SEC posts FAQs on new exec. comp. disclosures

BVWireIssue #56-3
May 16, 2007

After generally expanding its disclosure requirements, the SEC has “noticed an increased trend in obtaining consent” per Rule 436, said Cheryl Tjon-Hing, a Valuation Specialist with the Office of the Chief Accountant at the SEC.  (When a registration statement or prospectus cites an expert report or legal opinion, Rule 436 requires filing the expert’s written consent.)

An exception: Last summer, the SEC adopted broad new disclosure rules in executive compensation, effective at the end of 2006 (final version of the rules available here.)  The new rules do not require expert consent in exec. comp. disclosures—but Tjon-Hing cautioned that this is the “only” exception to Rule 436.  The SEC has just posted an FAQ on the new rules along with an update to its Compliance and Disclosure Interpretations.

Note: An excellent summary, “SEC Amends Rules on Executive Compensation Disclosure,” is in the current Insights (Willamette Management Associates), which dedicates the entire issue to reasonable compensation economic analyses.

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