On July 1, the Securities and Exchange Commission proposed amendments intended to improve disclosure in the area of corporate governance and clarify the SEC’s proxy rules.

The proposed amendments would require issuers to disclose in their proxy statements (i) the impact of overall compensation policies and practices (including those applicable to non-executive employees) on risk-taking; (ii) information concerning the qualifications, experience, skills and other attributes that qualify directors and nominees to serve on the board or a committee of the board; (iii) the role of the board of directors in risk management; (iv) the rationale for the issuer’s corporate leadership structure; and (iv) potential conflicts of interests of compensation consultants.

More specifically, proposed amendments would revise disclosure of stock options and awards in the Summary Compensation Table and Director Compensation Table to require disclosure of the aggregate grant date fair value of awards in place of current disclosure of the dollar amount recognized for financial statement reporting purposes. In addition, companies would be required to disclose whether and why they have chosen to combine or separate the chief executive officer and board chair positions.

The proposal also seeks to accelerate disclosure of election results by requiring issuers to disclose voting results in a current report on Form 8-K filed with the SEC within four days after the applicable stockholder action. Currently, election results need not be reported until an issuer files its first quarterly report on Form 10-Q following the applicable meeting of stockholders.

The proposed amendments would also clarify the manner in which several proxy rules operate and facilitate stockholder communications and voting. Among other things, such amendments would permit stockholders soliciting proxies to round out a “short slate” of directors with directors named in another soliciting stockholder’s proxy statement in the same manner currently permitted by the proxy rules for nominees named in the issuer’s proxy statement.

Click here to read remarks from Sean Harrison of the Division of Corporate Finance.