|
Summary
|
More
changes made to executive compensation tables
- Summary compensation table
- Grants of plan-based awards table
- Director compensation table
- to more closely conform the reporting of stock and option awards to [FAS 123R]
- The new disclosure requirements will be easier for companies to prepare and for investors to understand, says SEC Chairman Christopher Cox
- SEC press release 12.22.06
New quantitative measure for stock and option awards
- Affects dollar value used in Stock Awards
and Option Awards columns of the Summary Compensation Table and the Director Compensation Table
- Has affect of spreading out value of award over
the vesting period, rather than being fully reflected in year of grant
- Must now use the compensation cost of awards over their
requisite service period
- Rather than their aggregate grant date fair value
- Grant date fair value
will instead be disclosed in a new column in the
Grants of Plan-Based Awards Table
- Forfeitures are required to be described in accompanying footnotes
New disclosures for Grants of Plan Based Awards Table
-
About repriced or materially modified options, SARs and other similar instruments
-
Must disclose the incremental fair value computed as of the repricing or modification date per FAS 123R
- Must also include related footnote disclosure to the Director Compensation Table
Changes
are already effective
- Interim final rules, effective upon Fed Register publication
- Published on 12.29.06
- SEC still seeks comment
|
Hyperlinked Index
Interim Final Release 33-8765
12.22.06
|
Top of release
Background
I
Discussion
II
- Summary Compensation Table
II.A
- Grants of Plan-Based Awards Table
II.B
Administrative
law matters - Request for comments
III
Transition
guidance
IV
Miscellaneous sections
- Paperwork Reduction Act
V
- Cost-benefit analysis
VI
- Promotion of capital formation, etc
VII
- Regulatory Flexibility Analysis
VIII
Text
of amendments
IX
- Published in Federal Register on 12.29.06
Comment
letters to SEC
|
Text of Rule Changes
|
S-K 402(c) Summary
Compensation Table |
Revise
Instruction 2 to Item 402(c)(2)(iii) and (iv)
- Registrants shall include in the salary column
(column (c)) or bonus column (column (d)) any amount of salary or bonus forgone
at the election of a named executive officer under which stock, equity-based or
other forms of non-cash compensation instead have been received by the named
executive officer. However, the receipt of any such form of non-cash
compensation instead of salary or bonus must be disclosed in a footnote added to
the salary or bonus column and, where applicable, referring to the Grants of
Plan-Based Awards Table (required by paragraph (d) of this Item) where the
stock, option or non-equity incentive plan award elected by the named executive
officer is reported.
- Registrants need not include in the salary
column (column (c)) or bonus column (column (d)) any amount of salary or bonus
forgone at the election of a named executive officer pursuant to a registrants
program under which stock, equity-based or other forms of non-cash compensation
may be received by a named executive officer instead of a portion of annual
compensation earned in a covered fiscal year. However, the receipt of any such
form of non-cash compensation instead of salary or bonus earned for a covered
fiscal year must be disclosed in the appropriate column of the Summary
Compensation Table corresponding to that fiscal year (e.g., stock awards (column
(e)); option awards (column (f)); all other compensation (column (i)), or, if
made pursuant to a non-equity incentive plan and therefore not reportable in the
Summary Compensation Table when granted, a footnote must be added to the salary
or bonus column so disclosing and referring to the Grants of Plan-Based Awards
Table (required by paragraph (d) of this Item) where the award is reported.
|
Revise
S-K 402(c)(v)
- (v) For awards of stock, the dollar amount
recognized for financial statement reporting purposes with respect to the fiscal
year in accordance with FAS 123R (column (e));
- (v) For awards of stock, the aggregate
grant date fair value computed in accordance with FAS 123R (column (e));
|
Revise
S-K 402(c)(vi)
- (vi) For awards of options, with or without
tandem SARs, the dollar amount recognized for financial statement reporting
purposes with respect to the fiscal year in accordance with FAS 123R (column
(f));
- (vi) For awards of options, with or
without tandem SARs (including awards that subsequently have been transferred),
the aggregate grant date fair value computed in accordance with FAS 123R (column
(f));
|
Revise
Instructions to S-K 402(c)(2)(v) and (vi)
-
For awards reported in columns (e) and (f),
disregard the estimate of forfeitures related to service-based vesting
conditions. Include a footnote
describing all forfeitures during the year, and disclosing all assumptions made
in the valuation. Disclose assumptions made in the valuation by reference to a
discussion of those assumptions in the registrant's financial statements,
footnotes to the financial statements, or discussion in the Management's
Discussion and Analysis. The sections so referenced are deemed part of the
disclosure provided pursuant to this Item.
- 1. For awards reported in columns (e) and
(f), include a footnote disclosing all assumptions made in the valuation by
reference to a discussion of those assumptions in the registrants financial
statements, footnotes to the financial statements, or discussion in the
Managements Discussion and Analysis. The sections so referenced are deemed part
of the disclosure provided pursuant to this Item.
- 2. If at any time during the last completed fiscal year, the registrant has
adjusted or amended the exercise price of options or SARs previously awarded to
a named executive officer, whether through amendment, cancellation or
replacement grants, or any other means (repriced), or otherwise has materially
modified such awards, the registrant shall include, as awards required to be
reported in column (f), the incremental fair value, computed as of the repricing
or modification date in accordance with FAS 123R, with respect to that repriced
or modified award.
