Blog FinReg + Policy Watch September 23, 2020

SEC Issues CD&I On Disclosure of Benefits Provided to Executive Officers Because of the COVID-19 Pandemic

The staff of the SEC’s Division of Corporation Finance has issued a new compliance and disclosure interpretation under the Regulation S-K Compliance & Disclosure Interpretations (C&DIs) to provide guidance on whether benefits provided to executive officers because of the COVID-19 pandemic are perquisites or personal benefits under Item 402(c)(2)(ix)(A) of Regulation S-K. This question, which may be relevant for many companies this year, can affect determinations of disclosable executive compensation and determinations of which executive officers are “named executive officers” under Item 402. The C&DI states that the two-step analysis contained in Release 33-8732A, which will depend on the specific facts involved, applies to these determinations:

  • An item that is “integrally and directly” related to performance of an executive’s duties is not a perquisite or personal benefit.
  • An item that provides a direct or indirect benefit to the executive and has a personal aspect is a perquisite or personal benefit, even if it has a business purpose or was provided for the company’s convenience, unless the item is generally available to all employees on a non-discriminatory basis.

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