would it be preferable to have two separate versions of the Summary Compensation Table, with one showing all awards made during the year and the other having exactly the same columns showing all the amounts earned by services during the year? Would this approach increase the risk of double counting? Would it be duplicative as to cash salary and bonus and other currently earned and paid amounts and benefits?
62 The tabular disclosure and related narrative disclosure under proposed Item 402 would apply, as does existing Item 402, to named executive officers. As discussed below in Section II.B.6.a., we are proposing certain changes to the definition of named executive officer.
63 The two tables that would supplement the Summary Compensation Table would be the Grants of Performance-Based Awards Table, discussed below in Section II.B.2.a., and the Grants of All Other Equity Awards Table, discussed below in Section II.B.2.b. A proposed narrative disclosure requirement accompanying these three tables is discussed below in Section II.B.3.
64 Under the proposals, these interests would be disclosed as current compensation for those prior years.
65 Information regarding holdings of such equity-based interests that relate to compensation would be disclosed in the Outstanding Equity Awards at Fiscal Year-End Table, discussed below in Section II.B.4.a. Information regarding realization on holdings of equity-related interests would be required to be disclosed in the Option Exercises and Stock Vested Table discussed below in Section II.B.4.b.
66 The proposed disclosure regarding retirement and post-employment compensation would be required in the Retirement Plan Potential Annual Payments and Benefits Table, discussed below in Section II.B.5.a., the Nonqualified Defined Contribution and Other Deferred Compensation Plans Table, discussed below in Section II.B.5.b., and the narrative disclosure requirement for other potential post-employment payments discussed below in Section II.B.5.c.
67 Current Instruction to Item 402(b), permitting exclusion of information for fiscal years prior to the last completed fiscal year if the registrant was not a reporting company pursuant to Exchange Act Sections 13(a) or 15(d) at any time during that year, unless the registrant previously was required to provide information for any such year in response to a Commission filing requirement, would be retained and redesignated as proposed Instruction 1 to Item 402(c).
68 "PEO" refers to principal executive officer. See Section II.B.6.a. below for a description of the proposed named executive officers for whom compensation disclosure would be required.
69 "PFO" refers to principal financial officer.
70 Proposed Instruction 2 to Item 402(c) (requiring all compensation values in the Summary Compensation Table to be reported in dollars). Currently, some stock-based compensation is disclosed in per share increments rather than in dollar amounts. The instruction would further require, where compensation was paid or received in a different currency, footnote disclosure identifying that currency and describing the rate and methodology used for conversion to dollars.
71 Columns (a) and (b) would, as is currently the case, specify the executive officer and the year in question.
72 This is the case today for salary and bonus. This aspect of current Instruction 1 to Item 402(b)(2)(iii)(A) and (B) will be expanded and redesignated as Proposed Instruction 4 to Item402(c).
73 Currently, the requirement is triggered only if the officer elects the deferral. We propose to revise this to cover all deferrals no matter who has initiated them.
74 See Section II.B.5.b., describing the Nonqualified Defined Contribution and Other Deferred Compensation Plans Table. Disclosure of these amounts as contributions would be required for nonqualified deferred compensation plans. This disclosure would not be required for qualified plans. Nonqualified deferred compensation plans and arrangements provide for the deferral of compensation that does not satisfy the minimum coverage, nondiscrimination and other rules that "qualify" broad-based plans for favorable tax treatment under the Internal Revenue Code.
75 Proposed Instruction 3 to Item 5.02(e) of Form 8-K and proposed Instruction 1 to Item 402(c)(2)(iv) and (v). Currently, in the event that such amounts are not determinable at the most recent practicable date, they are generally reported in the annual report on Form 10-K or proxy statement for the following fiscal year. We believe providing the information more quickly is appropriate and are therefore proposing the use of a current report on Form 8-K. Proposed Instruction 1 to Item 402(c)(2)(iv) and (v) would require that the company disclose in a footnote that the salary or bonus is not calculable through the latest practicable date and the date that the salary or bonus is expected to be determined.
76 Generally speaking, a restricted stock award is an award of stock subject to vesting conditions, such as performance-based conditions or conditions based on continued employment for a specified period of time. This type of award is referred to as "nonvested equity shares" in FAS123R. Phantom stock, phantom stock units, common stock equivalent units and other similar awards are typically awards where an executive obtains a right to receive payment in the future of an amount based on the value of a hypothetical, or notional, amount of shares of common equity or in some cases stock based on that value). To the extent that the terms of phantom stock, phantom stock units, common stock equivalents or other similar awards include option-like features, the awards would be required to be included in the Option Awards column. Currently, restricted stock awards are valued in the Summary Compensation Table by multiplying the closing market price of the companys unrestricted stock on the date of grant by the number of shares awarded.
