December 18, 2017

Reg Flex Agenda: The New-Fangled One Is Here!

Last week, the SEC published its latest Reg Flex Agenda – this one in the new “more realistic” style that SEC Chair Clayton has been talking about. We’ll see if this new style winds up being truly more predictive – and less aspirational – than the ones before it. The Reg Flex Agenda comes in two flavors: “Existing Proposed & Final Rule Stages” (aka “Active”) – and “Long-Term Actions.” The new style moves a number of rulemakings from “Active” to “Long-Term” status – so that seemingly would be more realistic.

The “Existing Proposed & Final Rule Stages” rulemakings include those rules that are in the proposal stage which the SEC intends to tackle – and those that it hopes to propose – over the coming year. For those proposals that are already outstanding in this category, there is a prediction as to when a final rule might occur. There’s only a few Corp Fin items with this status. For example, the SEC hopes to adopt final rules for its Reg S-X proposal by October 2018 – the same timeframe applies to changing the “smaller company” definition.

The “Long-Term Actions” rulemakings include those proposals that the SEC isn’t likely to tackle in the near term. That includes leftover Dodd-Frank rulemakings like pay-for-performance, clawbacks and hedging. It includes a lot more stuff too – such as universal proxy, disclosure effectiveness, board diversity, proxy plumbing (an “oldie” that is back on the Reg Flex Agenda) – you name it. Even conflict mineral amendments and filing fee processing. There is no set timeframe for any of these – the next action is “to be determined.” And that’s the smart way to play it because the timeline for any rulemaking is so difficult to predict. See this Cooley blog

ISS Updates 3 Sets of Pay FAQs

Last week, ISS updated these three documents (updates noted in yellow):

U.S. Equity Compensation Plans: FAQs
U.S. Compensation Policies: FAQs
Pay-for-Performance Mechanics

Tax Reform: Reconciliation Doesn’t Further Tweak Pay Provisions

Here’s news from Winston & Strawn’s Mike Melbinger and his blog on

In case you are wondering, the Conference Committee version of the Tax Cuts and Jobs Act, which is likely to be the final version the House and Senate vote on and then deliver to the President is identical to the final versions that previously came out of the House and Senate in that it:

– Reduces corporate tax rates [think acceleration of deductions!]
– Does not touch 409A or deferred compensation
– Eliminates the performance-based compensation exception to Section 162(m)
– Extends the $1 million cap of Section 162(m) to certain private companies that file reports with the SEC
– Extends the $1 million cap of Section 162(m) to the company’s CFO
– Applies the “once a covered employee always a covered employee” rule to anyone who was a covered employee of the company after December 31, 2016 (even to payments made after death)
– Includes new Code Section 83(i), which allows for the deferral of taxation of certain broad-based stock awards at private companies

These changes apply to taxable years beginning after December 31, 2017, except to compensation paid pursuant to a written binding contract that was in effect on November 2, 2017, and that was not modified in any material respect on or after that date. There is still time to act!

Broc Romanek