Sample SEC Staff Comments
Courtesy of CompensationStandards.com
We have compiled some of the most common comments recently issued by the Staff of the Division of Corporation Finance as part of its executive compensation disclosure review project.
Identifying information has been deleted and brackets
(“[ ]”) have been inserted where necessary to understand the comment. We have
attempted not to duplicate comments seeking the same or similar disclosure;
although where a comment has multiple facets, some elements may be duplicative.
Your CD&A: Hot Spots and Vulnerabilities
Compensation Policies
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As noted in Section II.B.1 of the Commission Release 33-8732A, the
Compensation Discussion and Analysis should be sufficiently precise to capture
material differences in compensation policies with respect to individual named
executive officers. Please provide a more detailed analysis of how and why the
compensation of [ ] differs so widely from that of the other named executive
officers. If policies or decisions relating to a named executive officer are
materially different than the other officers, please discuss on an
individualized basis.
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Throughout your disclosure, you indicate that compensation decisions are
not determined through reference to a written policy or formula. You also,
however, disclose general factors considered by the committee in making
compensation decisions, and with respect to compensation decisions for
performance during fiscal 2005 and 2006. In highlighting specific operational
and financial achievements considered such as earnings performance, [ ] growth,
and [ ] ratio, your disclosure suggests that the committee may have established
operational and financial goals and targets. Please clarify whether the
committee only examines, retrospectively, and without regard to any
pre-established qualitative or quantitative targets, the performance of the
company.
Analysis
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Throughout this section, you indicate that you consider a named executive
officer’s individual performance in setting compensation. Please discuss how
you structure and implement specific forms of compensation to reflect the named
executive officer’s individual performance or contribution and describe the
elements of individual performance or contribution that you have taken into
consideration. See Item 402(b)(2)(vii) of Regulation S-K.
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The disclosure in this section consists of a line-item type recitation of
the information contained in the tabular presentations and a cursory
identification of the amount of cash incentive awards and the percentage of
these awards vis-à-vis salary. Please provide a complete analysis of how you
arrived at and why you paid each of the particular levels and forms of
compensation for 2006. To the extent you base compensation-related decisions on
achievement of business objectives, individual performance, or other internal
and external factors, please provide clear disclosure of the manner in which the
committee considered these factors when approving specific pieces of each named
executive officers’ compensation package. In addition, please disclose the
reasons why the committee believes that the amounts you paid to each named
executive officer are appropriate in light of the various items it considered in
making specific compensation decisions. Ensure that your Compensation
Discussion and Analysis explains and places in context how you considered each
element of compensation and why determinations with respect to one element may
or may not have influenced the committee’s decisions with respect to other
allocated awards.
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The emphasis of your Compensation Discussion and Analysis should be an
analysis of the elements and levels of compensation paid to the named executive
officers. Throughout this section and as to each compensation element, please
provide an analysis of how you arrived at and why you paid each of the
particular levels and forms of compensation for 2006. From a general
standpoint, it appears that the compensation committee gives some weight to the
extent to which compensation of your named executive officers compares to the
companies against which you benchmark compensation. Yet, your disclosure also
indicates that cash and equity awards are made on what appears to be a
discretionary basis but that the committee considers company performance when
determining compensation packages. Your disclosure in this respect lacks
sufficient quantitative or qualitative discussion of the analysis underlying the
committee’s decisions to make compensation awards and how decisions regarding
one type of award motivate the committee to award or consider other forms of
compensation. The Compensation Discussion and Analysis should explain and place
in context why you chose to pay each element, how particular payout levels were
determined, and why determinations with respect to one element may or may not
have influenced the committee’s decisions with respect to other allocated or
contemplated awards. Please refer to Item 402(b)(1)(iv)-(vi) of Regulation S-K.
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Please provide analysis about how you determine the amount and, where
applicable, the formula for each element to pay. See Item 402(b)(1)(v) of
Regulation S-K. Please analyze how the level of employment affects your
decisions to grant incentives at varying levels. For example, you state that
the chief executive officer is eligible to receive a higher percentage of base
salary as an annual and long-term incentive. Finally, please discuss why you
have placed a “greater weighting on long-term incentives.”