77 These performance-based stock awards can currently be reported at the companys election as incentive plan awards. See current Instruction 1 to Item 402(b)(2)(iv). Our proposal would eliminate this option. See the discussion of what are considered performance-based conditions in note 87, below.
78 A stock appreciation right usually gives the executive the right to receive the value of the increase in the price of a specified number of shares over a specified period of time. These awards may be settled in cash or in shares.
79 Current Item 402(c)(2)(vi).
80 Proposed Instruction 1 to Item 402(c)(2)(vi) and (vii).
81 See Exchange Act Rule 14a-3 [17 CFR 240.14a-3].
82 We recently proposed rules that would allow companies and other persons to use the Internet to satisfy proxy material delivery requirements. Internet Availability of Proxy Materials, Release No. 34-52926 (Dec. 8, 2005) [70 FR 74597].
83 Under FAS 123R, the classification of an award as an equity or liability award is an important aspect of the accounting because the classification will affect the measurement of compensation cost. Awards with cash-based settlement, repurchase features, or other features that do not allow an employee to bear the risks and rewards normally associated with share ownership for a specified period of time would be classified as liability awards under FAS 123R. For an award classified as an equity award under FAS 123R, the compensation cost recognized is fixed for a particular award, and absent modification, is not revised with subsequent changes in market prices or other assumptions used for purposes of the valuation. In contrast, liability awards are initially measured at fair value on the grant date, but for purposes of recognition in financial statement reporting are then re-measured at each reporting date through the settlement date under FAS 123R.These re-measurements would not be the basis for executive compensation disclosure unless the award has been modified, as described later in this proposal.
84 These earnings are currently reportable in the Other Annual Compensation or All Other Compensation columns of the Summary Compensation Table. Current Item 402(b)(2)(iii)(C)(2)requires disclosure of earnings on restricted stock, options, and SARs paid during the fiscal year or payable during that period but deferred at the election of the named executive officer), to the extent those earnings are above-market or preferential. The proposal would require disclosure of all such earnings, rather than merely any above-market or preferential portion. Current Item 402(b)(2)(iii)(C)(3) requires similar disclosure of all earnings on long-term incentive plan compensation. See also current Item 402(b)(2)(v)(B) and (C).
85 Proposed Instruction 3 to Item 402(c)(2)(vi) and (vii) and Proposed Instruction 2 to Item 402(c)(2)(viii).
86 See current Instruction 3 to Item 402(b)(2)(iv) and proposed Instruction 2 to Item 402(c)(2)(vi)and (vii). Under FAS 123R, unlike under our proposal, only the incremental compensation cost is recognized for a modified award.
87 See Section II.B.2.b., discussing the Grants of All Other Equity Awards Table required by proposed Item 402(e). As defined in Appendix E of FAS 123R, a performance condition is "acondition affecting the vesting, exercisability, exercise price or other pertinent factors used in determining the fair value of an award that relates to both (a) an employees rendering service for a specified (either explicitly or implicitly) period of time and (b) achieving a specified performance target that is defined solely by reference to the employers own operations (or activities). Attaining a specified growth rate in return on assets, obtaining regulatory approval to market a specified product, selling shares in an initial public offering or other financing event, and a change in control are examples of performance conditions for purposes of this Statement. A performance target also may be defined by reference to the same performance measure of another entity or group of entities. For example, attaining a growth rate in earnings per share that exceeds the average growth rate in earnings per share of other entities in the same industry is a performance condition for purposes of this Statement. A performance target might pertain either to the performance of the enterprise as a whole or to some part of the enterprise, such as a division or an individual employee." An award also would be considered to have a performance condition if it is subject to a market condition, which is "a condition affecting the exercise price, exercisability, or other pertinent factors used in determining the fair value of an award under a share-based payment arrangement that relates to the achievement of (a) a specified price of the issuer's shares or a specified amount of intrinsic value indexed solely to the issuers shares or (b) a specified price of the issuers shares in terms of a similar (or index of similar) equity security securities)."
88 See Section II.B.2.a., discussing the Grants of Performance-Based Awards Table.
89 See, e.g., Jonathan Weil and Betsy McKay, Coke Developed a New Way to Value Options, But Company Will Return to its Classic Formula, Wall St. J., Mar. 7, 2003, at C3 (highlighting potential issue of using one valuation methodology for financial statements and another for executive compensation disclosure).
