Skip to content

SEC’s Corp Fin Issues New Compliance & Disclosure Interpretations

Print Friendly, PDF & Email

On March 4, 2011, the SEC’s Division of Corporation Finance issued several new Compliance & Disclosure Interpretations (C&DIs) relating to the proxy disclosure rules.  Here is a link to the full C&DIs: http://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm

Below are the newly-added C&DIs for Regulation S-K:

Question 116.08

Question: If Item 401(a) and Item 401(e) director information is omitted from a proxy statement pursuant to Instruction 3 of Item 401(a), is this information nevertheless required to be included in a Form 10-K that otherwise provides its Part III information by incorporation by reference from the proxy statement?

Answer: Yes. Instruction 3 of Item 401(a) applies only to proxy statements and information statements. [Mar. 4, 2011]

Question 116.09

Question: Is a company required to include Item 401(e) information about a director’s business experience if the director is appointed by holders of a class of preferred stock?

Answer: Yes. In this situation, the company may either provide the same information about this director as it would directors nominated by the board or disclose that the preferred shareholder has advised the company that the shareholder has appointed this director because of [the Item 401(e) information provided to the company by the shareholder that the company would then include in its filing]. [Mar. 4, 2011]

Question 118.07

Question: In Compensation Discussion and Analysis (CD&A), is a company required to discuss executive compensation, including performance target levels, to be paid in the current year or in future years?

Answer: No. The CD&A covers only compensation “awarded to, earned by, or paid to the named executive officers.” Although Instruction 2 to Item 402(b) provides that the CD&A should also cover actions regarding executive compensation that were taken after the registrant’s last fiscal year’s end, such disclosure requirement is limited to those actions or steps that could “affect a fair understanding of the named executive officer’s compensation for the last fiscal year.” [Mar. 4, 2011]