Item 202 requires expansive disclosure about the issuers securities being registered. Manual of publicly available telephone interpretations sec. The new executive compensation disclosure rules, terrion, h. If required, describe the legal proceeding on an 6b.
Practical guidebook to the executive compensation disclosure. A practical guide to the secs executive compensation disclosure rules. Regulation sk 17 cfr part 229 securities lawyers deskbook. Item 402 k of regulation s k requires the reporting company to describe any arrangements for compensation of directors, stating the amount paid and name of the director, and providing the material terms of such arrangements. The sec s pay ratio rulemaking was mandated by the doddfrank act. The basic requirements of the rules are described in item 402 a2 of regulation s k which reads as follows. Item 401 of regulation s k section 16b liability that has been discharged by an officer or director need not be disclosed under item 402 e of regulation s k. Under the final rule, registrants must provide pay ratio disclosure for the. Analysis of sec executive compensation disclosure rules. Pursuant to the proposed paragraph u3 of item 402 of regulation sk, all employees of the registrant would be defined to mean all individuals employed by a companys or any of its subsidiaries and would include any fulltime, parttime, seasonal or temporary worker as of the last day of the companys prior fiscal year. Securities and exchange commission 17 cfr parts 229 and.
This item governs the disclosure of issues pertaining to executive compensation. If the amount of salary or bonus earned in a given fiscal year is not calculable through the latest practicable date, a. Srcs may comply with the scaled disclosure requirements available to them on an item by item basis. Item 301 of regulation sk requires a foreign private issuer to disclose the. Specifically, it focuses on the incentiverelated compensation disclosure required by reg. Part 229 standard instructions for filing forms under securities act of 1933, securities exchange act of 1934 and energy policy and conservation act of 1975 regulation sk subpart 229. A practical guide to the secs executive compensation. Check yes or no to indicate whether or not the corporation has been found, in any material legal.
Under item 402 b2xiii of regulation sk, registrants have already been required to describe material policies regarding hedging the economic risk of the ownership of their securities when discussing the compensation of named executive officers within compensation discussion and analysis. Issuers principal exchange act reports these frequently asked questions should be read together with our frequently asked questions about periodic reporting requirements for u. Regulation sx 17 cfr part 210 form and content of and requirements for financial statements. A registrant may have separate codes of ethics for different types of officers. New sec rules regarding disclosure of hedging policies are. Foreign private issuers currently are deemed to comply with item 402 if they provide the information in items 6. Sec adopts amendments to disclosure of relatedperson. Rules the basic requirements of the rules are described in item 402 a2 of regulation sk which reads as follows. Regulation sk item 202 securities law blog hamilton.
Complying with the ceo pay ratio rule in 2019 compensia. In addition, the disclosure requirements regarding compensation committee interlocks and insider participation in compensation decisions, which were previously required by item 402 j of regulation s k, are now consolidated into the new item 407. Furthermore, a code of ethics within the meaning of paragraph b of this item may be a portion of a broader document that addresses additional topics or that applies to more persons than those specified in paragraph a. Registrants engaged in mining operations must refer to and, if required, provide the disclosure under 229. Securities and exchange commission 17 cfr parts 228 and. Regulation sk item 202 description of registrants securities. The final rules require the pay ratio disclosure in any sec filing that calls for executive compensation disclosure under item 402 of regulation s k. Title 17 commodity and securities exchanges chapter ii securities and exchange commission part 229 standard instructions for filing forms under securities act of 1933, securities exchange act of 1934 and energy policy and conservation act of 1975 regulation sk subpart 229. This part together with the general rules and regulations under the securities act of 1933, 15 u. Sec sanctions the dow chemical company for undisclosed. Section 14i directs the sec to adopt rules requiring public companies to disclose, in any proxy or consent solicitation material, a clear description of executive compensation disclosures under item 402 of regulation sk. Issuers filing registration statements on form s1 for direct public offerings in their going public transactions must comply with regulation sk item 202. Regulation sk dart deloitte accounting research tool. Securities and exchange commission 17 cfr parts 229.
