New SEC interps under Reg S-K and 8-K

• Item 402(c)(2)(ix)(G) requires disclosure in the Summary Comp Table of the dollar value of any insurance premiums paid by, or on behalf of, the company during the covered fiscal year with respect to life insurance for the benefit of an NEO. Item 402(j) requires description and quantification of the estimated payments and benefits that would be provided in each covered termination circumstance, including the proceeds of the life insurance payable upon an NEO's death. However, if an executive officer dies during the last completed fiscal year, the proceeds of a life insurance policy funded by the company and paid to the deceased executive officer's estate need not be taken into consideration in determining the compensation to be reported in the SCT or in determining whether the executive is among the company's two additional former executive employees for whom disclosure would be required under Item 402(a)(3)(iv).

Item 402(c) –Executive Compensation; Summary Compensation Table

• For a person who was an NEO in year 1, but not in year 2, and will again be an NEO in year 3, compensation information must be disclosed in the SCT for all three fiscal years.
• A tax gross-up payment on perquisites or other compensation for year 1 that is not payable by the company to the NEO until year 2 is reportable in the SCT in year 1. To provide investors with a clearer view of all costs to the company associated with providing the perquisites or other compensation, disclosure in the SCT of the tax gross-up payment should be included for the same year as the related perquisites or other compensation.

Item 402(d) –Executive Compensation; Grants of Plan-Based Awards Table

• Where an incentive performance plan will pay out at different levels depending upon the actual performance results over the relevant performance period, the grant date fair value reportable in the column captioned "Grant Date Fair Value of Stock and Option Awards," column (l) of the table, is determined based on maximum (not threshold or target) performance so that investors can see the maximum grant date fair value numbers that were authorized in granting the award.
• Under a long-term incentive plan, an NEO receives an award for a target number of shares at the start of a three-year period, with one-third of this amount allocated to each of three single-year performance periods. For purposes of the disclosure required in the column captioned "Grant Date Fair Value of Stock and Option Awards," column (l) of the table, the grant date and grant date fair value are determined as provided in FAS 123R. Under paragraph A. 67 of FAS 123R, if all of the annual performance targets are set at the start of the three-year period, that is the grant date for the entire award, and the grant date fair value for all three tranches of the award would be measured at that time and reported in column (l). However, paragraph A.68 of FAS 123R provides that, if the annual performance targets are set at the start of the respective single-year performance periods, each of those dates is a separate grant date for purposes of measuring the grant date fair value of the applicable tranche. In this circumstance, only the grant date fair value for the first year's performance period would be measured and reported in column (l).
• If, during the fiscal year, an outstanding equity incentive plan award held by an NEO is amended or otherwise modified, the incremental fair value under FAS 123R must be reported in the column captioned "Grant Date Fair Value of Stock and Option Awards," column (l) of the table, as required by Item 402(d)(2)(viii) and Instruction 7 to Item 402(d).

Item 402(f) –Executive Compensation; Outstanding Equity Awards at Fiscal Year-End Table

• Under a company's performance-based restricted stock unit ("RSU") plan, awards are earned based on performance over a three-year period. The compensation committee evaluates performance to determine the number of RSUs earned by the NEOs after the end of the performance period (2007-2009). The company does not issue the shares underlying the RSUs to the NEOs unless and until they have completed a subsequent two-year service-based vesting period (2010-2011). In the Outstanding Equity Awards Table for fiscal year 2009, the number of shares should be reported based on the actual number of shares underlying the RSUs that were earned at the end of the three-year performance period, even if this number will be determined after the 2009 fiscal year end. The shares should not be reported in the columns for equity incentive plan awards, columns (i) and (j), because they are no longer subject to performance-based conditions. Instead, the shares should be reported in columns (g) and (h) because they are subject to service-based vesting.

Item 601 –Exhibits

• Consistent with the requirements of Item 601(b)(10)(iii), a company files its nonqualified deferred compensation plan as an exhibit. Subsequent establishment of a rabbi trust under the plan would trigger filing under Item 601(b)(10)(iii) only if the trust materially modified participants' rights under the previously filed plan.

FORM 8-K

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

• A Form 8-K pursuant to Item 5.02(d) for the appointment of a new director must, under Item 5.02(d)(5), briefly describe the director's compensatory and other agreements and arrangements, even if they are consistent with the company's previously disclosed standard agreements and arrangements for non-employee directors (e.g., an equity award, annual cash compensation and an indemnification agreement). In lieu of describing any material plan, contract or arrangement to which the director is a party or in which he or she participates, (but not material amendments or grants or awards or modifications thereto), the company may cross-reference the description of the plan, contract or arrangement from the Item 402 disclosure in the company's most recent annual report on Form 10-K or proxy statement.

Item 5.04 Temporary Suspension of Trading Under Registrant's Employee Benefit Plans

• An Item 5.04 Form 8-K applies only to a notice of a "blackout period" under Section 306(a) of SOX and Reg BTR; it is not required for notices of any other time periods that constitute "blackout periods" for purposes of the notice requirements under ERISA.

This content is provided for general informational purposes only, and your access or use of the content does not create an attorney-client relationship between you or your organization and Cooley LLP, Cooley (UK) LLP, or any other affiliated practice or entity (collectively referred to as “Cooley”). By accessing this content, you agree that the information provided does not constitute legal or other professional advice. This content is not a substitute for obtaining legal advice from a qualified attorney licensed in your jurisdiction and you should not act or refrain from acting based on this content. This content may be changed without notice. It is not guaranteed to be complete, correct or up to date, and it may not reflect the most current legal developments. Prior results do not guarantee a similar outcome. Do not send any confidential information to Cooley, as we do not have any duty to keep any information you provide to us confidential. This content may be considered Attorney Advertising and is subject to our legal notices.