On July 10, 2009, the U.S. Securities and Exchange Commission ("SEC") announced proposed rules intended to improve the disclosure provided to shareholders of public companies regarding compensation and corporate governance matters (the "Proposed Rules"). If approved, the SEC has indicated that it intends for the rules to be effective for the 2010 proxy season. Accordingly, public companies should begin to analyze these rules in anticipation of receiving the final rules immediately prior to next year's proxy season.

The most significant enhanced disclosures are briefly described below:

The Relationship of a Company's Overall Compensation Policies to Risk. The Proposed Rules would amend the Compensation Discussion and Analysis ("CD&A") to broaden its scope. The CD&A would include a new section discussing how the company's overall compensation policies for employees in general, including non-executive officers, create incentives that can affect the company's risk profile and management of that risk, if the risks arising from those policies or practices have a material effect on the company.

Reporting of Annual Stock and Option Awards to Company Executives and Directors. The Proposed Rules revise the Summary Compensation Table and Director Compensation Table disclosure of stock awards and option awards to require disclosure of the aggregate grant date fair value of awards. This replaces the currently mandated disclosure of the dollar amount recognized for financial statement reporting purposes.

Qualifications of Directors, Executive Officers and Nominees. The Proposed Rules expand the disclosure requirements for director candidates. Specifically, for each director or director nominee, the company must discuss (i) the particular experience, qualifications, and attributes/skills that qualify the directors to serve as directors or committee members in light of the company's business and structure, (ii) any directorships held during the past five years at other public companies (rather than only current directorships), and (iii) certain legal proceedings over the past 10 years (increased from five years).

Company Leadership Structure. The Proposed Rules require companies to discuss their leadership structure and why that structure is best for the company. This rule is intended to elicit information about why the company has or does not have an independent chairman of the board. Companies also must discuss the board's role in the company's risk management process (e.g., does the board implement and manage its risk management function itself or through a committee).

Potential Conflicts of Interest of Compensation Consultants. The Proposed Rules require companies to disclose the fees paid to compensation consultants when they play any role in determining or recommending the amount or form of executive and director compensation. If the consultant provides other services to the company, disclosure of any additional services provided by the compensation consultant is required.