---------------------------------------------------------------------------

    We have crafted our proposals to minimize the costs for smaller
reporting companies, while providing shareholders the opportunity to
express their views on the companies' compensation arrangements. For
example, our proposed amendments would provide the shareholders of
smaller reporting companies with the same voting rights with respect to
executive compensation as shareholders of other companies subject to
the proxy rules. We are not currently aware that Section 14A and our
proposed rules would unduly burden smaller reporting companies. Our
proposed amendments, for example, would not alter the existing scaled
disclosure requirements set forth in Item 402 of Regulation S-K for
smaller reporting companies, which recognize that the compensation
arrangements of smaller reporting companies typically are less complex
than those of other public companies.\133\ Under our proposed rules, we
would not alter the provision in our rules that smaller reporting
companies are not required to provide a CD&A.
---------------------------------------------------------------------------

    \133\ See Executive Compensation and Related Person Disclosure,
Release No. 33-8732A (Aug. 29, 2006) [71 FR 53158] (hereinafter, the
``2006 Executive Compensation Release'') at Section II.D.1. The
scaled compensation disclosure requirements for smaller reporting
companies are set forth in Item 402(1) [17 CFR 229.402(l)] through
(r) [17 CFR 229.402(r)] of Regulation S-K.
---------------------------------------------------------------------------

    Our proposed rules would, however, require quantification of golden
parachute arrangements in merger proxies. Smaller reporting companies
are not required to provide this quantification under current Item
402(q) in annual meeting proxy statements, and would not be required to
do so under our proposals unless they seek to qualify for the exception
for a shareholder advisory vote on golden parachute compensation in a
later merger transaction. Even though our proposed rules would impose
additional disclosure requirements relating to the shareholder advisory
votes required by Section 14A, we preliminarily do not believe our
proposed rules would impose a significant additional cost or
disproportionate burden upon smaller reporting companies. As noted
above, smaller reporting companies tend to have less complex
compensation arrangements \134\ so the proposed additional disclosures
should not add significantly to their disclosure burden. As a result,
we do not believe our proposed rules would place a disproportionate
burden on smaller reporting companies.
---------------------------------------------------------------------------

    \134\ In adopting executive compensation disclosure requirements
applicable to smaller reporting companies, we have recognized that
the executive compensation arrangements of these issuers typically
are less complex than those of other public companies. See 2006
Executive Compensation Release, supra note 133, at Section II.D.1.
---------------------------------------------------------------------------

Request for Comment
    (52) Should we fully, partially, or conditionally exempt smaller
reporting companies or some other category of smaller companies from
some or all of the requirements of Section 14A? Are the provisions of
Section 14A unduly burdensome on small companies and if so, how are
they unduly burdensome?
    (53) Should we fully, partially, or conditionally exempt smaller
reporting companies or some other category of smaller companies from
any or all of our proposed rules? If so, which ones? Are any of our
proposed rules unduly burdensome to smaller reporting companies and if
so, how are they unduly burdensome?
    (54) Are the golden parachute arrangements of smaller reporting
companies relatively simple and straightforward compared to those of
larger issuers? Would the disclosure of such arrangements required by
proposed Item 402(t) impose an undue burden on smaller reporting
companies?
    (55) Should we clarify in an instruction to Rule 14a-21, as
proposed, that smaller reporting companies are not required to include
a CD&A in their proxy statements in order to comply with our proposed
amendments?
    (56) Are there any other steps that we should take to reduce the
burden on smaller reporting companies?

