SEC Adopts Enhanced Executive Compensation And Governance Disclosure Rules

On December 16, 2009, the Securities and Exchange Commission adopted final rules, effective February 28, 2010, intended to improve corporate governance disclosures and to clarify the SEC's proxy rules. On December 22, 2009, the SEC published Compliance and Disclosure Interpretations (C&DIs) providing guidance as to transition dates for the new rules.

This advisory provides a summary of those changes, updated to reflect the transition interpretations, and our guidance on actions that companies should consider now in preparation for the new requirements.

The final rules require companies to disclose certain compensation policies and practices that could incentivize risk-taking in certain instances, as well as the board's role in risk management. They also require additional disclosure relating to the board's practices to encourage diversity, and its consideration of qualifications of directors, as well as expanded disclosure of legal proceedings involving