On December 16, 2009, the Securities and Exchange Commission (the “SEC”) published final rules (the “Amendments”)1 that considerably expand the required disclosures public companies must make in their proxy statements. The adopted Amendments make new or revised disclosures about compensation policies and practices that present material risks to the company, stock and option awards of executives and directors, director and nominee qualifications and legal proceedings, board leadership structure, the board’s role in risk oversight, and potential conflicts of interest of compensation consultants that advise companies and their boards of directors. The Amendments apply to proxy statements, information statements, annual reports, and registration statements under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940. The Amendments also transfer the requirement to disclose shareholder vote results from Forms 10-Q and 10-K to Form 8-K.
The Amendments are effective February 28, 2010 and it is believed that this effective date applies to the filing of proxies after February 28, 2010. The purpose of the Amendments are to improve disclosures regarding compensation and corporate governance and to provide a “more transparent view of these key risk, governance, and compensation matters [to] help shareholders make more informed voting and investment decisions.”
Primary Areas Affected by the Amendments
Compensation Programs and Risk Management—New Disclosures
Examples of situations that could trigger discussion and analysis disclosure
Examples of issues a company may need to address
Revisions to the Summary Compensation Table and Reporting of Equity Awards
Additional Disclosures: Compensation Consultants’ Fees and Services
Board Governance Proposals: Director and Nominee Disclosures
Board Governance Proposals: Company Leadership Structure and Board’s Role in Risk Management
To provide investors with more transparency and significant information regarding a company’s corporate governance practices, the Amendments require or encourage disclosure regarding:
Copy of SEC Final Rules Regarding Proxy Disclosure
A copy of the final SEC proxy disclosure enhancements is available on the SEC’s Web site at www.sec.gov.
 All quotes in this publication are from SEC Release Nos. 33-9089, Proxy Disclosure Enhancements.
This article is provided for general informational purposes only and should not be construed as legal advice or legal opinion on any specific facts or circumstances. You are urged to consult a lawyer concerning any specific legal questions you may have.
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