By Cydney Posner

The SEC has issued three more Compliance and Disclosure Interpretations (C&DIs) regarding the new executive comp rules:

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

  • Grants of annual non-equity incentive plan awards are made and the criteria communicated in 2010, and the amounts of the awards are determined and paid in 2011. Where, in 2011, one executive decides not to receive any payment under the award, for that executive, the award should be included in total compensation for purposes of determining if the executive is an NEO and should be reported in the Grants of Plan-Based Awards Table and the Summary Compensation Table for 2010. The executive officer's decision not to accept payment of the award does not change the fact that award was granted in and earned for services performed during 2010. The company should disclose the executive's decision not to accept payment of the award, which it can do either by adding a column to the SCT next to column (g), "Nonequity Incentive Plan Compensation," reporting the amount of award declined, or by providing footnote disclosure to the SCT. Moreover, in CD&A, the company should consider discussing the effect, if any, of the executive's decision on how the company structures and implements compensation to reflect performance.
  • Where, before the board takes action to grant discretionary bonuses for 2010, an executive officer advises the board that she will not accept a bonus for 2010. The company should not report in column (d) of the SCT the bonus award it would have granted her nor include that amount in total compensation for purposes of determining if she was an NEO for 2010. The executive declined the bonus before it was granted, and therefore, no bonus was granted.

Item 407 – Corporate Governance

  • Under Item 407(e)(3)(iii)(A)-(B), compensation consultant fees are required to be disclosed if the consultant provides advice on executive and director compensation and also provides "additional services" in an amount in excess of $120,000 during the last completed fiscal year. There is no limitation on the types of services that are included in "additional services." If the consultant also sells products to the company, then the revenues generated from those sales should be included in "aggregate fees for any additional services provided by the compensation consultant or its affiliates."

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