May 31, 2011
Confusion: How to Announce the Say-on-Pay Frequency Determination
– Broc Romanek, CompensationStandards.com
As noted in this recent blog by Ning Chiu of Davis Polk, some confusion exists about which of the SEC’s forms can companies use to disclose their SOP frequency in the wake of their annual meeting.
While Ning addresses the ambiguities in the SEC’s rules as to whether the determination can be made in the Form 8-K announcing the annual meeting results that is filed within 4 business days after the meeting, as compared to an amendment of the Form 8-K filed within 150 days after the meeting (Ning notes that many companies have indeed gone the original 8-K route rather than wait for a later amendment), there also remains the question of whether this determination can be filed in a Form 10-Q if that filing is otherwise due and a company is ready to disclose its determination. Although a CDI exists that would seem to support that avenue of disclosure, a member recently posted a discussion with a SEC Staffer in TheCorporateCounsel.net’s Q&A Forum (Q&A #6432) that said:
In response to a similar question, the SEC’s Office of Chief Counsel confirmed by telephone that an Item 5.07 triggering event must be filed on Form 8-K. Their reasoning was that there is an expectation that the issuer will be filing an amendment, either to report final voting results or to report the board’s determination on the frequency of say on pay votes, and that for ease of finding the information they want it all to be reported on an 8-K or 8-K/A.
The staff person I spoke with acknowledged the C&DI referenced above (Question 101.01) and indicated that they are looking into providing an update to that C&DI to address this particular issue.
So it seems that perhaps we may see some CDIs that address these murky issues sometime soon…