The Advisors' Blog

Liz recently shared some high-level themes from the comment letters that have been rolling in before and after the SEC’s roundtable on the executive compensation disclosure rules. Those comment letters focus primarily on the requirements of Item 402 of Regulation S-K. That makes sense because that’s what the SEC’s retrospective review appears to be focused on, based on the questions included in the statement by Chairman Atkins that was released with the announcement of the roundtable. But some commentators took this unique opportunity to use their letters to share thoughts on other existing rules relating to executive compensation.

For example, letters from Davis Polk, Cooley and A&O Shearman encourage the Commission to revive efforts it began with the 2018 concept release to modernize Rule 701 and Form S-8, reiterate support for certain measures reflected in the 2020 proposed rules and make suggestions for additional changes. These comment letters suggest, for example:

– Harmonizing the scope of eligible persons under Rule 701 and Form S-8
– Extending eligibility under Rule 701 and Form S-8 for consultants and advisors, specified post-termination grants to former employees, former employees of acquired entities and “platform workers”
– Clarifying the ability to add multiple plans to a single Form S-8 and allocate securities among multiple incentive plans on a single Form S-8
– Permitting use of a post-effective amendment to add shares on a Form S-8
– Modifying Rule 701 disclosure requirements
– Aligning the treatment of RSUs with the treatment of options so that the “date of sale” for RSUs is deemed to be the date of vesting or later settlement (and/or delaying required disclosures to new hires to be within 14 days following their hire)
– Extending the Rule 701 exemption to reporting companies
– Simplifying registration on Form S-8 for securities offered under 401(k) plans

Davis Polk’s letter also tackles related person transaction reporting under Item 404 of Regulation S-K, current report disclosures under Item 5.02 of Form 8-K and exhibit filing requirements under Item 601 of Regulation S-K.

– Meredith Ervine