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Your disclosure suggests that different elements of compensation (such as
base salary and incentive compensation) are significantly impacted by individual
performance. Provide an analysis of how individual performance contributed to
actual 2006 compensation for the named executive officers, including specific
contributions the compensation committee considered in its evaluation, and if
applicable, how they were weighted and factored into specific compensation
decisions. See Item 402(b)(2)(vii) of Regulation S-K.
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You indicate that the committee evaluates total rewards for the named
executive officers by reviewing tally sheets. Please analyze how the
compensation committee uses the tally sheet information to determine the amount
of compensation to be paid to the named executive officers. For example,
discuss whether the committee increased or decreased the amount of compensation
awarded based upon review of the tally sheet information.
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Expand your disclosure of your supplemental executive retirement plan,
deferred compensation plan and perquisite allowances to include a more thorough
discussion of Item 402(b)(l) with respect to each of these elements of
compensation. Disclose how each of these compensation components and your
decisions regarding these elements fit into your overall compensation objectives
and affect decisions regarding other elements.
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You discuss the employment and consulting agreements with former named executive
officers Messers. [ ] and [ ]. Please disclose why you structured these
agreements’ terms and payments as you have.
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The disclosure in this subsection should provide a clear and concise summary of
the material terms and conditions of [the named executive officer’s] employment
agreement, and should analyze why the employment agreement was designed and
structured to provide the mentioned material compensation elements and levels.
Internal Equity
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Please fully discuss how the compensation, governance and nominating committee
evaluates internal equity in setting compensation. For example, please discuss
whether the committee analyzes the number of times that a named executive
officer’s compensation exceeds that of a specified type of employee, including a
description of that employee’s position.
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We note a significant disparity in the compensation paid to [ ] as opposed to
other named executive officers. Although we note you provide some
individualized discussion of his compensation, please expand your discussion to
provide a detailed analysis of how and why the compensation of your chief
executive officer differs from that of the other named executive officers, if
applicable. If policies or decisions relating to certain named executive
officers are materially different than the other officers, this should be
discussed on an individualized basis. Refer to Item 402(b)(2)(vii) of
Regulation S-K and Release No. 8732A, Section II.B.1.
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You indicate that you review “internal pay equity” to determine pay. Please
discuss whether you considered this information to calculate pay based on a
certain multiple of a specified employee’s compensation.
Annual Incentive Compensation
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With respect to the compensation plans, please discuss whether the compensation,
governance and nominating committee has discretion or has exercised discretion
to increase the size of any award or payout. See Item 402(b)(2)(vi) of
Regulation S-K.
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Please more clearly explain the impact on potential award payouts of the failure
to satisfy one or both of the non-financial elements of the plan.
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Your disclosure regarding the amounts determinable pursuant to the annual
incentive plan should be revised and presented in a clear and concise manner.
Rather than only describing the general method of determining the cash amount
awarded, specify by reference to the award made to a named executive officer how
the committee assessed the company-wide performance and specific performance
components and how those assessments resulted in the awards made to a named
executive officer during fiscal 2006.
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According to your disclosure, the annual incentive bonus is largely contingent
upon the company’s annual profitability. Please explain how profitability is
measured for the purposes of annual incentive bonus eligibility. For instance,
please discuss whether you measure earnings with reference to EBITDA or some
other adjusted earning criteria.
Performance Goals
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Please provide quantitative or qualitative disclosure of the operational and
financial performance goals for the executive incentive plan for 2006 and the
total shareholder return goals for the performance shares for the 2006-2008
long-term incentive plan cycle. To the extent you believe disclosure of these
targets is not required because it would result in competitive harm, provide us
on a supplemental basis a detailed explanation under Instruction 4 to Item
402(b) of Regulation S-K for this conclusion. See also Question 3.04 of the
Item 402 of Regulation S-K Interpretations available on our website at
www.sec.gov. If disclosure of the performance-related factors would cause
competitive harm, please discuss further how difficult it will be for the named
executive officer or how likely it will be for you to achieve the target levels
or other factors. Please see Instruction 4 to Item 402(b) of Regulation S-K.
