Executive Compensation

This is the final installment summarizing the SEC's new final rule on executive compensation disclosure and corporate governance (http://www.sec.gov/rules/final/2009/33-9089.pdf). Now all you have to do is comply with the new rules!

The new rules make one important change to reporting requirements for Form 8-K.  The rules transfer the requirement to disclose shareholder vote results from Forms 10-Q and 10-K to Form 8-K.  New Item 5.07 to Form 8-K requires companies to disclose on the form the results of a shareholder vote and to file that information within four business days after the end of the meeting at which the vote was held.  (Under current disclosure requirements, it could be a few months before voting results are disclosed in a Form 10-Q or 10-K.)  The new rules eliminate the requirement to disclose shareholder voting results on Forms 10-Q and 10-K. 

The SEC acknowledged that there may be situations, such as contested elections, where a company may need a longer period of time to determine definitive voting results.  Therefore, the SEC expanded the instruction to Form 8-K to state that companies are permitted to file the preliminary voting results within four business days after the end of the shareholders' meeting, and then file an amended report on Form 8-K within four business days after the final voting results are known.  However, the rules provide that if a company obtains the definitive voting results before the preliminary voting results must be reported, it should report its definitive results on Form 8-K, preliminary voting results.  (The SEC also notes that the revisions to Form 8-K are not intended to preclude a company from announcing preliminary voting results during the meeting of shareholders at which the vote was taken and before filing the Form 8-K.)

The SEC's transition guidance on the new proxy disclosure enhancements, issued on December 22, 2009 (http://www.sec.gov/divisions/corpfin/guidance/pdetinterp.htm) provides that if a company's annual meeting of shareholders takes place on or after February 28, 2010, the results of the meeting are subject to reporting pursuant to Item 5.07, even if the company mails the proxy statement for the meeting to shareholders before that date.