On December 16, the Securities and Exchange Commission adopted final rules intended to improve disclosure in the area of corporate governance and clarify the SEC’s proxy rules.

The new rules, which are effective February 28, 2010, require issuers to disclose in their proxy statements (i) the impact of overall compensation policies and practices applicable to all employees on risk-taking that is reasonably likely to have a material adverse effect on the issuer; (ii) information concerning the qualifications, experience, skills and other attributes that qualify directors and nominees to serve on the board; (iii) whether, and if so, how, the nominating committee considers diversity when identifying nominees for director, (iv) the role of the board of directors in risk management; (v) the rationale for the issuer’s corporate leadership structure; and (vi) fees paid to compensation consultants who advise both the board of directors and management under certain circumstances.

More specifically, the amended rules revise the disclosure of stock options and awards in the Summary Compensation Table and Director Compensation Table to require reporting of the aggregate grant date fair value of awards rather than current disclosure of the dollar amount of compensation recognized in that year for financial statement reporting purposes. In addition, issuers will be required to disclose whether and why they have chosen to combine or separate the chief executive officer and board chair positions.

The final rules also 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 shareholder vote rather than in its Form 10-Q for that quarter.

A more detailed analysis of the Final Rules will be distributed in a Katten Client Advisory next week.  

Click here for the press release issued by the Securities and Exchange Commission. Click here for the Final Rule Release 33-9089.