Corporate Counsel and Compensation Standards are reporting that the SEC has begun the first phase of its proxy review project by issuing somewhere between 300 and 400 (depending on whom you talk to) comments letters on recent proxies. As I just reported with respect to the recent speech by John White to the ABA Convention (see my email of 8/17), they revisited a number of letters to ensure consistency. As I indicated in that email, the comments will relate to:

  • analysis, particularly on the different components of compensation and on change-of-control and termination payments;
  • adequacy of disclosure surrounding performance targets, particularly with respect to the "really vague disclosure" about "individual performance goals and targets" without further discussion;
  • adequacy of justification for withholding targets under the confidential treatment standards;
  • if targets were properly withheld, the adequacy of the alternative disclosure about the difficulty of achieving the targets;
  • clarity of the disclosure regarding benchmarking; and
  • disclosure regarding who makes compensation decisions, including the CEO’s and others’ roles in the decision-making process

If anyone receives a comment letter on a client's proxy or receives copies of letters sent to others, please forward them to me. I will try to collect and circulate the most common comments.

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