As I should have anticipated, I received a very significant percentage of out-of-office bounce-backs last week during the Thanksgiving holiday. Therefore, I thought I would mention a few potentially significant items that some readers may have missed.
Boards and Executives May Need to Review Their Indemnification Provisions. A change in Delaware law that becomes effective January 1, 2021 suggests that companies, directors, and covered executives may want to revise the wording of the company’s indemnification agreements, certificate of incorporation, and/or by-laws. (Note that we will be leading an NASPP Chicago chapter Webcast on Indemnification and D&O Insurance Issues for Executive Compensation Professionals tomorrow.)
SEC Proposes Temporary Rules to Facilitate Participation by Certain “Platform Workers” in Compensatory Offerings Under Rule 701 and Form S-8. Last week, the SEC voted 3-2 to propose rules that, on a temporary basis and subject to conditions, would permit a corporation to provide equity compensation to certain “platform workers” who provide services available through the corporation’s technology-based platform or system. The proposed rules would amend Rule 701 by adding a temporary rule provision that, for five years, would enable corporations to use Rule 701 to compensate certain platform workers.
Likely Priorities of the SEC in 2021. On November 19, the SEC adopted amendments to “Modernize and Enhance Management’s Discussion and Analysis and other Financial Disclosures.” Nothing about compensation in this. However, the two Democratic Commissioners released a Joint Statement on Amendments to Regulation S-K: Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, which strongly expressed their disagreement with the omission of climate change disclosure requirement in the amended rules, and concluded: “While we are disappointed that the modernization of Regulation S-K did not address these vital issues, there is a silver lining. We have an opportunity going forward to address climate, human capital, and other ESG risks, in a comprehensive fashion with new rulemaking specific to these topics.” One might view this as a harbinger of likely future action when the majority shifts to Democratic control next year.
Just 31 more days in this annus horribilis.
-Mike Melbinger, CompensationStandards.com November 30, 2020