SEC Considers Revamping Reg S-K

Author: Barbara Baksa

The SEC staff have finished their review of the disclosure requirements of Regulation S-K and issued a report that includes recommendations for further review.

The JOBS Act of 2012 required the study in respect to disclosures by emerging growth companies, however the SEC expanded it to cover all companies. Actual changes to Reg S-K have not been determined but can be implemented in the future as the SEC attempts to clarify executive compensation disclosure.

Here are some interesting facts about executive compensation disclosure that may interest you.

• The executive compensation disclosure rules have been amended more often than any other rules for disclosures required under Reg S-K.
• The executive compensation disclosures, albeit in a very different format, have been around since the very first registration statement (Form A-1) implemented in 1933.
• Back in 1933, the disclosure was required for any directors, officers, or other persons earning in excess of $25,000.  This seems like a pretty low threshold, but then I ran the amount through the Bureau of Labor Statistic’s inflation calculator.  In today’s dollars, that’s around $450,000.
• In 1972, the threshold for disclosure was increased to compensation in excess of $40,000. According to the inflation calculator, that’s around $223,000 in today’s dollars.
• It wasn’t until 1992 that the threshold was increased to $100,000. In today’s dollars, that’s about $166,000.  $40,000 in 1972 was the equivalent of about $134,000 in 1992, so my guess is that we have a ways to go until the SEC decides to increase the threshold again.

What are your opinions on Reg S-K and executive compensation?