- See Instructions to S-K 402(c)(2)(v) and (vi)
|
Revise
S-K 402(c)(2)(ix)(G)SEC_CODE_REF_0090001192884
-
The dollar value of any dividends or other
earnings paid on stock or option awards, when those amounts were not factored
into the grant date fair value required to be reported for the stock or option
award in column (l) of the Grants of Plan-Based Awards Table required by
paragraph (d)(2)(viii) of this Item; and
- The dollar value of any dividends or other
earnings paid on stock or option awards, when those amounts were not factored
into the grant date fair value required to be reported for the stock or option
award in columns (e) or (f); and
|
|
S-K 402(d) Grants
of Plan-Based Awards Table |
Revise
S-K 402(d)(1)
- Add new column l to table:
- Grant Date Fair Value of Stock and Option Awards
See S-K 402(d)(1)
|
Add
S-K 402(d)(2)(viii)
-
The grant date fair value of each equity award
computed in accordance with FAS 123R (column (l)). If at any time during the
last completed fiscal year, the registrant has adjusted or amended the exercise
or base price of options, SARs or similar option-like instruments previously
awarded to a named executive officer, whether through amendment, cancellation or
replacement grants, or any other means (''repriced''), or otherwise has
materially modified such awards, the incremental fair value, computed as of the repricing or modification date in accordance with FAS 123R, with respect to that
repriced or modified award, shall be reported.
|
Add
Instruction 7 to S-K 402(d)
- Options, SARs and similar option-like instruments
granted in connection with a repricing transaction or other material
modification shall be reported in this Table. However, the disclosure required
by this Table does not apply to any repricing that occurs through a pre-existing
formula or mechanism in the plan or award that results in the periodic
adjustment of the option or SAR exercise or base price, an antidilution
provision in a plan or award, or a recapitalization or similar transaction
equally affecting all holders of the class of securities underlying the options
or SARs.
- See Instruction 7
to S-K 402(d)
|
|
S-K 402(k)
Director Compensation Table |
Revise
S-K 402(k)(2)(iii)
- For awards of
stock, the dollar amount recognized for financial statement reporting purposes
with respect to the fiscal year in accordance with FAS 123R (column (c));
- For awards of stock, the aggregate grant
date fair value computed in accordance with FAS 123R (column (c));
|
Revise
S-K 402(k)(2)(iv)
- For awards of stock options, with or without
tandem SARs, the dollar amount recognized for financial statement reporting
purposes with respect to the fiscal year in accordance with FAS 123R (column
(d));
- For awards of stock options, with or
without tandem SARs (including awards that subsequently have been transferred),
the aggregate grant date fair value computed in accordance with FAS 123R (column
(d));
|
Revise
Instruction to Item 402(k)(2)(iii) and (iv)
- For each director, disclose by footnote to the
appropriate column: the grant date fair value of each equity award computed in
accordance with FAS 123R; for each option, SAR or similar option like instrument
for which the registrant has adjusted or amended the exercise or base price
during the last completed fiscal year, whether through amendment, cancellation
or replacement grants, or any other means (''repriced''), or otherwise has
materially modified such awards, the incremental fair value, computed as of the repricing or modification date in accordance with FAS 123R; and the aggregate
number of stock awards and the aggregate number of option awards outstanding at
fiscal year end. However, the disclosure required by this Instruction does not
apply to any repricing that occurs through a preexisting formula or mechanism in
the plan or award that results in the periodic adjustment of the option or SAR
exercise or base price, an antidilution provision in a plan or award, or a
recapitalization or similar transaction equally affecting all holders of the
class of securities underlying the options or SARs.
- For each director, disclose by footnote to
the appropriate column, the aggregate number of stock awards and the aggregate
number of option awards outstanding at fiscal year end.
- See Instruction to
Item 402(k)(2)(iii) and (iv)
|
Revise
S-K 402(k)(2)(vii)(I)
- The dollar value of any dividends or other
earnings paid on stock or option awards, when those amounts were not factored
into the grant date fair value for the stock or option award; and
- The dollar value of any dividends or other
earnings paid on stock or option awards, when those amounts were not factored
into the grant date fair value required to be reported for the stock or option
award in column (c) or (d); and
- See S-K 402(k)(2)(vii)(I)
|
|
S-K 402
Instructions |
Revise
Instruction to S-K 402
- In addition to the Instruction to paragraphs
402(k)(2)(iii) and (iv) and the Instructions to paragraph (k)(2)(vii) of this
Item, the following apply equally to paragraph (k) of this Item: Instructions 2
and 4 to paragraph (c) of this Item; Instructions to paragraphs (c)(2)(iii) and
(iv) of this Item; the Instruction to paragraphs (c)(2)(v) and (vi) of this
Item; Instructions to paragraph (c)(2)(vii) of this Item; Instructions to
paragraph (c)(2)(viii) of this Item; and Instructions 1 and 5 to paragraph
(c)(2)(ix) of this Item. These Instructions apply to the columns in the Director
Compensation Table that are analogous to the columns in the Summary Compensation
Table to which they refer and to disclosures under paragraph (k) of this Item
that correspond to analogous disclosures provided for in paragraph (c) of this
Item to which they refer.
- Specify the applicable fiscal year in the
title to each table required under this Item which calls for disclosure as of or
for a completed fiscal year.
- See Instruction to
S-K 402
|
Commentary
|
Law
firms
Compensation
consultants
News
-
Change has been criticized as "loosening reporting requirements" and
"backtracking"
|
Related Topics
|