90 FAS 123R requires a company to aggregate individuals receiving awards into relatively homogenous groups with respect to exercise and post-vesting employment termination behaviors for the purpose of determining expected term, for example executives and non-executives. Our proposals today are not intended to change the method used to value employee share options for purposes of FAS 123R or to affect the judgments as to reasonable groupings for purposes of determining the expected term assumption required by FAS 123R. Under our proposals, where a company uses more than one group, the measurement of grant date fair value for purposes of Item 402 would be derived using the expected term assumption for the group that includes the named executive officers (or the group that includes directors for purposes of proposed Item 402(l)).
91 Proposed Item 402(c)(2)(viii). An incentive plan generally provides for compensation intended to serve as an incentive for performance to occur over a specified period, whether such performance is measured by reference to financial performance of the company or an affiliate, the company's stock price, or any other measure. See proposed Item 402(a)(6)(iii) for definitions of "incentiveplan" and "non-stock incentive plan."
92 Awards disclosed in this column are not covered by FAS 123R for financial reporting purposes because they do not involve share-based payment arrangements. Awards that involve share-based payment arrangements would be disclosed in the Stock Awards or Option Awards columns, as appropriate.
93 See Section II.B.2.a., discussing the Grants of Performance-Based Awards Table. Under the proposals, once the disclosure has been provided in the Summary Compensation Table when the specified performance criteria have been satisfied and the compensation earned, and the grant of the award has been disclosed in the Grants of Performance-Based Awards Table, no further disclosure would be required under proposed Item 402 when payment is actually made to the named executive officer.
94 Current Items 402(b)(2)(iv)(C) and 402(e).
95 The only exception, as discussed below, would be perquisites and personal benefits if they aggregated less than $10,000 for a named executive. The 1992 Release, at Section II.A.4, also noted "the revised item includes an express statement that it requires disclosure of all compensation to the named executive officers and directors for services rendered in all capacities to the registrant and its subsidiaries." See also current Item 402(a)(2).
96 Current Item 402(b)(2)(iii)(c).
97 See Section II.B.1.d.iii. regarding separate standards for identification of perquisites and other personal benefits.
98 Proposed Item 402(c)(2)(ix)(B).
99 Current Items 402(b)(2)(iii)(C)(2) and 402(b)(2)(v)(B). An instruction specifies that interest isabove-market only if the rate exceeds 120% of the applicable federal long-term rate. Furthermore, earnings disclosure is currently required in the Other Annual Compensation column or the All Other Compensation column, depending upon when paid or payable, complicating the preparation process and generating confusion among users of the Summary Compensation Table.
100 See, e.g., Ellen E. Schultz, Buried Treasure: Well-Hidden Perk Means Big Money for Top Executives, Wall St. J. , Oct. 11, 2002, at A1.
101 Proposed Instruction 3 to Item 402(c)(2)(ix). Consistent with current requirements, if applicable interest rates vary depending upon conditions such as a minimum period of continued service, the reported amount should be calculated assuming satisfaction of all conditions to receiving interest at the highest rate. Proposed Instruction 5 to Item 402(c)(2)(ix), which is derived from current Instruction 3 to Item 402(b)(2)(iii)(C).
102 Proposed Instruction 5 to Item 402(c)(2)(ix).
103 Proposed Item 402(c)(2)(ix)(G).
104 Proposed Instruction 6 to Item 402(c)(2)(ix). Defined benefit plans include, for example, cash balance plans in which the retirees benefit may be determined by the amount represented in an account rather than based on a formula referencing salary while still employed.
105 See Section II.B.5.a., discussing the proposed Retirement Plan Potential Annual Payments and Benefits Table.
106 Current Item 402(b)(2)(v)(D), which requires annual registrant contributions or other allocations to vested and unvested defined contribution plans to be disclosed in the All Other Compensation column.
107 A typical defined contribution plan is a retirement plan in which the company and/or the executive makes contributions of a specified amount, and the amount that is paid out to the executive depends on the return on investments from the contributed amounts. A typical defined benefit plan is a retirement plan in which the company pays the executive specified amounts at retirement which are not tied to investment performance of the contributions that fund the plan.
