Subscribe (Free) to
Daily or Weekly Newsletters
Post a Job

Featured Jobs

Defined Benefit Combo Cash Balance Compliance Consultant

Loren D. Stark Company (LDSCO)
(Remote)

Loren D.  Stark Company (LDSCO) logo

Loan & Distribution Specialist

AimPoint Pension
(Remote)

AimPoint Pension logo

Retirement Plan Administrator

Bates & Company, Inc.
(Remote / Winter Park FL)

Bates & Company, Inc. logo

Business Development Director

AimPoint Pension
(Remote / Pompano Beach FL / AL / GA)

AimPoint Pension logo

Regional Vice President of Sales

The Retirement Plan Company
(Remote / AL / FL / GA / MS)

The Retirement Plan Company logo

Director of 3(16) Operations

Compass
(Remote / NH / Hybrid)

Compass logo

View More Employee Benefits Jobs

Free Newsletters

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Mobile app icon
LinkedIn icon     Twitter icon     Facebook icon

Guest Article

Deloitte logo

(From the August 16, 2004 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

New SEC Rules, Effective August 23, Require Form 8-K Disclosure of Certain Executive Compensation Agreements


Public companies will have to file Form 8-K more often and more quickly under new SEC rules scheduled to take effect on August 23, 2004. The new rules, which the SEC issued on March 16, 2004, add 8 new items to the list of events that trigger a Form 8-K disclosure requirement (called "triggering events") and shorten the filing deadline for most items to four business days after a triggering event occurs. One of the new triggering events is entry into, or material amendment of, a material definitive non-ordinary course agreement, which includes some executive compensation agreements.

The following discussion is for general information purposes only. The SEC's final regulations appeared in the March 25, 2004, edition of the Federal Register, at 69 FR 15594.

Background

The SEC proposed increasing the number of triggering events in June 2002, due to concerns that current rules permit public companies to delay disclosure of many significant events until the due dates for their next periodic reports. As a result, there may be an extended delay before the company's stock price reflects the effect of these events.

Later in the summer of 2002, Congress enacted the Sarbanes-Oxley Act in response to several high-profile corporate governance scandals. Section 409 of the Act requires public companies to disclose "on a rapid and current basis" material information regarding certain changes in a company's financial condition or operations. The Act gives SEC the authority to determine what changes are subject to this "rapid" disclosure requirement. The SEC believes the enhanced Form 8-K disclosure requirements will "further the goals" of this provision.

New Triggering Events and Executive Compensation Agreements

The 8 new items are:

  • entry into a material definitive non-ordinary course agreement;

  • termination of a material definitive non-ordinary course agreement;

  • creation of a material direct financial obligation or a material obligation under an off-balance sheet arrangement;

  • triggering events that accelerate or increase a material direct financial obligation or a material obligation under an off-balance sheet arrangement;

  • incurring material costs associated with exit or disposal activities;

  • concluding that an asset is materially impaired;

  • receipt of notice of delisting or failure to satisfy a continued listing rule or standard; and

  • concluding or being notified of non-reliance on previously issued financial statements or a related audit report or completed interim review.

According to the final regulations, a material definitive agreement is "an agreement that provides for obligations that are material to and enforceable against the registrant, or rights that are material to the registrant and enforceable by the registrant against one or more other parties to the agreement, in each case whether or not subject to conditions." The final regulations specifically require Form 8-K disclosure when a public company enters into any of the following:

  • a management contract or any compensatory plan, contract or arrangement, including but not limited to plans relating to options, warrants or rights, pension, retirement or deferred compensation or bonus, incentive or profit sharing (or if not set forth in any formal document, a written description thereof) in which any director or "named executive officer" participates;

  • a management contract or any other compensatory plan, contract, or arrangement in which any other executive officer participates, unless immaterial in amount or significance; and

  • a compensatory plan, contract or arrangement adopted without the approval of security holders pursuant to which equity may be awarded, including, but not limited to, options, warrants or rights (or if not set forth in any formal document, a written description thereof), in which any employee (whether or not an executive officer) participates, unless immaterial in amount or significance.

However, the Form 8-K disclosure requirement will not apply if the relevant compensatory plan, contract or arrangement is available to employees, officers, or directors generally and provides for the same method of allocating benefits between management and non-management participants.


Deloitte logoThe information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Tom Brisendine 202.879.5365, Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Taina Edlund 202.879.4956, Mike Haberman 202.879.4963, Stephen LaGarde 202.879.5608, J. D. Lutz 202.879.5366, Bart Massey 202.220.2104, Diane McGowan 202.220.2077, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5324, Tom Veal 312.946.2595, or Deborah Walker 202.879.4955.

Copyright 2004, Deloitte.


BenefitsLink is an independent national employee benefits information provider, not formally affiliated with the firms and companies who kindly provide much of the content and advertisements published on this Web site, including the article shown above.
© 2024 BenefitsLink.com, Inc.