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Please disclose the financial performance-related factors for your 2006
incentive programs and those financial performance goals that are tied to 2007
incentive compensation. See Item 401(b)(2)(v)-(vi) and Instruction 2 to Item
402(b) of Regulation S-K. To the extent you believe that such disclosure is not
required because it would result in competitive harm such that you may omit the
disclosure under Instruction 4 to Item 402(b) of Regulation S-K, please provide
a detailed supplemental analysis supporting your conclusion and provide
appropriate disclosure pursuant to Instruction 4. In discussing how difficult
it will be for you to achieve the target levels or other factors, please provide
as much detail as necessary without disclosing information that poses a
reasonable risk of competitive harm. Consider providing disclosure that
addresses the relationship between historical and future achievement and the
extent to which the committee set the incentive parameters based upon a
probability that you would achieve the performance objectives. Please see
Instruction 4 to Item 402(b) of Regulation.
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Please provide additional support for your statement that future performance
goals will be “more challenging” to achieve than in 2006. Please address the
specific reasons why earning payouts under your incentive program may be easier
or more difficult to achieve in the future.
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We note that the compensation committee determined that the 2006 performance
goal was not met, and as a result no awards were made to the named executive
officers under the annual performance-based incentive plan. Further, the
compensation committee also determined that awards would be payable to [ ] under
the discretionary plan. Please elaborate on this exercise of discretion and the
transformational priorities achieved that lead to the payment of awards to these
individuals despite the failure to obtain the performance goal.
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We direct you to Item 402(b)(1)(vi) of Regulation S-K. You provide insufficient
analysis of the reasons you paid bonus compensation amounts during a fiscal year
in which neither company-wide or specific-performance goals were met. Please
provide an analysis of why the committee believes that bonuses awards were
warranted.
Long-Term Incentives and Equity Awards
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Please disclose the formula used to calculate the value of the stock options and
restricted stock to be granted to the named executive officers.
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Please disclose whether options may be granted at times when the board or
committee is in possession of material non-public information.
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Please disclose the basis for how you allocate long-term compensation among the
different types of awards you may grant. For instance, disclose the
relationship of the particular type of award to the achievement of a goal,
management’s exposure to downside equity performance risk, and correlation
between costs and benefits to the registrant. See Item 402(b)(2)(iii) of
Regulation S-K.
Use of Discretion
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The compensation committee has discretion to reduce awards under your short-term
incentive plans. Please more fully address the discretion the compensation
committee may exercise with respect to your incentive programs. For instance,
when the company fails to meet performance targets may the committee, in its
discretion, still choose to grant cash awards? Alternatively, when objective
performance criteria are satisfied what discretion does the compensation
committee have to limit (or increase) incentive awards? Refer to Item
402(b)(2)(vi) of Regulation S-K.
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To provide further context to your disclosure regarding the discretion of the
committee in making adjustments to compensation decisions made in the [ ]
meeting, identify the circumstances that would result in an adjustment of
compensation. Also, specify which elements of compensation would be subject to
adjustment (i.e., bonus, long-term incentives, or salary). See generally
Instruction 2 to Item 402(b) of Regulation S-K.
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We note that the compensation committee has discretion to adjust annual
incentive bonuses on [ ] and elsewhere in the proxy. Please revise to state
whether or not such discretion was exercised.
Benchmarking
To the extent that you engage in benchmarking your performance against your
specific industry peer group, a general industry peer group and a long-term
incentive peer group, please identify the companies that comprise these peer or
survey groups. See Item 402(b)(2)(xiv) of Regulation S-K. Please clarify why
you use different peer groups and survey data for your company, such as the
different peer group for the determination of long-term incentives. In
addition, indicate whether the compensation committee adjusts its analysis based
on consideration of the variation in size of the companies in your comparator
group.
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We note that you benchmark your compensation against companies in two peer
groups. Please identify the companies in the general peer group and describe
how the company’s “relative size” is measured and how it impacts its
benchmarking activities. If you have benchmarked different elements of your
compensation against different benchmarking groups, please identify the
companies that comprise each group. Refer to Item 402(b)(2)(xiv) of Regulation
S-K. In addition, to the extent actual compensation was outside of the
disclosed targeted percentile ranges, please explain why.