108 Current Item 402(b)(2)(iii)(C)(1).
109 Proposed Instruction 3 to Item 402(c)(2)(ix). Compare current Instruction 1 to Item 402(b)(2)(iii)(C).
110 See In the Matter of Tyson Foods, Inc. and Donald Tyson, Litigation Release No. 34-51625 (Apr.28, 2005) (failure to identify perquisites).
111 In the 1970s and early 1980s, the Commission issued several interpretive releases regarding executive compensation disclosure issues, including disclosure of perquisites and personal benefits. See Disclosure of Management Remuneration, Release No. 33-5856 (Aug. 18, 1977) [42FR 43058]; Disclosure of Management Remuneration, Release No. 33-5904 (Feb. 6, 1978) [43 FR6060]; Disclosure of Management Remuneration, Release No. 33-6027 (Feb. 22, 1979) [44 FR16368]; Disclosure of Management Remuneration, Release No. 33-6166 (Dec. 12, 1979) [44 FR74803]; and Interpretation of Rules Relating to Disclosure of Management Remuneration, Release No. 33-6364 (Dec. 3, 1981) [46 FR 60421]. In Section I of the 1983 Release, as part of a substantial revision to Item 402 adopted at the time, the Commission rescinded those interpretive releases. Subsequently, neither the Commission nor its staff has published interpretations addressing what must be disclosed as a perquisite or personal benefit.
112 For directors, the disclosure would be required in the Director Compensation Table discussed below in Section B.9.
113 The Commission has recently taken action in circumstances where perquisites were not properly disclosed. See In the Matter of Tyson Foods, Inc. and Donald Tyson, note 110 above. See also Alex Berenson, From Coffee to Jets, Perks for Executives Come Out in Court, N.Y. Times, Feb. 22, 2004, at 11 (citing criminal and civil litigation in which perquisites were identified and commentators discussing the benefits of improved perquisite disclosure).
114 Proposed Instruction 4 to Item 402(c)(2)(ix).
115 See IRS Regulation §1.61-21(g) [26 CFR 1.61-21(g)] regarding Internal Revenue Service guidelines for imputing taxable personal income to an employee who travels for personal reasons on corporate aircraft. These complex regulations are known as the Standard Industry Fare Level or SIFL rules.
116 See the 1983 Release, at Section III.C.
117 These items are all currently required to be disclosed either under All Other Compensation or under Other Annual Compensation.
118 Unlike the current Item 402(b)(2)(v)(A) requirement, proposed Item 402(c)(2)(ix)(E) does not refer to amounts payable under post-employment benefits, because the focus for this item is current year compensation rather than aggregate amounts potentially payable in the future. These items are also the subject of disclosure as post-termination compensation, as described in Section II.B.5., below. For any compensation as a result of a business combination, other than pursuant to a plan or arrangement in connection with any termination of employment or change-in-control, such as a retention bonus, acceleration of option or stock vesting periods, or performance-based compensation intended to serve as an incentive for named executive officers to acquire other companies or enter into a merger agreement, disclosure would be required in the appropriate Summary Compensation Table column and in the other tables or narrative disclosure where the particular element of compensation is required to be disclosed.
119 Proposed Item 402(c)(2)(ix)(F).
120 Proposed Item 402(c)(2)(ix)(H). Because the proposal calls for disclosure of the dollar value of any life insurance premiums, rather than only premiums with respect to term life insurance, as currently required, the requirement of current Items 402(b)(2)(v)(E)(1) and (2) to disclose the value of any remaining premiums with respect to circumstances where the named executive officer has an interest in the policys cash surrender value would be deleted.
121 Proposed Item 402(c)(2)(ix)(C).
122 Proposed Item 402(c)(2)(ix)(D).
123 Proposed Item 402(a)(6)(iii).
124 This table would contain the information in the current Long-Term Incentive Plan Awards Table, augmented with information regarding performance-based stock, option and similar awards. See current Item 402(e). This table would also include awards with performance, market and other conditions affecting the terms of the award (exercise price, for example) rather than vesting.
126 Proposed Instruction 1 to Item 402(d).
127 Proposed Item 402(e). Proposed Instruction 2 to Item 402(e) would require that if more than one award is made to a named executive officer during the last completed fiscal year, a separate line should be used to disclose each award.
128 Proposed Instructions 3 and 4 to Item 402(e).
129 See current Item 402(c)(2)(vi). We also propose removing the column, required by current Item 402(c)(2)(iii), requiring disclosure of the percent that the grant represents of total options and stock appreciation rights granted to all employees during the fiscal year. At this time, we do not believe that this relatively narrow disclosure is independently material to an understanding of a named executive officers compensation.
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