February 23, 2004

“Cashless Exercise” Transcript is Up!

We have posted the transcript from our February 11th webcast “Cashless Exercises and Other Murky 402 Issues.”

Don’t forget the NASPP’s upcoming webcast – “What The Top Compensation Consultants Are NOW Telling Compensation Committees” – scheduled for Thursday, March 18th. Try a no-risk trial membership to the NASPP and hear the top consultants “tell it like it is.”

Where Does that Equity Compensation Plan Table Go?

Recently I have had a number of questions in this area, many of which have been nicely addressed in past issues of The Corporate Counsel and The Corporate Executive over a year ago (search the Electronic Back Issues for “201(d)”). As discussed in the Mar/Apr issue of The Corporate Executive – and just clarified by the SEC staff in its no-action response to the ABA – even if not required in the proxy statement (because the company is not proposing any compensation plan for shareholder approval), this disclosure can be deferred for a month via incorporation by reference from the proxy statement to Item 12 the 10-K, as its in Part III of the 10-K (and per General Instruction G(3)). On the other hand, it’s okay to present this stock plan disclosure in the 10-K only and not include in the proxy statement (so long as it’s not required in the proxy statement because a plan is up for a vote).

What appears to be tripping up folks is that some companies are placing the table under Item 5 of 10-K (which generally calls for the information required by S-K Item 201), instead of Item 12 of 10-K (which specifically calls for this table under S-K Item 201(d)). For companies that place it under Item 5 and also include it in their proxy statement – which then incorporates it into Item 12 of 10-K – they effectively have put the table in their 10-K twice!

Even if the table is not duplicated in the proxy statement, the ABA no-action letter confirms that it belongs in Item 12, not Item 5. Even before the ABA letter, this could have been implied from the SEC’s adopting release and from the legal principles that (i) the “specific” trumps the “general” and (ii) the SEC doesn’t generally expect us to include the same information in two non-financial sections.

“Securities Law and the City”

As Carrie Bradshaw goes off into that sweet, dark night, I wonder whether I should pick up her mantle and blog about relationships rather than securities law. Alas, a loud booming voice in my head keeps saying “Stick to what you know, son. Stick to what you know.” So I blog about “Reg A” rather than “reggae” and other peculiar topics that the “man on the street” doesn’t have to understand.