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It is unclear whether you benchmark compensation against companies in addition
to those included in the list you have disclosed. To the extent you engage in
benchmarking against data for companies in addition to those you have
identified, please disclose the compensation committee’s analysis of the data in
materially complete detail, including the identity of these companies. See Item
402(b)(2)(xiv) of Regulation S-K.
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You indicate that you target total compensation at the [ ] percentile of
competitive positions in the general industry and the [ ] industry and that you
target salary between [ ] and [ ] percentiles. You should include a discussion
of where you target each other element of compensation against peer companies
and the percentiles represented by actual compensation paid for 2006. To the
extent actual compensation paid to an executive officer varied from the targeted
percentile, analyze the reasons for the divergence.
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You state that variations from the general philosophy may occur based upon the
expertise and experience level of a given executive as well as individual,
company and market factors. If the total compensation or any individual
elements of compensation vary for any named executive officer, please disclose
such variations from benchmarks for each named executive officer and explain the
basis for the variation.
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You discuss the comparator companies examined during the course of negotiations
of the letter agreements between [ ] and [ ]. Revise to elaborate on why the
comparator group the compensation consultants and committee considered for [ ]’s
compensation was significantly larger and broader in scope than that of the
comparator group the compensation consultants considered with respect to [ ].
Role of Executive Officers in Determining Compensation
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Your disclosure is this section is unclear as to which person or body determines
the compensation of your executives, particularly your chief executive officer.
Please expand your disclosure to discuss in greater detail the responsibilities
of the compensation committee and board of directors’ and the interaction
between these groups when setting compensation for the chief executive officer
and other senior executives. Refer to Item 402(b)(2)(xv) of Regulation S-K.
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You have indicated that the compensation committee may solicit compensation
recommendations from the chief executive officer. Please expand this disclosure
to discuss fully the role of the chief executive officer in determining or
recommending the amount or form of executive or director compensation. See Item
407(e)(3)(ii) of Regulation S-K. Please consider discussing whether the chief
executive officer works with the compensation committee in establishing
measures, targets and similar items that affect his compensation and whether he
retains the ability to call compensation committee meetings or meet with the
compensation consultant on an individual basis.
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Please discuss fully the role of executive officers in determining or
recommending the amount or form of executive and director compensation. See
Item 407(e)(3)(ii) of Regulation S-K. Please consider discussing whether the
chief executive officer had the ability to call or attend committee meetings,
whether the chief executive officer met with the compensation consultant used by
the committee, whether the chief executive officer retained or had access to any
other compensation consultant who influenced your executive compensation and the
amount of input the chief executive officer had in developing compensation
packages.
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Please clarify whether or not the chief executive officer makes recommendations
to the compensation committee relating to measures, targets and similar items
that affect his compensation and discuss the extent to which the chief executive
officer attends compensation committee meetings or meets with the consultants
used by the committee.
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Please expand your disclosure to discuss in greater detail the compensation
committee and board of directors’ responsibilities with respect to setting CEO
and senior executive compensation. Refer to Item 407(e)(3)(i) of Regulation
S-K.
Role of Compensation Consultants
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With respect to the engagement of compensation consultants, please provide the
full disclosure set forth in paragraph (c)(3)(iii) of Item 407 of Regulation
S-K. This includes discussion of the material elements of the instructions or
directions the committee gave to the compensation consultant with respect to the
performance of its duties under the engagement. In addition, pursuant to Item
407(e)(3)(iii) of Regulation S-K, please provide a complete description of the
nature and scope of the assignments of the consultant.
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You disclose that from time to time, the compensation committee may retain
legal, accounting and compensation experts to assist in its determination of
compensation. You also identify three companies that the committee has used in
the past. Disclose all groups or persons that the compensation committee
engaged to assist it in the determination of compensation awarded during the
fiscal year. Further, consistent with the requirements of Item 407(e)(3)(iii)
of Regulation S-K, please disclose the nature and scope of their assignments and
the material instructions and directions given to the consultants.
