Recent SEC Staff Comments Challenge Reporting Of Equity Compensation

Recent correspondence between the staff (Staff) of the Securities and Exchange Commission's Division of Corporation Finance and Verizon Communications Inc. (Verizon) emphasizes the difficulties inherent in reporting executive compensation in the summary compensation table (SCT). In the correspondence, the Staff challenged the reporting of payments made pursuant to performance stock unit awards (PSUs) granted to Verizon's chief executive officer (CEO) under Verizon's Long-Term Incentive Plan (LTIP) and questioned whether the PSUs consisted of two discrete components: a stock award reportable in the amount of the grant date fair value in the year granted and a cash bonus reportable in full in the year paid. Noting that Verizon directors had discretion to pay out a portion of the CEO's PSUs in cash based on their assessment of the CEO's achievement measured against certain qualitative criteria, the Staff initially took the position that the full amount of the discretionary