The Securities and Exchange Commission has approved amendments to its rules that will require public companies to disclose additional information about risk, compensation and corporate governance matters. According to the SEC, the new disclosure requirements announced on December 16 are intended to enhance the information provided to shareholders so that they are better able to evaluate the leadership of public companies. In particular, the amendments will require new disclosures about compensation policies and practices as they relate to a company’s risk management, the board’s role in stock and option awards to company executives and directors, potential conflicts of interests of compensation consultants, and legal actions involving a company's executive officers, directors and nominees. The amendments will also require disclosures in proxy and information statements about the background and qualifications of directors and board nominees, the consideration of diversity in the process by which candidates for director are considered for nomination, board leadership structure and the board's role in risk oversight. Smaller reporting companies will not be required to provide the new disclosures. The new disclosure requirements will become effective on February 28, 2010.

Nutter Notes: The amendments will require public companies to provide a narrative disclosure about their compensation policies and practices for all employees if those policies or practices create risks that may have a material adverse effect on the company, in addition to the existing disclosure required for public companies (other than smaller reporting companies) regarding compensation for the most highly compensated executive officers. For each director and board nominee, each public company will have to disclose the particular experience, qualifications, attributes or skills that led the company’s board to conclude that the person should serve as a director, any directorships at public companies and registered investment companies that each director and board nominee held at any time during the past five years, and an expanded list of legal proceedings, including SEC securities fraud enforcement actions against the director or nominee, going back ten years, instead of five years as is currently required. Amendments to Form 8-K will require companies to disclose the results of a shareholder vote within four business days after the end of the meeting at which the vote was held, replacing the requirement to disclose voting results in annual or quarterly reports, which are sometimes filed months after the relevant meeting.