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Please clarify in your disclosure why the committee chose to use a particular
consultant with respect to determinations of the respective elements of
compensation. We note that two different consultants provided data regarding
base salaries, yet there is no discussion of why the compensation committee
chose to review two sets of data and how the committee ultimately weighed the
respective data provided. You should disclose the relative importance of
benchmarking data to compensation decisions.
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We note that no market assessment of your executive compensation program was
performed by compensation consultants in 2006 but that compensation consultants
have been engaged since 2004 on specific projects that do not involve the review
of peer company practices. Describe in greater detail the nature and scope of
each consultant’s assignment and the material elements of the instructions or
directions given to the consultants with respect to the performance of their
duties under the engagement. See Item 407(e)(3)(iii) of Regulation S-K.
Re-Tackling the Summary Compensation Table
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We note your statement on page [ ] that “the value of equity awards in the
‘Stock Awards’ column is based on SFAS No. 123(R) as required by the Securities
and Exchange Commission” and that “this amount does not reflect what was paid to
our executives….” Please revise to remove any implication that your analysis is
a substitute for the complete information as required by the SEC’s rules.
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It does not appear that you have included the appropriate amount in the
bonus column for fiscal year 2006. We note the disclosure on page [ ] of cash
bonuses earned for 2006 performance that was paid in 2007. Item 402(c)(2)(iv)
of Regulation S-K requires disclosure of bonus amounts earned during the fiscal
year. We also refer you generally to Instruction 1 to Item 402(c)(2)(vii) of
Regulation S-K. Although not awarded pursuant to a non-equity incentive plan,
the amounts reported as bonus in column (d) should include amounts earned during
fiscal 2006, even if not paid until 2007.
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Please explain how the annual “perquisite allowance” [ ] was determined.
Identify generally the [perquisites] towards which the allowance can be spent,
reference the specific items the named executive officers used the allowance for
in the prior year and disclose whether the committee has any discretion in
providing additional monies above the allowance in any given year.
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With respect to the perquisite amount for [ ] use of the corporate aircraft,
please describe the methodology for computing the aggregate incremental costs.
Refer to Instruction 4 to Item 402(c)(2)(ix) of Regulation S‑K.
Analyzing the Equity-Based Tables
Grants of Plan-Based Awards Table
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Please revise footnote [ ] or your Compensation Discussion and Analysis to more
fully describe the restricted shares and stock options granted to [ ].
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We refer you to Item 402(e)(1)(iii). Please include a narrative description of
whether dividends are paid on the restricted stock awards that you granted.
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Please use the headings set forth in Item 402(d) of Regulation S-K, regarding
“threshold,” “target,” and “maximum.” Explain in a footnote what you mean, if
different.
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We note footnote [ ] to the grants of plan-based awards table. Please include
the threshold, target and maximum “Estimated possible payouts under non-equity
incentive plan awards” per question 5.02 of the Item 402 of Regulation S-K
Questions and Answers available on out website at
www.sec.gov even though you have included the actual amounts in the summary
compensation table.
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You indicate a reserve pool of an additional 10% of stock options may be awarded
for “exceptional performance.” To provide context to your disclosure, disclose
what factors you considered in determining whether an individual had performed
exceptionally and the amount of options that the individual should receive for
such performance. See generally Item 402(b)(1)(v) of Regulation S-K.
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It is not clear how the committee determined the amount of option awards that
were made to the named executive officers on [date]. Please provide a complete
analysis of the individual factors that you considered in making this award and
describe the reasons why the committee believed the awards were appropriate and
fit reasonably within your overall compensation objectives.
Outstanding Equity Awards at Fiscal Year-End Table
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Please revise to include the vesting dates of options and equity incentive plan
awards held at fiscal year-end in a footnote to the applicable column. Refer to
Instruction 2 to 402(f)(2) of Regulation S-K.
