SEC Releases Final Rules On Executive Compensation Disclosure

On August 11, 2006, the SEC released the final rules on executive and director compensation disclosure, along with detailed commentary and guidance. (Available at:  http://www.sec.gov/rules/final/2006/33-8732a.pdf).  The final rules require extensive disclosures about compensation policies and practices that will require significant fact-finding and analysis, as well as the attention of companies’ most senior executives and directors.  The rules will generally be effective for Forms 10-K and proxy statements filed for fiscal years ending on or after December 15, 2006.  As a result, they will require disclosures regarding compensation going back as far as December 16, 2005.  Companies should familiarize themselves now with the new disclosure requirements to ensure they have processes in place that allow them to collect and analyze the information they will need in order to comply with the new rules. We also recommend that companies commence preparing their proxies significantly sooner