Proxy Disclosure Enhancements and ERM Opportunities

©April 2010, 12 pages

On December 16, 2009 the U.S. Securities and Exchange Commission (SEC) issued Final Rule 33-9089, “Proxy Disclosure Enhancements.” It was effective February 28, 2010. The new rule covers disclosures associated with: 1. The Role of the Board in Risk Oversight 2. Governance and Director Qualifications 3. Compensation Table and Compensation Consultants 4. Accelerated Reporting of Voting Results Senior financial executives should be aware that although the chief legal counsel may take the primary responsibility for the proxy statement, many other areas (such as the annual report) are affected by the rules and related disclosures. Additionally, financial executives who serve on boards should be especially interested in how this new rule impacts their role in risk oversight and the related disclosures. The rule was partially fueled by investor demand for more accountability and transparency. It meets this demand by enhancing proxy and annual reports via significantly improved information related to risk, board oversight, directors and nominees, compensation, and voting results. Although it is a regulatory requirement and compliance is essential, the rule also presents opportunities for company management and boards to strengthen their existing processes in some critical areas, especially the management of significant risks with Enterprise Risk Management (ERM).