F. Transition Matters

    As noted above in Section I, Section 14A(a)(3) requires that both
the initial shareholder vote on executive compensation and the initial
vote on the frequency of votes on executive compensation be included in
proxy statements relating to an issuer's first annual or other meeting
of the shareholders occurring on or after January 21, 2011. Because
Section 14A(a) applies to shareholder meetings taking place on or after
January 21, 2011, any proxy statements, whether in preliminary or
definitive form, even if filed prior to this date, for meetings taking
place on or after January 21, 2011, must include the separate
resolutions for shareholders to approve executive compensation and the
frequency of say-on-pay votes required by Section 14A(a) without regard
to whether the Commission has adopted rules to implement Section 14A(a)
by that time. Therefore, in order to facilitate compliance with the new
statute, we are addressing certain first year transition issues.
    Rule 14a-6 currently requires the filing of a preliminary proxy
statement at least ten days before the proxy is sent or mailed to
shareholders unless the meeting relates only to the matters specified
by Rule 14a-6(a). Until we take final action to implement Exchange Act
Section 14A, we will not object if issuers do not file proxy material
in preliminary form if the only matters that would require a filing in
preliminary form are the say-on-pay vote and frequency of say-on-pay
vote required by Section 14A(a).
    Rule 14a-4 under the Exchange Act currently provides that persons
solicited are to be afforded the choice between approval or disapproval
of, or abstention with respect to, each matter to be voted on, other
than elections of directors. Exchange Act Section 14A(a)(2) requires a
``separate resolution subject to shareholder vote to determine whether
[the say-on-pay] votes * * * will occur every 1, 2, or 3 years.'' \135\
Until we take final action to implement Exchange Act Section 14A, we
will not object if the form of proxy for a shareholder vote on the
frequency of say-on-pay votes provides means whereby the person
solicited is afforded an opportunity to specify by boxes a choice among
1, 2 or 3 years, or abstain. In addition, we understand that some proxy
service providers may have difficulty in the short term in programming
their systems to enable shareholders to vote among four choices and
that their systems are currently set up to register at most three
votes--for, against, abstain. If proxy service providers are not able
to reprogram their

systems to enable shareholders to vote among four choices in time for
the shareholder votes required by Section 14A(a)(2), until we take
final action to implement Exchange Act Section 14A, we will not object
if the form of proxy for a shareholder vote on the frequency of say-on-
pay votes provides means whereby the person solicited is afforded an
opportunity to specify by boxes a choice among 1, 2 or 3 years, and
proxies are not voted on the frequency of say-on-pay votes matter in
the event the person solicited does not select a choice among 1, 2 or 3
years.\136\
---------------------------------------------------------------------------

    \135\ Exchange Act Section 14A(a)(2).
    \136\ See Shareholder Communications, Shareholder Participation
in the Corporate Electoral Process and Corporate Governance
Generally, Release No. 34-16356 (Nov. 21, 1979) [44 FR 68770].
---------------------------------------------------------------------------

    Finally, issuers with outstanding indebtedness under the TARP are
already required to conduct an annual shareholder advisory vote on
executive compensation until the issuer has repaid all outstanding
indebtedness under the TARP. Because such issuers are subject to an
annual requirement to provide a say-on-pay vote, a requirement to
provide a vote on the frequency of such votes would impose unnecessary
burdens on issuers and shareholders. Until we take final action to
implement Exchange Act Section 14A, we will not object if an issuer
with outstanding indebtedness under the TARP does not include a
resolution for a shareholder advisory vote on the frequency of say-on-
pay votes in its proxy statement for its annual meeting, provided it
fully complies with its say-on-pay voting obligations under EESA
Section 111(e).

G. General Request for Comment

    We request and encourage any interested person to submit comments
on any aspect of our proposals, other matters that might have an impact
on the amendments, and any suggestions for additional changes. With
respect to any comments, we note that they are of greatest assistance
to our rulemaking initiative if accompanied by supporting data and
analysis of the issues addressed in those comments and by alternatives
to our proposals where appropriate.

III. Paperwork Reduction Act

A. Background

    The proposed amendments contain ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\137\ We are submitting the proposed amendments to the Office
of Management and Budget (``OMB'') for review in accordance with the
PRA.\138\ The title for the collection of information is:
---------------------------------------------------------------------------

    \137\ 44 U.S.C. 3501 et seq.
    \138\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

    (1) ``Regulation 14A and Schedule 14A'' (OMB Control No. 3235-
0059);
    (2) ``Regulation 14C and Schedule 14C'' (OMB Control No. 3235-
0057);
    (3) ``Form 10-K'' (OMB Control No. 3235-0063);
    (4) ``Form 10-Q'' (OMB Control No. 3235-0070);
    (5) ``Form 10'' (OMB Control No. 3235-0064);
    (6) ``Regulation S-K'' (OMB Control No. 3235-0071); \139\
---------------------------------------------------------------------------

