Proposed Changes to Disclosure Rules: Plan Now to Avoid the Unexpected
On July 10, 2009, the Securities and Exchange Commission released proposals that would significantly change existing disclosure requirements. The proposed changes include new Compensation Discussion and Analysis disclosure regarding risks, revised treatment for equity awards, additional corporate governance disclosures regarding director qualifications, board leadership structure, risk management and compensation consultants, and accelerated reporting of voting results. The SEC expects the changes to be effective for the 2010 proxy season. Many of the proposed changes do not seem dramatic at first glance, but they could lead to surprising results. Therefore, companies should consider carefully the ramifications of the proposed changes now to avoid unpleasant surprises next year.