Topic: Executive Compensation

SEC Proposes Changes to Equity Compensation Rules for Public and Private Companies

The Securities and Exchange Commission, on November 24, 2020, proposed changes to the rules and forms that are used for compensatory securities offerings by both private and public companies. If adopted, the changes should give added flexibility to companies using equity as part of their compensation programs for employees, directors and consultants. At the same time, but in a separate release, the SEC proposed to extend eligibility under these rules and forms to participants in the so-called “gig economy” for five years.

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Locke Lord QuickStudy: SEC Amends Rule 701 TO Increase Disclosure Threshold and Seeks Comment on Further Changes for Compensatory Awards

On July 18, the Securities and Exchange Commission adopted an amendment to Rule 701 increasing the threshold that triggers the Rule’s disclosure requirements. As background, Rule 701 provides an exemption from the registration requirements of the Securities Act for offers and sales of securities (including securities issuable under stock options and restricted stock units) by private companies (i.e., companies not subject to the reporting requirements under the Exchange Act) to their employees, officers, directors, consultants and advisors under compensatory benefit plans.

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Locke Lord QuickStudy: SEC Sanctions Inadequate Perk Disclosure and Sends Message

On June 2, 2018, the U.S. Securities and Exchange Commission (“SEC”) announced that The Dow Chemical Company (“Dow Chemical”) agreed to settle charges related to its inadequate disclosure of executive perquisites in SEC filings by paying a $1.75 million civil penalty, hiring an independent consultant to evaluate and recommend changes to the company’s policies and procedures relating to perquisites disclosure, and implementing the recommended changes.

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