Consistent with the proposal, we are not amending any of the scaled disclosure accommodations available to srcs in regulation s k and regulation s x. The pay ratio disclosure rule is contained in new paragraph u of item 402 of regulation sk. Item 401 of regulation s k item 401 information with respect to executive officers need not be included in proxy statements. The second part, item 10e of regulation s k, applies additional and more stringent requirements to. Memorandum sec issues updated guidance on pay ratio disclosure september 22, 2017 on september 21, 2017, the securities and exchange commission the sec released updated interpretive guidance with respect to the pay ratio disclosure requirement codified in item 402u of regulation sk. The compensation discussion and analysis provides a narrative overview of compensation policies and decisions made under those policies. The second part, item 10e of regulation sk, applies additional and more stringent requirements to. In these payrelated circumstances only, the sec provided that it will not object if a company includes the required gaap reconciliation and other information in an annex to the proxy statement, provided the registrant includes a prominent crossreference to such annex. Manual of publicly available telephone interpretations. The rules require a compensation table for directors similar to that required for named executives. Item 401 of regulation sk requires that companies disclose the business experience of its directors, officers, nominees and significant employees in order for investors and stockholders to evaluate the management of a public company read more. We are adopting amendments to item 402 of regulation sk to implement section 953b of the doddfrank wall street reform and consumer protection act. The sec has posted some new interps regarding reg sk, item 404, transactions with related persons, promoters and certain control persons.
This sec enforcement action highlights the need for companies to implement proper procedures and apply the appropriate standard for determining whether or not items are perquisites for purposes of item 402 of regulation sk. Sec finalizes sayonpay rules page 4 sayonpay rules the final rules implement the sayonpay vote as follows. Mergers and acquisitions regulation ma section 229. The rule will allow companies to consider individual facts and circumstances in determining the appropriate approach when identifying the median. Item 101 of regulation sk requires a general description of a companys business operations. Federal register smaller reporting company definition. Section 953b directs the commission to amend item 402 of regulation sk to require disclosure of the median. The pay ratio rules add the new item 402 u under regulation sk to require u. A foreign private issuer will be deemed to comply with this item if it provides the information required by items 6. Item 402 of regulation sk a registrant need not report earnings on salary and bonus deferred pursuant to nontax qualified arrangements where the return on such earnings is calculated in the same manner and at the. Memorandum sec issues updated guidance on pay ratio disclosure september 22, 2017 on september 21, 2017, the securities and exchange commission the sec released updated interpretive guidance with respect to the pay ratio disclosure requirement codified in item 402 u of regulation sk. On october 15, 1992, the securities and exchange commission adopted major revisions to item 402 of regulation s k. Jan 24, 2019 complying with the ceo pay ratio rule in 2019.
Sep 19, 20 on september 18, 20 by a 32 vote, the sec proposed amendments to item 402 of regulation s k to implement section 953b of the doddfrank wall street reform and consumer protection act. Item 402 of regulation sk requires disclosure of the total value of all perquisites and other personal benefits provided to named executive. The rule creates new item 402u of regulation sk outlining the requirements for the pay ratio disclosure. Companies are also often called issuers issuing or contemplating issuing shares, filers entities that must file reports with the sec or registrants entities that must register usually shares with the sec. Section 953b of the doddfrank act directs the sec to amend item 402 of regulation sk to require each registrant to disclose. Item 101 also requires disclosure as to the material effects that compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, may have upon the capital expenditures, earnings and.
This item requires clear, concise and understandable disclosure of all plan and nonplan compensation awarded to, earned by, or paid to the. The securities and exchange commission is publishing interpretive guidance to assist registrants in preparation of their pay ratio disclosures required by item 402 u of regulation sk. Download a pdf of this article as we move towards the start of the 2019 proxy season, we also begin the second year of compliance with item 402u of regulation sk, the ceo pay ratio rule. Item 405 compliance with section 16a of the exchange act. In satisfying the requirements of paragraph c, a registrant. The secs pay ratio rulemaking was mandated by the doddfrank act.
Item 403 security ownership of certain beneficial owners and management. According to the sec, the term material definitive agreement is meant to parallel the category of material contracts required to be filed as exhibits with registration statements and periodic reports pursuant to item 601b10 of regulation s. A practical guide to the sec s executive compensation disclosure rules perkins coie llp danielle benderly susan daley iveth durbin. Federal register commission guidance on pay ratio disclosure.