    \139\ The paperwork burden from Regulation S-K is imposed
through the forms that are subject to the disclosures in Regulation
S-K and is reflected in the analysis of those forms. To avoid a
Paperwork Reduction Act inventory reflecting duplicative burdens,
for administrative convenience we estimate the burdens imposed by
Regulation S-K to be a total of one hour.
---------------------------------------------------------------------------

    (7) ``Schedule 14D-9'' (OMB Control No. 3235-0102);
    (8) ``Schedule 13E-3'' (OMB Control No. 3235-0007);
    (9) ``Schedule TO'' (OMB Control No. 3235-0515);
    (10) ``Form S-1'' (OMB Control No. 3235-0065);
    (11) ``Form S-4'' (OMB Control No. 3235-0324);
    (12) ``Form S-11'' (OMB Control No. 3235-0067);
    (13) ``Form F-4'' (OMB Control No. 3235-0325); and
    (14) ``Form N-2'' (OMB Control No. 3235-0026).
    The regulations, schedules, and forms were adopted under the
Securities Act and the Exchange Act, except for Form N-2, which we
adopted pursuant to the Securities Act and the Investment Company Act.
The regulations, forms, and schedules set forth the disclosure
requirements for periodic reports, registration statements and proxy
and information statements filed by companies to help shareholders make
informed voting decisions. The hours and costs associated with
preparing, filing and sending the form or schedule constitute reporting
and cost burdens imposed by each collection of information. An agency
may not conduct or sponsor, and a person is not required to respond to,
a collection of information unless it displays a currently valid OMB
control number.
    As discussed in more detail above, we are proposing new Rule 14a-21
under the Exchange Act and new Item 24 of Schedule 14A. Proposed Rule
14a-21 would implement the requirements of Section 14A of the Exchange
Act to provide separate shareholder advisory votes on executive
compensation, the frequency of shareholder votes on executive
compensation, and, in connection with merger and similar transactions,
golden parachute compensation arrangements. New Item 24 of Schedule 14A
would require disclosure in proxy statements with respect to each of
these shareholder votes. New Rule 14a-21 and new Item 24 of Schedule
14A would increase existing disclosure burdens for proxy statements by
requiring:
     New disclosure about the requirement to provide separate
shareholder votes on executive compensation, the frequency of
shareholder votes on executive compensation and golden parachute
compensation arrangements in connection with merger transactions; and
     New disclosure of the general effect of the shareholder
advisory votes, such as whether such votes are non-binding.
    As discussed in more detail above, we are also proposing amendments
to Item 402(b) of Regulation S-K. The proposed amendments to Item
402(b) of Regulation S-K may increase existing disclosure burdens for
proxy statements by requiring:
     New disclosure of whether, and if so, how the issuer has
considered the results of previous shareholder votes on executive
compensation required by Section 14A of the Exchange Act in determining
compensation policies and decisions, and if so, how that consideration
has affected the issuer's compensation decisions and policies.
    As discussed in more detail above, we are also proposing new Item
402(t) of Regulation S-K and the proposed amendments to Item 1011(b) of
Regulation M-A, Item 5 of Schedule 14A, Item 15 of Schedule 13E-3 and
Item 8 of Schedule 14D-9. These proposed amendments would increase
existing disclosure burdens for proxy statements, registration
statements on Form S-4 and F-4, tender offer schedules and going
private schedules by requiring:
     New tabular and narrative disclosure of understandings and
agreements of named executive officers with acquiring and target
companies in connection with merger, acquisition, tender offer and Rule
13e-3 going-private transactions, and disclosure of the aggregate total
of all compensation that may be paid or become payable to each named
executive officer.
    As discussed in more detail above, we are proposing to amend Forms
10-K and 10-Q. The proposed amendments to Form 10-K and Form 10-Q would
increase existing disclosure burdens for

