Proposed Changes to Disclosure Rules

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

The SEC's proposed changes would require Compensation Discussion and Analysis (CD&A) to include an examination of a company's compensation policies and practices for employees generally, including employees who are not executive officers, if risks arising from those policies or practices may have a material effect on the company. This change would represent the first expansion of the scope of CD&A beyond named executive officers to cover compensation for all employees. The SEC believes that such disclosure can assist stockholders in determining whether a company's compensation programs incentivize employees to take excessive or inappropriate risks. Even if a company concludes that its compensation policies and practices do not result in risks that could have a material effect on the company, it may elect to include an affirmative statement in CD&A that the company's overall compensation structure does not affect its risk profile. A company may, in some cases, wish to support such an affirmative statement by discussing the aspects of compensation that the compensation committee reviewed in concluding that the company's compensation policies and practices do not create any material risks.