February 26, 2008

How Corp Fin is “Clearing” Performance Target Comments

At an ALI-ABA conference last Friday, Corp Fin Director John White noted that the Staff has “cleared” about 70% of its targeted reviews of executive compensation disclosures, meaning that those companies had received a letter indicating that the review process was over.

The Staff is now using two types of letters to “clear” exec comp reviews. In addition to the typical letter from the Staff indicating that the comments are “all clear,” the Staff is using a modified letter that states that the Staff “neither agrees or disagrees” with the company’s conclusion about its basis for excluding performance targets; this leaves the door open for the Staff to challenge the exclusion at a later date. However, a company that receives this type of letter can consider the Staff’s review complete. While its true the Staff could challenge the exclusion at a later date – most likely in a different filing – they won’t consider the original comment on the 2007 proxy outstanding. Here is a sample of what the “neither agrees or disagrees” letter looks like.

We now have over 100 comment letters (and responses) posted on – and you will want to read Mark Borges’ recent blogs that analyze the meaning of specific comments, including this one that begins “to paraphase Alice in Wonderland, reading the publicly-available comment letters and responses gets “curiouser and curiouser.”

The Section 162(m) Workshop (and Transcript Posted)

We have announced that our 162(m) program – “The Section 162(m) Workshop” – will take place on March 25th on This webcast will be held in a “workshop” style, where experts provide analysis of the numerous issues raised for specific types of employment arrangements, including guidance on what well-designed plans should look like under the IRS’ latest guidance.

We have also posted the transcript from the recent webcast: “The New IRS Letter Ruling: How It Impacts Your Employment Arrangements, Accounting, Proxy Disclosures, Etc.”

Postponed: This Thursday’s House Hearing on Severance Pay

As noted in this WSJ article, the House Committee on Oversight and Government Reform was scheduled to hold a hearing – “Executive Compensation II: CEO Pay and the Mortgage Crisis” – on Thursday, but today it was announced that it was postponed. When it’s re-scheduled, it should be a “doozy” as three current and former CEOs (Charles Prince, Stan O’Neal and Angelo Mozilo) as well as three chairs of compensation committees not only face the questions of Congress, but those of Nell Minow of The Corporate Library and the mayor of a town in Michigan hit hard by subprime. It should be some interesting theater…

Possible New SEC Commissioners?

In Saturday’s WSJ, this article names four possible successors to Commissioner Paul Atkins (who is a Republican) when his term runs out this summer (Douglas Cox, Steven Guynn, Stuart Kaswell, Troy Paredes) – as drawn up by the White House – as well as lists the two Democratic candidates (Luis Aguilar, Elisse Walter) that have been sitting in the White House for some time.

– Broc Romanek