annual reports on Form 10-K and quarterly reports on Form 10-Q by
requiring:
     New disclosure of the issuer's decision of how frequently
to provide a separate shareholder vote on executive compensation in
light of a shareholder advisory vote on the frequency of shareholder
votes on executive compensation conducted pursuant to Section 14A(a)(2)
of the Exchange Act.
    Together, new Rule 14a-21 and new Item 24 of Schedule 14A and the
proposed amendments to Item 5 of Schedule 14A and the proposed
amendments to Item 402 of Regulation S-K, Item 1011 of Regulation M-A,
Item 15 of Schedule 13E-3 and Item 8 of Schedule 14D-9 would implement
and supplement the requirements under Section 14A of the Exchange Act
and also would provide additional meaningful disclosure regarding
golden parachute arrangements and regarding issuers' consideration of
the shareholder votes and the impact of such votes on issuers'
compensation policies and decisions. We believe these changes may
result in more meaningful disclosure for investors making voting or
investment decisions.
    We are proposing an amendment to Rule 14a-4, which relates to the
form of proxy that issuers are required to include with their proxy
materials, to require that issuers present four choices to their
shareholders in connection with the advisory vote on frequency. We are
also proposing an amendment to Rule 14a-6 to add the shareholder votes
on executive compensation and the frequency of shareholder votes on
executive compensation required by Section 14A(a) to the list of items
that do not trigger the filing of a preliminary proxy statement. In
addition, we are proposing an amendment to Rule 14a-8, adding a note to
Rule 14a-8(i)(10) to clarify the status of shareholder proposals
relating to the approval of executive compensation or the frequency of
shareholder votes approving executive compensation. Finally, we are
proposing conforming amendments to Item 402(a) and Item 402(m) of
Regulation S-K, clarifying that the disclosure required by proposed
Item 402(t) includes information regarding group life, health,
hospitalization, or medical reimbursement plans that do not
discriminate in scope, terms or operation, in favor of executive
officers or directors of the registrant and that are available
generally to all salaried employees. Pursuant to these conforming
amendments, issuers may continue to omit such information in connection
with disclosure required by other portions of Item 402 of Regulation S-
K. The proposed amendments to Rule 14a-4, Rule 14a-6, Rule 14a-8 under
the Exchange Act and Item 402(a) and Item 402(m) of Regulation S-K
would not increase any existing disclosure burden. We believe these
proposals, if adopted, would merely clarify existing and new statutory
requirements or reduce burdens otherwise arising from our proposals. As
a result, these amendments would not affect any existing disclosure
burden.
    Compliance with the proposed amendments by affected U.S. issuers
would be mandatory. Responses to the information collections would not
be kept confidential and there would be no mandatory retention period
for the information disclosed.