The vote must be a separate shareholder resolution. Regulation s k is a prescribed regulation under the us securities act of 1933 that lays out reporting requirements for various sec filings used by public companies. If the registrant is a foreign registrant, include to the extent not disclosed in the document pursuant to item 201 of regulation sk or otherwise in the description of the securities. Frequently asked questions about periodic reporting. Clearly the revisions make item 402 of regulation s k quite comprehensive. If a registrant does not use annual total compensation calculated using item 402 c2x of regulation sk annual total compensation to identify the median employee, how should a registrant select another consistently applied compensation. Sec sanctions inadequate perk disclosure and sends. Item 402u pay ratio disclosure requirements, mandated by the doddfrank wall street reform and consumer protection act, require each covered public company to make annual disclosure of the ratio of.
See instruction 1 to item 101 of regulation sk 229. Quite a few of these interps are restatements of prior interps. Treatment of specific types of issuers small business issuers. Sec proposes amendments to item 402 of regulation sk. The pay ratio disclosure will be required in any filing that must include executive compensation disclosure under item 402 of regulation sk, including annual reports on form 10k, proxy and information statements and certain registration statements. Apr 01, 2011 part 229 standard instructions for filing forms under securities act of 1933, securities exchange act of 1934 and energy policy and conservation act of 1975 regulation s k subpart 229. The proposed rules will amend item 402 of regulation sk to include a new paragraph u. On october 19th, the sec released five new compliance and disclosure interpretations cdis relating to the upcoming pay ratio disclosure requirements in item 402u of regulation sk. Regulation sk is a prescribed regulation under the us securities act of 1933 that lays out reporting requirements for various sec filings used by public companies.
The new rules are contained in a new item 402 u of regulation sk added by the sec. The sec received more than 287,000 comment letters. Section 404 auditor attestation report described in item 308b of regulation sk. Applies to all companies required to provide summary compensation table disclosure pursuant to item 402 c of regulation sk. These interps replace the item 404 interps in the july 1997 telephone interp manual and march 1999 supplement.
Under the rules, executive compensation disclosure in item 402 of regulation s k is structured into four segments. Understating perquisites in the companys proxy statement could be costly, resulting in both significant monetary penalties and a requirement to hire an outside consultant. The first part, regulation g, applies to any public disclosure, whether made in writing or orally, and whether or not the disclosure appears in a document filed with or furnished to the sec. Regulation sk highlights from secs proposed amendments. On june 27, 2012, the sec adopted rules implementing the doddfrank acts compensation committee and compensation adviser requirements. This research investigates the determinants and consequences of compensation disclosure in the context of the sec compensation regulation of 2006. Section 128c item 402u pay ratio disclosure question 128c. Highlights of the final rulenew item 402 u of regulation sk. The following table summarizes these scaled disclosure accommodations. Item 402 k of regulation sk requires the reporting company to describe any arrangements for compensation of directors, stating the amount paid and name of the director, and providing the material terms of such arrangements. On april 29, 2015, the securities and exchange commission the sec or commission voted 32 to propose a rule requiring certain reporting companies to include a new payversusperformance disclosure in any proxy or information statement for which disclosure under item 402 of regulation sk is required. Item 404 transactions with related persons, promoters and certain control persons.
Part 229 standard instructions for filing forms under securities act of 1933, securities exchange act of 1934 and energy policy and conservation act of 1975regulation sk subpart 229. The sec originally proposed pay ratio disclosure in 20, and the proposal generated a great deal of interest and debate. Full text of regulation sk items 402, 403, 404 and 407. If a registrant does not use annual total compensation calculated using item 402c2x of regulation sk annual total compensation to identify the median employee, how should a registrant select another consistently applied compensation. The secs pay ratio disclosure rule and its implications. Therefore, for calendar year registrants, the first pay ratio disclosure will be made in early 2018, as part of the proxy statement or information statement for the 2018 annual meeting. Comments on the secs proposed changes to executive. Item 2 properties regulation sk item 102 item 3 legal proceedings regulation sk item 103 item 4 safety disclosures regulation sk item 104 part ii information item 5 market for registrants common equity, related stockholder matters and issuer purchases of equity securities regulation s. Smaller reporting companies, emerging growth companies, foreign private issuers, mjds filers and registered investment companies are exempt. Provide the information required by item 101g of regulation sk 229.