As we previously reported in our August 6, 2009 Client Alert, on July 10, 2009, the SEC published proposed changes to its rules regarding compensation and corporate governance disclosures in proxy statements and, with respect to the reporting of voting results, on Form 8-Ks. On December 16, 2009, the SEC adopted, with certain revisions, these proposed rules. In addition, on January 20, 2010, the SEC issued interpretative guidance regarding these new rules. This Client Alert will summarize the new rules and offer practical guidance on how to comply with these new requirements.
The final compensation rules impose new disclosure obligations with respect to (1) the relationship of a company’s compensation policies and practices and risk management, (2) fees paid to compensation consultants, and (3) the aggregate grant date fair value of equity awards. The final corporate governance rules impose new disclosure obligations with respect to (1) the board’s role in risk oversight, (2) additional biographical and related information for directors and director nominees, (3) the board’s leadership structure and why the board believes the structure is appropriate, (4) the board’s considerations of diversity, if any, in the nomination process, and (5) the results of shareholder meetings on Form 8-K instead of Form 10-Q or Form 10-K.