B. Burden and Cost Estimates Related to the Proposed Amendments

    We anticipate that the proposed disclosure amendments would
increase the burdens and costs for companies that would be subject to
the proposed amendments. New Section 14A of the Exchange Act, as
created by Section 951 of the Act, has already increased the burdens
and costs for issuers by requiring separate shareholder votes on
executive compensation and the frequency of shareholder votes on
executive compensation. Section 14A also requires additional disclosure
of golden parachute arrangements in proxy solicitations to approve
merger transactions and a separate shareholder vote to approve such
arrangements in certain circumstances. Our proposed amendments address
the Act's requirements in the context of disclosure under the federal
proxy rules, Regulation S-K and related forms and schedules, thereby
creating only an incremental increase in the burdens and costs for such
issuers. The proposed amendments will specify how issuers are to comply
with Section 14A of the Exchange Act and require new disclosure with
respect to comparable transactions.
    For purposes of the PRA, we estimate the annual incremental
paperwork burden for all companies to prepare the disclosure that would
be required under our proposals to be approximately 25,192 hours of
company personnel time and a cost of approximately $8,141,200 for the
services of outside professionals. These estimates include the time and
the cost of data gathering systems and disclosure controls and
procedures, the time and cost of preparing and reviewing disclosure by
in-house and outside counsel and executive officers, and the time and
cost of filing documents and retaining records. In deriving our
estimates, we recognize that the burdens will likely vary among
individual companies based on a number of factors, including the size
and complexity of their organizations, and the nature of their
operations. We believe that some companies will experience costs in
excess of this average in the first year of compliance with proposals
and some companies may experience less than the average costs.
    We derived the above estimates by estimating the average number of
hours it would take an issuer to prepare and review the proposed
disclosure requirements. These estimates represent the average burden
for all companies, both large and small. Our estimates have been
adjusted to reflect the fact that some of the proposed amendments would
be required in some but not all of the above listed documents depending
upon the circumstances, and would not apply to all companies.
    With respect to reporting companies, the disclosure required by new
Item 402(t) of Regulation S-K would be required in merger proxy and
information statements, Forms S-4 and F-4, Schedule 13E-3 and certain
tender offer documents and solicitation/recommendation statements. As
proposed, the disclosure required by new Item 402(t) may also be
included in annual meeting proxy statements on a voluntary basis.
    The disclosure required by our amendments to Item 402(b) of
Regulation S-K would be required in proxy and information statements as
well as Forms 10, 10-K, S-1, S-4, S-11, and N-2. The proposed
amendments to CD&A would not be applicable to smaller reporting
companies because under current CD&A reporting requirements these
companies are not required to provide CD&A in their Commission filings.
Based on the number of proxy filings that were received in the 2009
fiscal year, we estimate that approximately 1,200 domestic companies
are smaller reporting companies that have a public float of less than
$75 million.
    Our annual burden estimates are also based on other assumptions.
First, we assumed that the burden hours of the proposed amendments
would be comparable to the burden hours related to similar disclosure
requirements under current reporting requirements, such as the
disclosure required by Item 402(j). Second, we assumed that
substantially all of the burdens associated with the proposed
amendments to Rule 14a-21 and Item 24 would be associated with Schedule
14A as this would be the primary

disclosure document in which these items would be prepared and
presented. In the case of our proposed amendments to Item 402(b) and
Item 402(t) of Regulation S-K, we have assumed the burdens associated
with the proposed amendments would be associated with various
disclosure documents as these items will be included in a number of
forms and statements. For each reporting company, we estimate that the
proposed amendments would impose on average the following incremental
burden hours:

 2 hours for the proposed amendments to CD&A
 1 hour for the proposed amendments to Item 24 of Schedule 14A
 1 hour for the proposed amendments to Form 10-K
 1 hour for the proposed amendments to Form 10-Q
 20 hours for new Item 402(t) of Regulation S-K
1. Annual Meeting Proxy Statements
    For purposes of the PRA, in the case of reporting companies, we
estimate the annual incremental paperwork burden for proxy statements
under the proposed amendments would be approximately 1 hour per form
for companies that are smaller reporting companies, and 3 hours per
form for companies that are non-accelerated filers (and not smaller
reporting companies), accelerated filers, or large accelerated
filers.\140\ The estimated burden is smaller for smaller reporting
companies as such issuers are not required to include a CD&A.
---------------------------------------------------------------------------

    \140\ Our estimate for annual proxy statements is based upon an
estimated burden over a six-year period during which the shareholder
advisory votes required by Section 14A(a) would not occur annually.
We used a six-year period because issuers will conduct at least two
shareholder advisory votes on executive compensation and at least
one shareholder advisory vote on the frequency of such votes in this
time period. We then estimated an average annual burden based on the
average burden over the six-year period.
---------------------------------------------------------------------------

2. Exchange Act Periodic Reports
    For purposes of the PRA, we estimate the annual incremental
paperwork burden for Form 10-K under the proposed amendments would be
approximately 1 hour per form.\141\ We estimate the annual incremental
paperwork burden for Form 10-Q under the proposed amendments would be
approximately 1 hour per form. Our estimates below also account for the
fact that each issuer would only be required to include additional
disclosure in either the Form 10-K or one of the quarterly Form 10-Q
filings each year.
---------------------------------------------------------------------------

    \141\ We have assumed that the annual incremental paperwork
burden under the proposed amendments to Item 402(b) of Regulation S-
K would be included in the annual meeting proxy statement so that
the annual incremental paperwork burden for the Form 10-K relates
only to the proposed amendments to Item 9A.
---------------------------------------------------------------------------

