Update on Form 8-K Related to Executive Compensation

By: Cydney Posner

It is being reported that, at the ABA meeting in Atlanta, SEC staff provided some interpretation of the Form 8-K requirements as they relate to compensation matters. Consistent with the advice we gave at the last public companies meeting, SEC staff commented that a company must file an 8-K to report action taken by the board:

• to adopt or materially amend a compensation plan, including cash bonus plans, in which any of the Named Executive Officers may participate (including a brief description of the plan, although the plan itself need not be filed as an exhibit to the 8-K); and
• to grant or materially amend a stock option or other award to a Named Executive Officer, even if the form of grant was previously filed. Although grants made to directors were apparently not specified, it seems likely that those would also be included.

Apparently, the SEC is still considering whether adoption of a plan by the board subject to shareholder approval would permit delayed reporting until shareholder approval has been obtained. Similarly, the SEC is apparently also considering whether the adoption of resolutions by the board or committee establishing specific bonus or other performance criteria (in lieu of or in addition to a formal plan) would require a Form 8-K filing. It is also unclear how much information must be included in the 8-K, for example, whether specific target levels must be provided (although, for example, they are expressly not required in compensation committee reports).

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