Executive Compensation Disclosure Memo Series (Part 2 of 6)

To read Part 1 of 6 please click here

Part 2 of 6 summarizes the principal aspects of the new Compensation Discussion and Analysis ("CD&A") section that will be required in proxy statements (or 10-K’s for companies not subject to the proxy rules) filed in the upcoming proxy season.

The SEC’s director of the Division of Corporate Finance, John White, has characterized CD&A as the "heart" of the new compensation disclosure regime. The CD&A is intended to serve a similar purpose for compensation disclosure as that served for financial disclosure by Management’s Discussion and Analysis ("MD&A"). The CD&A will explain all material elements of a company’s compensation program and provide a discussion and analysis of the material factors underlying compensation policies and decisions. The implementation of those decisions should be reflected in the data presented in the Summary Compensation Table (see Part 3 of 6) and other tables