3. Securities Act Registration Statements and Exchange Act Registration
Statements
    For purposes of the PRA, in the case of reporting companies, we
estimate the annual incremental paperwork burden for Securities Act and
Exchange Act registration statements under the proposed amendments
would be approximately 2 hours per form, which represents the
additional burden associated with our proposed amendments to CD&A. In
making our estimates, we note that the additional burdens in CD&A would
only apply to issuers who have conducted a prior shareholder advisory
vote and would not apply, for example, to issuers making an initial
filing on Form S-1 or Form S-11.
4. Merger Proxies, Tender Offer Documents and Schedule 13E-3
    For purposes of the PRA, in the case of reporting companies, we
estimate the annual incremental paperwork burden for merger proxy
statements, registration statements on Form S-4 and F-4 to be 21 hours
per form, as these forms would be required to include additional
disclosures under Item 24 of Schedule 14A and Item 402(t) of Regulation
S-K. We estimate the annual incremental paperwork burden for merger
information statements, tender offer documents and tender offer
solicitation/recommendation statements and Schedules 13E-3 to be 20
hours per form, as these forms would not be required to include
additional disclosure under Item 24 of Schedule 14A.
    The tables below illustrate the total annual compliance burden of
the collection of information in hours and in cost under the proposed
amendments for annual reports; quarterly reports; proxy and information
statements; Form 10; registration statements on Forms S-1, S-4, F-4, S-
11, and N-2; and Regulation S-K.\142\ The burden estimates were
calculated by multiplying the estimated number of responses by the
estimated average amount of time it would take an issuer to prepare and
review the proposed disclosure requirements. For the Exchange Act
reports on Form 10-K and Form 10-Q, and the proxy statements we
estimate that 75% of the burden of preparation is carried by the
company internally and that 25% of the burden of preparation is carried
by outside professionals retained by the issuer at an average cost of
$400 per hour. For the registration statements on Forms S-1, S-4, F-4,
S-11, and N-2, and the Exchange Act registration statement on Form 10,
we estimate that 25% of the burden of preparation is carried by the
issuer internally and that 75% of the burden of preparation is carried
by outside professionals retained by the issuer at an average cost of
$400 per hour. There is no change to the estimated burden of the
collections of information under Regulation S-K because the burdens
that this regulation imposes are reflected in our revised estimated
burden for the forms. The portion of the burden carried by outside
professionals is reflected as a cost, while the portion of the burden
carried by the issuer internally is reflected in hours.
---------------------------------------------------------------------------

    \142\ Figures in both tables have been rounded to the nearest
whole number.

       Table 1--Incremental Paperwork Burden Under the Proposed Amendments for Annual Reports; Quarterly Reports; Proxy and Information Statements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Incremental        Total
                                                             Number of     burden hours/    incremental     75% Company         25%        Professional
                                                          responses\143\       form        burden hours                    Professional        costs
                                                                     (A)             (B)     (C)=(A)*(B)    (D)=(C)*0.75    (E)=(C)*0.25    (F)=(E)*$400
--------------------------------------------------------------------------------------------------------------------------------------------------------
10-K \144\..............................................           1,803               1           1,803           1,352             451        $180,400
10-Q....................................................           5,409               1           5,409           4,057           1,352         540,800
Form 10 \145\...........................................               9               2              18               4              14           5,600
DEF 14A \146\...........................................           7,212  ..............  ..............  ..............  ..............  ..............
Accel. Filers...........................................           6,112               3          18,336          13,752           4,584       1,833,600
SRC Filers..............................................           1,100               1           1,100             825             275         110,000

DEF 14C.................................................             582  ..............  ..............  ..............  ..............  ..............
Accel. Filers...........................................             482               2             964             723             241          96,400
SRC Filers..............................................             100               0               0               0               0              $0
Reg. S-K................................................             N/A             N/A             N/A             N/A             N/A             N/A
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............          27,630          20,713  ..............       2,766,800
--------------------------------------------------------------------------------------------------------------------------------------------------------