Overcoming Challenges in the
Retirement Pay Tables
Pension Benefits Table
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Please disclose the reasons for the difference in the number of years of
credited service for each named executive officer under the various plans. See
Instruction 4 to Item 402(h)(2). On page [ ], you disclose the number of
credited months under the benefit restoration plans; however it is unclear why
the number differs under other plans.
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It does not appear that you have presented the actuarial present value of the
accumulated benefit under the plans for each named executive officer. See Item
402(h)(2)(vi) of Regulation S-K. Please advise or revise.
Nonqualified Deferred
Compensation Table
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Please disclose the measures for calculating interest or other plan earnings
(including whether such measure(s) are selected by the executive or the
registrant and the frequency and manner in which selections may be changed),
quantifying interest rates and other earnings measures applicable during your
last fiscal year. Refer to Item 402(i)(3)(ii) of Regulation S-K.
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Please include, pursuant to the Instruction to paragraph (i)(2) of Item 402 of
Regulation S-K, a footnote quantifying the extent to which amounts reported in
“Aggregate Balance at December 31, 2006” previously were reported as
compensation to the named executive officer in the registrant’s Summary
Compensation Table for prior years.
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Please include a succinct narrative description of any material factors
necessary to an understanding of each plan. See Item 402(f)(3) of Regulation
S-K. For example, clarify whether there are any limitations (by percentage of
compensation or otherwise on the extent to which deferral is permitted.
Disclose how the plan earnings are calculated. [ ]. Disclose who selects the
investments and how the available funds are determined.
Dealing with the
Complexities of Perks
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Expand your disclosure of your supplemental executive retirement plan, deferred
compensation plan and perquisite allowances to include a more thorough
discussion of Item 402(b)(l) with respect to each of these elements of
compensation. Disclose how each of these compensation components and your
decisions regarding these elements fit into your overall compensation objectives
and affect decisions regarding other elements.
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Please explain how the annual “perquisite allowance” [ ] was determined.
Identify generally the [perquisites] towards which the allowance can be spent,
reference the specific items the named executive officers used the allowance for
in the prior year and disclose whether the committee has any discretion in
providing additional monies above the allowance in any given year.
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With respect to the perquisite amount for [ ] use of the corporate aircraft,
please describe the methodology for computing the aggregate incremental costs.
Refer to Instruction 4 to Item 402(c)(2)(ix) of Regulation S‑K.
Change-of-Control and Severance Arrangements
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Where appropriate, please describe and explain how the appropriate payment and
benefit levels are determined under the various circumstances that trigger
payments or provision of benefits under the severance agreements and change of
control agreements. See paragraphs (b)(1)(v) and (j)(3) of Item 402 of
Regulation S-K. Also please discuss how these arrangements fit into your
overall compensation objectives and affect the decisions you made regarding
other compensation elements and the rationale for decisions made in connection
with these arrangements.
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Please describe and explain how the appropriate payment and benefit levels are
determined under the circumstances that trigger payments or provide benefits
upon a change in control. See Items 402(b)(1)(v) and 402(j)(3) of Regulation
S-K. Please discuss why you have chosen to pay certain multiples of the
components of compensation as change-in-control payments and why vesting of
equity awards is accelerated.
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Please consider providing a table to show amounts payable upon termination or
change of control. Refer to Item 402(j) of Regulation S-K.
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Please define “cause” and “good reason” as used in the agreements described in
this section.
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Please define “change-in-control” as set forth in the management
change-in-control plan.
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Please describe any material conditions or obligations applicable to the receipt
of payments or benefits under severance and change of control agreements. Refer
to Item 402(j)(4) of Regulation S-K.
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Please describe and explain the specific circumstances that would trigger change
of control payments. Refer to Item 402(j)(1) of Regulation S-K.
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Regarding the total termination compensation for named executive officers that
left the company [ ], please present in the table what they actually were or
will be paid. See Instruction 4 to Item 402(j) of Regulation S-K. Also
consider stating, in a row or column in the table, each named executive
officer’s total compensation following each kind of termination event.
Director Compensation Disclosures
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Please disclose all assumptions made in the valuation of awards in the stock
awards column of the table by reference to a discussion of those assumptions in
your financial statements, footnotes to the financial statements, or discussion
in management’s discussion and analysis. See Instruction to Regulation S-K Item
402(k), which refers to Instruction 1 to Item 402(c)(2)(v) and (vi).
