The SEC announced the appointment of Jim Kroeker as Chief Accountant for the Commission. He has been serving as Acting Chief Accountant since the beginning of the year, and during that time he has been quite busy, focusing on fair value issues, among many others. Before coming to the SEC as Deputy Chief Accountant back in February 2007, Jim had been in Deloitte’s national office. It is nice to see someone serving as “Acting” to get the permanent slot, for a change.
Minding Your HSR Compliance for Equity Compensation Programs
When you mention the Hart-Scott-Rodino Act, it usually evokes images of mergers and acquisitions, but HSR compliance should not be viewed so narrowly. As noted in this O’Melveny & Myers LLP memo, the Federal Trade Commission has long taken the position that the HSR Act is applicable to the acquisition of any voting stock, including an acquisition by an individual. As a result, companies and their officers and directors need to be cognizant of tripping HSR filing and waiting period requirements, and the potential consequences of non-compliance (including significant fines).
The O’Melveny memo notes that these types of events could potentially result in an HSR filing requirement if the value of the transaction exceeds the HSR Act’s jurisdictional thresholds and no exemption applies:
- an acquisition of voting stock upon the exercise of a stock option or warrant (except for a true same-day, cashless net exercise);
- a grant of restricted stock where the grantee receives the right to vote the securities at the time of grant;
- the vesting of restricted stock units;
- a purchase of voting stock in an open market transaction;
- a purchase of voting stock pursuant to a dividend reinvestment plan; or
- a purchase of voting stock pursuant to an employee stock purchase plan.
Some companies reimburse officers and directors for filing and legal fees associated with HSR compliance, and the memo notes that such reimbursement amounts generally get reported as perquisites in the Summary Compensation Table.
New Treasury and SEC Regulations and the ARRA: Executive Compensation Restrictions
We have posted the transcript from our recent CompensationStandards.com webcast: “New Treasury and SEC Regulations and the ARRA: Executive Compensation Restrictions.”
– Dave Lynn