 Table 2--Incremental Paperwork Burden Under the Proposed Amendments for Registration Statements, Merger Proxy and Information Statements, Tender Offer
                                                              Documents and Schedules 13E-3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Incremental        Total
                                                             Number of     burden hours/    incremental     25% Company         75%        Professional
                                                          responses\147\       form        burden hours                    Professional        costs
                                                                     (A)             (B)     (C)=(A)*(B)    (D)=(C)*0.25    (E)=(C)*0.75    (F)=(E)*$400
--------------------------------------------------------------------------------------------------------------------------------------------------------
Form S-1 \148\..........................................             485               2             970             243             727        $290,800
Form S-11...............................................              22               2              44              11              33          13,200
Form S-4 \149\..........................................             499              21          10,479           2,620           7,859       3,143,600
Form F-4................................................              27              21             567             142             425         170,000
DEFM 14A................................................             137              21           2,877             719           2,158         863,200
DEFM 14C \150\..........................................              14              20             280              70             210          84,000
Schedule TO-T \151\.....................................              50              20           1,000             250             750         300,000
Schedule 14D-9..........................................              77              20           1,540             385           1,155         462,000
Schedule 13E-3..........................................               5              20             100              25              75          30,000
Form N-2 \152\..........................................              29               2              58              14              44          17,600
Reg. S-K................................................             N/A             N/A             N/A             N/A             N/A             N/A
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............          17,915           4,479  ..............       5,374,400
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Request for Comment

    Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment to:
---------------------------------------------------------------------------

    \143\ The number of responses reflected in the table equals the
actual number of forms and schedules filed with the Commission
during the 2009 calendar year, adjusted to reflect the estimated
number of forms and schedules that would be required to include
additional disclosure under our rules as proposed. As explained
below in notes 144 through 146, we have reduced the number of
estimated filings to reflect that the additional disclosure
requirements as proposed would only apply to a smaller number of the
forms filed.
    \144\ We calculated the burden hours for Forms 10-K and 10-Q
based on the number of proxy statements filed with the Commission
during the 2009 calendar year. We assumed that there would be an
aggregate equal number of Forms 10-K and 10-Q to disclose the
issuer's plans with respect to the frequency vote as the number of
proxy statements and further assumed that 75% of issuers would
disclose this information on Form 10-Q and 25% would disclose this
information on Form 10-K.
    \145\ The burden allocation for Form 10 uses a 25% internal to
75% outside professional allocation. We have reduced the number of
estimated Form 10 filings to reflect that approximately 95% of these
forms would not require additional disclosure, as new disclosure
required under Item 402 as proposed would only relate to issuers in
spin-off transactions that are disclosing compensation of public
parent companies that have conducted a prior shareholder vote on
executive compensation.
    \146\ The estimates for Schedule 14A and Schedule 14C are
separated to reflect our estimate of the burden hours and costs
related to the proposed amendments to CD&A which would be applicable
to companies that are large accelerated filers, accelerated filers,
and non-accelerated filers (that are not smaller reporting
companies), but would not be applicable to smaller reporting
companies.
    \147\ The number of responses reflected in the table equals the
actual number of forms and schedules filed with the Commission
during the 2009 calendar year, adjusted to reflect the estimated
number of forms and schedules that would be required to include
additional disclosure under our rules as proposed. As explained
below in notes 148 through 152, we have reduced the number of
estimated filings to reflect that the additional disclosure
requirements as proposed would only apply to a smaller number of the
forms filed.
    \148\ We have reduced the number of estimated Form S-1 and Form
S-11 filings to reflect that approximately 60% of these forms would
not require additional disclosure, as new disclosure required under
Item 402 as proposed would only relate to issuers who are already
public companies and have conducted a prior shareholder vote on
executive compensation.
    \149\ We have reduced the number of estimated Form S-4 and Form
F-4 filings to reflect an approximate 75% of these forms which will
not relate to mergers or similar transactions but will be other
transactions (e.g., holding company formations and financings) to
which the amended rules would not apply.
    \150\ We have reduced the number of estimated DEFM14C filings to
reflect an approximate 15% of these forms, which will not relate to
merger transactions but will involve dissolutions and similar
transactions.
    \151\ We have reduced the number of estimated Schedules TO-T,
14D-9 and 13E-3 to reflect the approximate number of these filings
to which the proposed rules would apply, based on the total number
of filings from calendar year 2009. We have substantially reduced
the number of Schedules 13E-3 to avoid double counting, as the
majority of these forms are filed in conjunction with a DEF14A. In
addition, we have reduced the number of Schedule TO-T filings as we
anticipate that some bidders would incorporate by reference
disclosure in Schedule 14D-9 and not incur an additional disclosure
burden.
    \152\ We have reduced the number of estimated Form N-2 filings
to reflect that 29 filings were made by business development
companies during calendar year 2009, because only business
development companies would be subject to the proposed disclosure
required under Item 402 on Form N-2.
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     Evaluate whether the proposed collections of information
are necessary for the proper performance of the functions of the
Commission, including whether the information will have practical
utility;
     Evaluate the accuracy of our estimate of the burden of the
proposed collections of information;
     Determine whether there are ways to enhance the quality,
utility, and