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For each director, please disclose by footnote to the stock and option awards
columns of the director compensation table the grant date fair value of each
equity award computed in accordance with FAS 123R. See Instruction to
Regulation S-K Item 402(k)(2)(iii) and (iv).
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Please disclose how you determined the amounts of stock and stock options to be
granted to the directors. If policies or decisions relating to one director are
materially different than the other directors, please disclose in materially
complete detail.
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Please include in all other compensation any matching gifts made to 501(c)(3)
organizations. See Item 402(k) of Regulation S-K.
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We direct you to Item 407(e)(3) of Regulation S-K. While you provide footnote
disclosure accompanying the table, please provide in the narrative discussion
further detail regarding the arrangement you enter with [director] whereby you
pay his/her director’s fees to [ ].
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Please explain the company’s policy with respect to the appropriate mix of cash
and equity in director compensation.
How to Handle Related Party Transaction Disclosures and Director Independence
Related Person
Transactions
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We note your disclosure in [ ] regarding transactions with some
directors, executive officers and entities. Please revise your disclosure in
accordance with Instruction 4(c)(ii) of Item 404 of Regulation S-K to state
whether or mot the comparable credit transactions were with people not related
to you.
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Please state whether your policies and procedures for the review, approval or
ratification of any related person transaction are in writing and, if not, how
such procedures are evidenced. See Item 404(b)(2) of Regulation S-K. Please
consider expanding the disclosure regarding your policies and procedures to
discuss the standards to be applied under such policies and procedures. See
Item 404(b)(1)(ii) of Regulation S-K.
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Please describe the types of transactions that are covered by your policies and
procedures for review, approval or ratification of transactions with related
persons. See Item 404(b)(1)(i) of Regulation S-K.
Director Independence
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In this section, disclose the independence standards that you use to determine
whether members of the board of directors are independent. See Item 407(a) of
Regulation S-K.
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It appears that [the company] uses standards for director independence that
supplement the listing standards of the New York Stock Exchange. Revise this
section to discuss any requirements beyond the listing standards and disclose
whether the standards are included on [the company’s] website or identify the
proxy statement where the standards were included as an appendix. Please refer
to Item 407(a)(2) of Regulation S-K.
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For each director and nominee for director that is identified as independent,
describe, by specific category or type, any transactions, relationships or
arrangements not disclosed pursuant to Item 404(a) that the board of directors
considered under the applicable independence definitions in determining that the
director is independent. See Item 407(a)(3) of Regulation S-K and related
Instruction 3.
Misc. - Plain English
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Your disclosure regarding the compensation paid to named executive officers is
difficult to understand because of your extensive reliance on abbreviations to
describe your named executive officers, compensation plan and plan goals.
Please consider the principles set forth in Rule 13a-20 under the Securities
Exchange Act of 1934 when drafting your executive compensation disclosure so it
is easier for an investor to understand the disclosure you have provided.
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The disclosure in this section is dense, difficult to understand, and comprises
a disproportionate amount of disclosure when compared to the rest of the
information you provided under Item 402 of Regulation S-K. In addition, you
rely too heavily on the use of defined terms as a primary means of explaining
the information and your use of extensive footnoting to the various tables
significantly impairs the readability of your disclosure. Please distill this
information into concise disclosure of the material concepts and potential
payouts that underlie these types of agreements and present your disclosure in a
fashion that is readily understandable and that fits within your overall
compensation discussion. Refer to Section VI of Commission Release 33-8732A.
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Refer to Item 402(b)(1)(v) of Regulation S-K. Please disclose how you calculate
annual incentive plan awards in terms that are easier for an investor to
understand. For example, please consider including additional tables using
hypothetical or actual dollar amounts regarding the calculations of how the
bonus pool is funded and how awards are paid out. Please avoid using jargon to
describe awards under this plan, such as “stretch goal” and “earnings kicker” or
better describe how these terms specifically factor into award determinations.
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table.
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