On July 1, 2009, the Securities and Exchange Commission ("SEC") voted to approve proposed amendments to the proxy disclosure and solicitation rules, which would enhance executive compensation and corporate governance disclosures for public companies, including operating companies and registered investment companies. The amendments would be applicable to proxy and information statements, annual reports and registration statements under the Securities Exchange Act of 1934, and registration statements under the Securities Act of 1933 and Investment Company Act of 1940. The comment period on the proposals will close 60 days after the date on which the proposals are published in the Federal Register. If adopted, the SEC release indicates that compliance with the proposed amendments would begin in the 2010 proxy season.

The most significant proposed enhancements are summarized below.

Compensation Discussion & Analysis. The proposal would amend the Compensation Discussion & Analysis to require companies to discuss and analyze the manner in which compensation policies and practices for employees generally, including non-executive officers, relate to the company's risk and the management of that risk, if risks arising from those policies or practices may have a material effect on the company. The SEC's proposed amendment identifies particular situations and issues that may warrant discussion and analysis.

Tabular Disclosure. The proposal would revise the Summary Compensation Table and Director Compensation Table. As revised, the tables would disclose the full FAS 123R fair value on the grant date of stock awards and option awards, rather than the current disclosure of the dollar amount recognized for financial statement reporting purposes for the fiscal year. This reverts to the original standard proposed by the SEC in 2006, when the compensation disclosure rules were last significantly expanded. This revision could potentially result in a change in the most highly compensated executives for whom individualized compensation disclosure is required. The proposal solicited comment on the best approach for presentation of this information for prior periods, so as to preserve the objective of year-to-year comparability on a cost effective basis as a transitional matter.

Directors & Nominees. The proposal would expand the disclosure requirements regarding the particular experience, qualifications, attributes and skills that qualify a person to serve as a director of a company and on any Board committee, in light of the company's business and structure. Additionally, the proposal would require disclosure of any directorships held by each director and nominee at any time during the past five years at public companies. Further, the proposal would lengthen the time during which the disclosure of involvement in legal proceedings is required, from five to 10 years. The expanded disclosure requirements regarding director and nominee qualifications, past directorships, and the timeframe for disclosure of legal proceedings, would also apply to management investment companies that are registered under the Investment Company Act. The proposal also would amend Forms N-1A, N-2, and N-3 to require that registered investment companies include the expanded disclosures regarding director qualifications and past directorships in their statements of additional information.

Leadership Structure. The proposal would require disclosure of the company's Board leadership structure, including why that structure is the best for the company, whether and why the principal executive officer and board chair positions are combined, and—if they are combined—whether the company has a lead independent director. In addition, disclosure is required as to the Board's role in the company's risk-management process and any effect it may have on the company's leadership structure. The proposal requires registered management investment companies to provide the new disclosure about leadership structure and the Board's role in the risk-management process in proxy and information statements. However, the proposal is tailored to the management structure of funds. For example, the proposal would require that a fund disclose whether the Board chair is an "interested person" of the fund, as defined in Section 2(a)(19) of the Investment Company Act. If the Board chair is an "interested person" of the fund, a fund would be required to disclose whether it has a lead independent director, and what specific role the lead independent director plays in the fund leadership. The proposal also would amend Forms N-1A, N-2, and N-3 to require that registered investment companies include similar disclosure in their statements of additional information.

Compensation Consultants. The proposal would require disclosure of the fees paid to, and services provided by, any compensation consultants and their affiliates that play any role in determining or recommending the amount or form of executive and director compensation, if they also provide other services to the company. Disclosure includes the nature and extent of additional services, and the amount of fees paid for additional services and for services relating to advice as to the form or amount of executive and director compensation, together with information as to whether the engagement was made, recommended, subject to screening or reviewed by management, and whether all services in addition to executive compensation services were approved by the Board or compensation committee.

Voting Results. The proposal would require a Form 8 K filing for shareholder voting results within four business days of the meeting at which the vote was held.

Proxy Solicitation Changes. The proposal includes technical changes to the proxy solicitation rules. Principally, these amendments would clarify certain exceptions from the applicability of the proxy rules where persons are not seeking the power to vote for another, and would facilitate the inclusion of additional director nominees by a proponent proposing candidates constituting a minority of the board.