Departure of an Executive Officer — What Disclosure and Compliance Issues Should Companies Consider?

If certain company executive officers retire, resign, or are terminated from their position, the company has a filing requirement under Item 5.02(b) of Form 8-K. The filing requirement applies to the departure or reassignment of the following officers:

Principal executive officer
President
Principal financial officer
Principal accounting officer
Principal operating officer
Any person performing similar functions to those previously listed officers
Any other named executive officer in the most recent Summary Compensation Table filed with the SEC (U.S. Securities and Exchange Commission) — typically, the company’s most recently filed proxy statement

The Form 8-K filing is due within four business days of the notice of termination or resignation, not the executive’s last day.

The 60-Second Version

A Form 8-K under Item 5.02(b) must be filed no later than four business days after the departure event, disclosing the officer’s departure. Separation arrangements may require separate disclosure under Item 5.02(e).
The departing executive should either receive a formal written notice of termination or submit a formal notice of resignation.
The board’s compensation committee is responsible for approving, or recommending to the full board for approval, any new or amended severance agreements with the departing executive officer. If the departing executive is a director or a named executive officer, the agreement will generally need to be filed as an exhibit to the next periodic report on Form 10-Q or Form 10-K.
A Form 4 filing must be made for the departing officer to report any equity transactions triggered by the termination, such as the vesting or settlement of performance-based equity awards.
All ancillary internal and external positions and authorities held by the departing executive — including banking authority, press release authority, disclosure committee roles, and compliance officer positions — must be identified and terminated or reassigned.
The directors and officers (D&O) insurance carrier should be notified of the executive officer’s departure.
Determine whether a change in role, such as ceasing to be the principal executive, financial, accounting, or operating officer without leaving the company, requires a Form 8-K filing.

SEC Filings and Public Disclosures

A current report on Form 8-K under paragraph (b) to Item 5.02 must be filed no later than four business days after the departure event. The Form 8-K must disclose that the event occurred and the date of the event. It may also be necessary to describe any compensation arrangements or amendments to compensation arrangements in connection with the departure pursuant to Item 5.02(e) of Form 8-K.

Companies should also consider issuing a press release to announce the departure in conjunction with the Form 8-K. While not required, a coordinated press release is common practice and allows the company to manage the transition’s narrative.

If the departing executive was included in the company’s previously distributed proxy card for an upcoming annual meeting — for example, as a director nominee — a definitive additional proxy materials filing may be required to notify stockholders that the individual will no longer stand for reelection and that any votes cast for or against them on the previously delivered proxy card will be irrelevant to the meeting’s proceedings. This filing should be made on the same date as the Form 8-K.

Companies listed on the New York Stock Exchange (NYSE) must submit a notice to the NYSE to update the list of certain executive officers promptly following the public announcement of the departure. Nasdaq-listed companies should confirm whether any notification obligations apply.

Practice Point

The Form 8-K filing clock begins running from the date of the triggering event — the board or executive action approving the termination or the executive officer’s delivery of a notice of resignation — not from the executive’s last day of employment or the effective date of departure. Companies must be prepared to file a Form 8-K within four business days, even if the separation documentation and related arrangements are not yet finalized. When material terms of a separation agreement remain under negotiation at the time of filing, a company should consider how to describe those arrangements accurately at the time of filing, and should be prepared to file again once the terms are finalized. Legal counsel should be engaged at the outset of the process to sequence all required steps.

Section 16 Filing

Form 4 filings must be made for departing executive officers to report any equity transactions triggered by or occurring in connection with the termination — for example, the acquisition of common stock as a result of the vesting or settlement of performance-based equity awards prior to the executive officer’s departure. These filings must be made within two business days of the reportable transaction.

Companies should also assess the departing executive's continuing Section 16 exposure. For six months after the individual ceases to be an officer, a transaction may still be matched against a non-exempt opposite-way transaction that occurred while the individual was an officer, and a Form 4 may be required to report it.

Board and Committee Approvals

Under some circumstances, board approval of the termination of a departing executive officer is appropriate. When the departing executive also serves as a director, the board should simultaneously address the implications for board size and composition — including whether to (i) decrease the size of the board effective upon the earlier of the executive’s resignation from the board or the end of their term at the next annual meeting and (ii) reapprove the slate of director nominees at the upcoming annual meeting to exclude the departing executive.

The board’s compensation committee is responsible for approving — or recommending to the full board for approval — any new or amended compensation agreements with the departing executive officer.

Employment and Severance Documentation

Formal written notice of termination should be prepared and delivered to the departing executive officer, or the individual should submit a written notice of resignation to the company.

New or amended compensation agreements for departing executive officers should be negotiated, documented, and executed.

Companies should also consider whether any departing executive officer’s indemnification agreement requires review or amendment in connection with the transition. Indemnification rights typically survive an executive’s departure; therefore, companies should ensure that any applicable tail coverage or continued indemnification commitments are properly documented.

Internal Authority and Transition Matters

Companies should identify all ancillary internal and external positions and authorities held by the departing executive officer (e.g., officer of a subsidiary) and take steps to designate replacements for internal roles and terminate those external authorities.

The company’s D&O insurance carrier should be notified of the executive’s departure promptly following the public announcement.

When the departure involves a change in the company’s chief financial officer or principal accounting officer, the company should notify its external auditors directly.

The company’s website should be updated to reflect the executive changes, typically on the same date that the Form 8-K is filed. Companies should also coordinate internal communications to employees and, if appropriate, key customers, investors, and other external stakeholders.

Practical Checklist

Board and Committee Approvals

Get board approval if necessary
Address board size and composition issues if the officer was a director
Get compensation committee approval of new or amended compensation arrangements

Documentation

Prepare or deliver formal notice of termination or resignation
Negotiate, document, and execute severance or other compensation agreements if applicable

SEC Filings and Public Disclosures

File Form 8-K pursuant to Item 5.02(b)
File any individual compensation or other agreements as exhibits to the Form 8-K or with the next periodic report on Form 10-Q or Form 10-K
Issue a press release
If the departing executive was included in a previously distributed proxy card as a director nominee, file additional soliciting material to indicate that the director will not be standing for election
Submit notice to the NYSE
File Form 4 for all equity transactions triggered by the termination

Internal Authority and Transition Matters

Terminate internal and external positions and authorities held by the departing executive, including banking, investment account, and signing authorities
Notify D&O insurance carrier of the departure, and confirm runoff or tail for the departing executive
When the departure involves the chief financial officer or principal accounting officer, notify the external auditors
Update the company website
Prepare internal and external communications to employees, investors, and customers

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.

Departure of an Executive Officer — What Disclosure and Compliance Issues Should Companies Consider?

SEC Filings and Public Disclosures

Section 16 Filing

Board and Committee Approvals

Employment and Severance Documentation

Internal Authority and Transition Matters

Practical Checklist

Board and Committee Approvals

Documentation

SEC Filings and Public Disclosures

Internal Authority and Transition Matters

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