The NASPP Blog

June 16, 2009

SEC Issues New CDIs; Final Interim Rule for TARP Companies

SEC Issues New CDIs on Executive Compensation Disclosures
On May 29, the SEC updated its Compliance and Disclosure Interpretations (CDIs); the update includes the following new guidance on disclosure of stock compensation:

  • For performance awards reported in the Grants of Plan-Based Awards Table, the grant date value disclosed should be based on the maximum payout.
  • If outstanding awards are modified during the year, the incremental fair value attributable to the modification must be reported in the Grants of Plan-Based Awards Table.
  • Where shares earned pursuant to achievement of a performance target continue to be subject to an ongoing service requirement, the number of shares reported in the Outstanding Equity Awards at Fiscal Year-End Table should be the actual number of shares earned, but they should be reported as subject to service-based vesting.

The CDIs also provide guidance on how awards with multiple performance periods should be reported in the Grants of Plan-Based Awards Table and on a number of other matters not related to stock compensation.

For more information on the new CDIs, see the memos from Frederic W. Cook & Co., McDermott Will & Emery, and Pearl Meyer & Partners that we’ve posted in the NASPP’s Executive Compensation Disclosures Portal.

Interim Final Rule on Compensation and Corporate Governance Standards for TARP Companies
Treasury has issued an interim final rule on standards for compensation and corporate governance for companies receiving TARP funds.

The rule implements the following requirements for TARP companies:

  • Imposes limits on bonuses to executives and highly compensated employees and curtails golden parachute payments and imposes clawback provisions on bonuses paid to these same individuals.
  • Requires risk analysis of compensation for all employees.
  • Requires luxury expenditure polices.
  • Institutes “Say on Pay” requirements.
  • Prohibits tax gross-ups.
  • Requires additional perk disclosures and disclosure of compensation consultants.

In addition, the rule appoints a Special Master to review compensation plans at firms receiving exceptional assistance.

For more information on the rule, see Treasury’s press release and the memos we’ve posted from McDermott Will & Emery, McGuireWoods, and WilmerHale.

NASPP Conference Session of the Week
This week’s session is “After the Hype: The Real World Impact of RSUs vs. Stock Options.” This session will examine a cost benefit analysis of options and restricted stock units to determine if full value awards are really all they have been cracked up to be.

Last Chance Early-Bird Savings on NASPP Conference
You have just a little over one week left to take advantage of the early-bird discount on registration for the 17th Annual NASPP Conference. Don’t wait any longer–after June 26, the rate goes up!

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

– Barbara