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Proposed Changes to Disclosure Rules

By Avrohom J. Kess, Francis C. Marinelli and LeAnn S. Leutner

On July 10, 2009, the Securities and Exchange Commission (SEC) released its proposals for a number of changes to the compensation disclosure and proxy rules (Proposed Rule: Proxy Disclosure and Solicitation Enhancements, Release No. 34-60280). The SEC believes that the proposed changes would enhance disclosure regarding compensation and corporate governance and clarify certain of the rules governing proxy solicitation. Although the comment process may result in some revisions to the proposals, the SEC expects the changes to be effective for the 2010 proxy season. Many of the proposed changes do not seem dramatic at first glance, but they could lead to surprising results.

The proposed changes include:

  • New Compensation Discussion and Analysis disclosure regarding compensation policies and practices that may increase risks;
  • Revised treatment of equity awards in the Summary Compensation Table and the Director Compensation Table;
  • Additional biographical disclosure about directors, nominees and executive officers and a discussion of director and nominee qualifications to serve as directors and members of board committees;
  • New disclosure about board leadership structure and the role of directors in risk management;
  • Additional disclosure about compensation consultants that are not independent;
  • Accelerated reporting of voting results; and
  • Clarifications to the proxy solicitation rules.

Inclusion of Risk in CD&A

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