August 18, 2004

SEC Brings It Regarding Perks

Yesterday, it was reported that the SEC Enforcement Staff is planning to bring a civil lawsuit against Tyson Foods related to certain perks given to its top officers and board members, including Tyson family members. Specifically, the SEC Staff alleges that company’s proxy statements for 1997 through 2003 didn’t fully disclose $1.7 million in perks enjoyed by former Senior Chairman Don Tyson, and the company failed to maintain adequate internal controls on the personal use of company assets and the disclosure of perks and personal benefits.

Notably, Tyson said the SEC Staff also told the company it is considering recommending that the Commission bring administrative cease-and-desist actions against two Tyson employees who are not executives – these are the employees that were responsible for reporting the perks; not those that enjoyed the perks! Folks like me and you…

We are on the verge of announcing the program for the October 20th Executive Compensation conference – and a practical panel discussing how to properly report perks has been penciled in since day one. Now, that panel takes on even greater signficance. Register now to learn how to save your hide – as well as obtain access to the practice pointers already posted on

8-K In-House Memo for Reporting Chain Insiders

As the August 23rd effective date for the new 8-K rules approaches, many companies are rushing to adopt policies that designate who can approve certain things, identify who is either responsible for learning of (or most likely to learn of) certain events and charging those people with implementing disclosure processes as well as forming a subgroup of their disclosure committee to assess whether a trigger has occurred.

In a Word file, we have posted an 8-K In-House Memo for Reporting Chain Insiders – and hope to post more samples soon in our Sample Document Library.

Amendments to NYSE Corporate Governance Listing Standards

The NYSE has posted a rule filing it made with the SEC on August 3 that would amend its corporate governance listing standards. In a number of cases, the amendments codify prior interpretations of the NYSE corporate governance rules provided in a series of FAQs.

Among other things, the amendments (which still must be approved by the SEC):

– clarify the definition of “executive officer”
– amend the independence tests generally to clarify the operation of the 3-year look-back
– revise the independence definitions related to employment and receipt of direct compensation to clarify that service as an interim executive officers (as well as an interim Chairman or CEO) will not disqualify a director
– clarify that exception for charitable contributions from the independence standard related to payments for services exceeding the greater of $1 million or 2% of consolidated gross revenues is only intended to apply to “contributions” and, therefore, the independence standard covers any business-based payments to such a charitable organization
– narrow the independence standard related to prior employees of the company’s auditor, but bring a director with a family member who is a current partner of the audit firm under the standard
– clarify that the non-CEO compensation arrangements that are the responsibility of the compensation committee are those of “executive officers” and that the board may delegate its authority to approve “executive officer” compensation to the compensation committee
– provide that qualifications to the annual CEO certification must be specified and disclosed
– require that listed companies submit Annual and Interim Written Affirmations to the NYSE, including foreign private issuers and preferred- and debt-listed companies (but only to the extent these types of companies must comply with the audit committee requirement in NYSE Rule 303A.6).