Disclosure and Shareholder Vote for Golden Parachute Compensation Guide

Summary

Section 14A(b) of the Securities Exchange Act of 1934, as amended (Exchange Act) (15 U.S.C § 78n-1), enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires the disclosure of “golden parachute payments” that will be paid or may become payable based on or related to a merger or a similar transaction. It also requires those arrangements to be submitted to a non-binding shareholder vote when a company seeks shareholder approval of a merger, acquisition, or sale of assets. (See Shareholder Approval of Executive Compensation and Golden Parachute Compensation, SEC Release No. 33-9178 (Jan. 25, 2011) (the “Adopting Release”).) This guide outlines how to determine whether “golden parachute” disclosure is required in an SEC filing, and what the disclosure needs to cover. It also outlines the circumstances under which a non-binding shareholder advisory vote is required to approve the golden parachute arrangements, and the requirements associated with ...