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Developments - Federal Register Publication
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 Final
SEC release was published in Federal Register
- Published on 9.08.06, after a delay
- Delay was because GPO insisted on SEC's
reproposal of "Katie Couric" rules being put in a separate new proposal release
- Main release was re-designated as Release
33-8732A
- Had been 33-8732
- No material changes were made to the release
- Separate release published for "Katie Couric"
proposals
- Also published in Federal Register on 9.08.06
- Designated as Release 33-8735
LawyerLinks
Advantage release updated on 9.08.06
- To reflect revised final release 33-8732A
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Summary
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Orange links in this box go to
detail below on this Topic Page
Significant
SEC final rule release
Principal
changes to SEC rules
- Revises disclosure rules for executive
compensation and related party transactions
- Revises disclosure rules for corporate
governance
- Requires Plain English for proxy and
information statements
- Gives guidance for stock option disclosures
For
other changes made to Rules and Forms
Effective
dates
- Changes made generally apply to SEC filings
for fiscal years ending on or after 12.15.06
- See
Effective dates
Special
treatment for
Aug
2006 release adopts SEC Jan 2006 proposals
But
re-proposes "Katie Couric" disclosures
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Hyperlinked Index Final Release 33-8732A
9.08.06
Principal Changes Made
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Executive
compensation disclosures
Related
party transactions
Corporate
governance disclosures
Plain
English
- Extends Plain English requirements
to proxy and information statements
- See
Plain English
Provides
guidance on option disclosures
- With particular focus on timing of option grants
and determination of exercise prices
- See Stock Option Disclosures
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Other Rule Changes
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Director
compensation
- Director compensation for the last fiscal year will
be required in a Director Compensation Table (along with related narrative),
which will be similar in format to the Summary Compensation Table described
above.
S-K 402 (_) Stock performance graph
S-K
306 Compensation committee report
S-K
401(g) Promoters and control persons
- Revises required disclosures
- Moved to S-K 201(e)
S-K
403(b) Management security ownership
- Revises disclosure to cover shares pledged as
security
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S-K 403(b)
Form
8-K
- The
rules will modify the disclosure requirements in Form 8-K to capture some
employment arrangements and material amendments thereto only for named executive
officers. The rules will also consolidate all Form 8-K disclosure regarding
employment arrangements under a single item
- Form 8-K required to report salary and bonus
information that is not available when proxy distributed
In an effort to restore a more balanced approach to
the filing requirements added by the 2004 Form 8-K
amendments, the Release amends
- Form 8-K Items 1.01, Entry into a Material
Definitive Agreement
- Item 5.02,
Departures of Directors or Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers
The
new rules modify the disclosure requirements relating to management contracts
and plans and move certain requirements from Item 1.01 to Item 5.02. A new
instruction to Item 5.02 also clarifies that the Named Executive Officers for
whom disclosure is required are those Named Executive Officers included in the
most recently filed proxy statement Conforming
changes to
- Rule 16b-3
- Regulation BTR
Changes
to SEC Forms
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Changes to SEC Forms
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Exchange
Act Forms
Securities
Act Forms
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Effective Dates for Changes
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Applies
to SEC filings for fiscal years ending
on or after 12.15.06
- Proxy and information statements
- Forms 10-K and 10-KSB
- Securities Act registration statements
Form
8-K changes
Final
release commentary
-
Section VII 33-8732
- No need to restate compensation disclosure for
prior years
- Disclosure requirements will be phased-in over
three years
- E.g., Summary Compensation Table need only show
one year of information in 2007; two years in 2008
SEC
FAQs
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Small Business Issuers
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Small Business Issuers
- Small business issuers are not required to
provide the CD&A and the only tables required of small business issuers are the
Summary Compensation Table, the Outstanding Equity Awards at Fiscal Year-End
Table and the Director Compensation Table. Information in the Summary
Compensation Table will be required for the last two fiscal years and the Named
Executive Officers will include only the principal executive officer and the
other two most highly compensated executive officers with total compensation
exceeding $100,000
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Foreign Private Issuers
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 Form 20-F
- The Amendments amend Form 20-F, the annual reporting
form for non-U.S. companies, to clarify exhibit requirements.
- Compensatory contracts or plans with executives or directors
will be required exhibits in the Form 20-F only if required to
be filed publicly, in whole or part, under the companys home
system of regulation or if it has otherwise made the contract or
plan public.
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Business Development Companies
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The amendments will modify certain disclosure
requirements for registered investment companies and business development
companies. Specifically, the amendments will:
- Apply the executive compensation disclosure requirements for operating companies
in their entirety to business development companies;
- Increase to $120,000 the current $60,000
threshold for disclosure of certain interests, transactions, and relationships
of independent directors of registered investment companies, similar to the
increase proposed for operating companies with respect to related party
disclosure
- Reorganize the proxy rules applicable to
investment companies to reflect organizational changes proposed for operating
companies
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Reproposed - Highly Compensated Employee Disclosure
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So-called
"Katie Couric" proposal
- SEC would have required narrative disclosure for
up to three employees who were not executive officers
- If their total compensation was more than any
NEO
- Proposal received extensive comment
- Including expressions of concerns that it would
trigger disclosure of proprietary information about entertainment personalities,
Wall Street traders and similar employees
SEC
has requested additional comment
- May limit disclosures to the most highly
compensated employees who exert "significant policy influence"
- May limit to large accelerated filers
The revised proposal gives examples of employees who generally do
not have responsibility for significant policy decisions:
- Salespeople, Entertainment Personalities,
Actors, Singers, Professional Athletes, Traders, and Portfolio Managers
The
SEC is also more generally requesting comments on whether the three additional
employees should be named, whether the additional narrative disclosure, as
revised, is material to investors, whether the disclosure raises privacy issues
or negatively impacts competition, and what additional work and costs are
associated with collecting the additional information
The
comment period ends 45 days following publication of the final rules in the
Federal Register
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Commentary
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Commentary
on Final Release
Commentary
on Proposal Release
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