The Advisors' Blog

As John shared on TheCoprorateCounsel.net on Friday, Corp Fin just issued six new and two revised CFIs. With the exception of one CFI addressing the timing of Form 4 filings for transactions on a foreign stock exchange, the CFIs cover Form S-8 and Rule 701-related topics. As Broc said on Cooley’s Governance Beat blog, there are some “biggies” here. More from Broc:

One biggie is Question 271.28 under the ’33 Act Rules, which is a new CFI allowing companies to move outstanding pre-IPO compensatory awards that were originally granted in reliance on an exemption from registration onto a Form S-8 after the IPO.

Two other related biggies are Question 271.29 under the ’33 Act Rules and Question 126.14 under the ’33 Act Forms, which liberalize the treatment of assumed awards in acquisitions as assumed awards held by former target employees can now be covered by Form S-8 for public-company buyers or Rule 701 for eligible private-company buyers.

Also check out Question 126.46 under the ’33 Act Forms under which Corp Fin will allow companies to apply the filing fees associated with securities underlying forfeited RSUs to future registrations of offers and sales of securities underlying the RSUs. As a result, companies should no longer need to register extra shares on Form S-8 simply to account for shares underlying forfeited RSUs that return to the plan pool.

And Question 126.47 under the ’33 Act Forms is notable as well, under which Corp Fin will allow companies to register restricted stock and RSUs no later than the date of vesting, so long as a company was eligible to use Form S-8 on the date of grant. This brings the treatment of restricted stock and RSUs closer to the existing treatment of options under Question 126.02, which permits shares underlying options to be registered on Form S-8 at any time before exercise – regardless of when the options became exercisable.

Broc notes that some of this guidance follows engagement between the ABA’s Joint Committee on Employee Benefits (JCEB) and the Staff. People who have been working in executive compensation disclosure for a while know that the JCEB used to meet with federal agencies every spring to share common questions. The JCEB would share notes from the meeting, with the questions asked and the Staff’s response, until the format of the meeting changed in 2015. I believe the meetings were then suspended for some time due to COVID. So big thanks to the JCEB for re-engaging with the Staff and to the Staff for its open door policy, attention to pain points and willingness to issue guidance!

Though they’re old, I do still (for now!) find myself referencing pre-2015 JCEB notes from time to time. In case you need to too (or are interested in the history), keep in mind that we have those notes posted here on CompensationStandards.com (subject to the disclaimer at the top of the page), and they’re still available on the JCEB page on the ABA’s website.

– Meredith Ervine