Disclosing Risk and Overall Compensation Checklist

Summary

This checklist (1) outlines the steps that a company should take to evaluate the risks associated with their compensation policies and practices and (2) provides drafting tips for companies that are required or choose to provide risk disclosure. Employee compensation, whether for executives or the broader employee population, was identified by the Securities and Exchange Commission (SEC) as a significant contributor to the financial crisis. To protect the "safety and soundness" of our financial system, the SEC adopted rules requiring companies to thoroughly review the relationship between their employee compensation policies and practices and risks to the company and mandating disclosure under certain circumstances.