Final Rule, Amended: Executive Compensation and Related ...

1 Conforming Version (To Conform to Release Published in the Federal Register) SECURITIES AND EXCHANGE COMMISSION 17 CFR PARTS 228, 229, 232, 239, 240, 245, 249 AND 274 [RELEASE NOS. 33-8732A; 34-54302A; IC-27444A; FILE NO. S7-03-06] RIN 3235-AI80 Executive Compensation AND Related PERSON DISCLOSURE AGENCY: Securities and Exchange Commission. ACTION: Final rule. SUMMARY: The Securities and Exchange Commission is adopting amendments to the disclosure requirements for Executive and director Compensation , Related person transactions, director independence and other corporate governance matters and security ownership of officers and directors. These amendments apply to disclosure in proxy and information statements, periodic reports, current reports and other filings under the Securities Exchange Act of 1934 and to registration statements under the Exchange Act and the Securities Act of 1933.

2 We are also adopting a requirement that disclosure under the amended items generally be provided in plain English. The amendments are intended to make proxy and information statements, reports and registration statements easier to understand. They are also intended to provide investors with a clearer and more complete picture of the Compensation earned by a company s principal Executive officer, principal financial officer and highest paid Executive officers and members of its board of directors. In addition, they are intended to provide better information about key financial relationships among companies and their Executive officers, directors, significant shareholders and their respective immediate family members. In Release No. 33-8735, published elsewhere in the proposed rules section of this issue of the Federal Register, we also request additional comments regarding the proposal to require Compensation disclosure for three additional highly compensated employees.

3 DATES: Effective Date: November 7, 2006. Comment Date: Comments regarding the request for comment in Section of this document should be received on or before October 23, 2006. Compliance Dates: Companies must comply with these disclosure requirements in Forms 8-K for triggering events that occur on or after November 7, 2006 and in Forms 10-K and 10-KSB for fiscal years ending on or after December 15, 2006. Companies other than registered investment companies must comply with these disclosure requirements in Securities Act registration statements and Exchange Act registration statements (including pre-effective and post-effective amendments), and in any proxy or information statements filed on or after December 15, 2006 that are required to include Item 402 and 404 disclosure for fiscal years ending on or after December 15, 2006.

4 Registered investment companies must comply with these disclosure requirements in initial registration statements and post-effective amendments that are annual updates to effective registration statements on Forms N-1A, N-2 (except those filed by business development companies) and N-3, and in any new proxy or information statements, filed with the Commission on or after December 15, 2006. ADDRESSES: Comments may be submitted by any of the following methods: 2 Electronic Comments: Use the Commission s Internet comment form ( ): or Send an e-mail to Please include File Number S7-03-06 on the subject line; or Use the Federal Rulemaking Portal ( ). Follow the instructions for submitting comments. Paper Comments: Send paper comments in triplicate to Nancy M.

5 Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington DC 20549-1090. All submissions should refer to File Number S7-03-06. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission s Internet Web site ( ). Comments are also available for public inspection and copying in the Commission s Public Reference Room, 100 F Street, NE, Washington, DC, 20549. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available.

6 FOR FURTHER INFORMATION CONTACT: Anne Krauskopf, Carolyn Sherman, or Daniel Greenspan, at (202) 551-3500, in the Division of Corporation Finance, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-3010 or, 3 with respect to questions regarding investment companies, Kieran Brown in the Division of Investment Management, at (202) 551-6784. SUPPLEMENTARY INFORMATION: We are amending: Items 201,1 306,2 401,3 402,4 4035 and 4046 of Regulations S-K7 and S-B,8 Item 6019 of Regulation S-K, Item 110710 of Regulation AB,11 Item 30412 of Regulation S-T,13 and Rule 10014 of Regulation We are also adding new Item 407 to Regulations S-K and S-B. In addition, we are amending Rules 13a-11,16 14a-3,17 14a-6,18 14c-5,19 15d-1120 and 16b-321 under the Securities Exchange Act of We are adding Rules 13a-20 and 15d- 1 17 CFR and 17 CFR 2 17 CFR and 17 CFR 3 17 CFR and 17 CFR 4 17 CFR and 17 CFR 5 17 CFR and 17 CFR 6 17 CFR and 17 CFR 7 17 CFR et seq.

7 8 17 CFR et seq. 9 17 CFR 10 17 CFR 11 17 CFR et seq. 12 17 CFR 13 17 CFR et seq. 14 17 CFR 15 17 CFR et seq. 16 17 CFR 17 17 CFR 18 17 CFR 19 17 CFR 20 17 CFR 21 17 CFR 22 15 78a et seq. 4 20 under the Exchange Act. We are further amending Schedule 14A23 under the Exchange Act, as well as Exchange Act Forms 8-K,24 10,25 10SB,26 10-Q,27 10-QSB,28 10-K,29 10-KSB30 and Finally, we are amending Forms SB-2,32 S-1,33 S-3,34 S-435 and S-1136 under the Securities Act of 1933,37 Forms N-1A,38 N-2,39 and N-340 under the Securities Act and the Investment Company Act of 1940,41 and Form N-CSR42 under the Investment Company Act and the Exchange Act. 23 17 CFR 24 17 CFR 25 17 CFR 26 17 CFR 27 17 CFR 28 17 CFR 29 17 CFR 30 17 CFR 31 17 CFR 32 17 CFR 33 17 CFR 34 17 CFR 35 17 CFR 36 17 CFR 37 15 77a et seq.

8 38 17 CFR and 39 17 CFR and 40 17 CFR and 41 15 80a-1 et seq. 42 17 CFR and 5 Table of Contents I. Background and Overview II. Executive and Director Compensation Disclosure A. Options Disclosure 1. Background 2. Required Option Disclosures a. Tabular Disclosures b. Compensation Discussion and Analysis i. Timing of Option Grants ii. Determination of Exercise Price B. Compensation Discussion and Analysis 1. Intent and Operation of the Compensation Discussion and Analysis 2. Instructions to Compensation Discussion and Analysis 3.

9 Filed Status of Compensation Discussion and Analysis and the Furnished Compensation Committee Report 4. Retention of the Performance Graph C. Compensation Tables 1. Compensation to Named Executive Officers in the Last Three Completed Fiscal Years -- The Summary Compensation Table and Related Disclosure a. Total Compensation Column b. Salary and Bonus Columns c. Plan-Based Awards i. Stock Awards and Option Awards Columns ii. Non-Equity Incentive Plan Compensation Column d. Change in Pension Value and Nonqualified Deferred Compensation Earnings Column i.

10 Earnings on Deferred Compensation ii. Increase in Pension Value e. All Other Compensation Column i. Perquisites and Other Personal Benefits ii. Additional All Other Compensation Column Items f. Captions and Table Layout 2. Supplemental Grants of Plan-Based Awards Table 3. Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table a. Narrative Description of Additional Material Factors b. Request for Additional Comment on Compensation Disclosure for up to Three Additional Employees 6 4.