Another Week, Another Set of SEC Guidance

On Friday, March 12, 2010, the SEC Staff again updated the Regulation S-K Compliance & Disclosure Interpretations (C&DIs).

Here is a quick summary of the three new bits of clarification that the SEC Staff offers for the revised proxy disclosure rules:

• Q. 119.25-NEIP award based on performance during 2010 granted in January 2010. After the end of the year, amounts payable are determined based on performance achieved and communicated to NEOs. After the end of the fiscal year, one executive decides not to receive any payment for the award. The SEC position is that the award would be included in both the GPBAT and SCT, even though the executive declined the award payment. Company should disclose the executive’s decision to not receive the award by either (1) adding a column next to NEIP in the SCT to report NEIP compensation declined, or (2) through a footnote to the SCT. Also, company should consider discussing in the CD&A the effect, if any, of the executive’s decision on how the company structures and implements compensation to reflect performance.
• Q. 119.26-A company has a practice of granting discretionary bonuses to executives. Before the board takes action for 2010, an executive advises the board that she will not accept a bonus for 2010. The company does not have to report anything since the bonus was declined before it was granted, and therefore, no bonus was granted.
• Q. 133.12-If a company has to disclose a consultant’s fees for “additional services” in an amount in excess of $120,000, there is no limitation on the types of services that are included in “additional services.” If a consultant also sells products to the company, then the revenues generated from such sales should be included in “aggregate fees for any additional services provided by the compensation consultant or its affiliates.”