The Advisors' Blog

Last week, Liz shared how the SEC’s proposed overhaul of filer status thresholds – if adopted – could make approximately 80% of public companies eligible for scaled disclosure accommodations. But she warned that companies should avoid the “Jurassic Park problem” and carefully consider before deciding whether to provide fewer disclosures and scrap say-on-pay if the proposals are adopted. To that end, this CAP memo lists these practical steps companies should consider taking early on to evaluate the impact on their proxy disclosures and compensation governance. They suggest that companies should begin:

– Assessing whether they would likely qualify as a proposed NAF or LAF
– Modeling how the proposed rules would change the content and timing of annual proxy preparation
– Identifying which current disclosures would no longer be required but may still be useful to investors
– Considering whether to retain a streamlined compensation narrative even if CD&A is no longer required
– Evaluating how the elimination of say-on-pay could affect the company’s shareholder engagement strategy
– Assessing whether reduced peer company disclosure could affect peer group benchmarking analyses, especially for companies that rely heavily on proxy statement disclosure as a market data source
– Monitoring institutional investor and proxy advisor reactions to the proposal
– Following the SEC comment process and any changes made before final rule adoption

It says a company’s approach might depend on company size, ownership profile, compensation history, governance posture, and investor expectations and that market practice is likely to evolve over time – as may the advisability of using scaled disclosure accommodations.

This and lots more memos are now posted in our “SEC Rules” Practice Area!

– Meredith Ervine