clarity of the information to be collected;
     Evaluate whether there are ways to minimize the burden of
the collections of information on those who respond, including through
the use of automated collection techniques or other forms of
information technology; and
     Evaluate whether the proposed amendments will have any
effects on any other collections of information not previously
identified in this section.
    Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
the burdens. Persons who desire to submit comments on the collection of
information requirements should direct their comments to OMB,
Attention: Desk Officer for the Securities and Exchange Commission,
Office of Information and Regulatory Affairs, Room 10102, New Executive
Office Building, Washington, DC 20503 and should send a copy to
Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100
F Street, NE., Washington, DC 20549-1090, with reference to File No.
S7-31-10. Requests for materials submitted to the OMB by us with regard
to these collections of information should be in writing, refer to File
No. S7-31-10 and be submitted to the Securities and Exchange
Commission, Office of Investor Education and Advocacy, 100 F Street,
NE., Washington, DC 20549-0213. Because OMB is required to make a
decision concerning the collections of information between 30 and 60
days after publication, your comments are best assured of having their
full effect if OMB receives them within 30 days of publication.

IV. Cost-Benefit Analysis

A. Introduction

    We are proposing rulemaking to implement and supplement the
provisions of the Dodd-Frank Act relating to shareholder approval of
executive compensation and disclosure and shareholder approval of
golden parachute compensation arrangements. Section 951 of the Dodd-
Frank Act amends the Exchange Act by adding new Section 14A. New
Section 14A(a)(1) requires companies to conduct a separate shareholder
advisory vote to approve the compensation of executives. Section
14A(a)(2) requires companies to conduct a separate shareholder advisory
vote to determine how often an issuer will conduct a shareholder
advisory vote on executive compensation. In addition, Section 14A(b)
requires companies soliciting votes to approve merger or acquisition
transactions to provide disclosure of certain ``golden parachute''
compensation arrangements and, when such arrangements have not been
included in the shareholder advisory vote on executive compensation, to
conduct a separate shareholder advisory vote to approve the golden
parachute compensation arrangements.\153\
---------------------------------------------------------------------------

    \153\ According to the Dodd-Frank Wall Street Reform and
Consumer Protection Act Conference Report at page 872, Section 951
is ``designed to address shareholder rights and executive
compensation practices.''
---------------------------------------------------------------------------

    We are proposing new Rule 14a-21 to implement Section 14A(a)(1) by
providing separate shareholder advisory votes to approve executive
compensation, to approve the frequency of such votes on executive
compensation, and to approve golden parachute compensation arrangements
at shareholder meetings at which shareholders are asked to approve
merger transactions. In addition to the votes required by Section 14A,
we are also proposing a new Item 24 of Schedule 14A to elicit
disclosure, similar to our approach with respect to TARP companies
providing shareholder advisory votes on executive compensation,
regarding the effect of the shareholder votes required by Rule 14a-21,
including whether the votes are non-binding.
    Our proposed new Item 402(t) of Regulation S-K implements and
supplements the statutory requirement in Section 14A(b)(1) to
promulgate rules for the clear and simple disclosure of golden
parachute compensation arrangements that the soliciting person has with
its named executive officers (if the acquiring issuer is not the
soliciting person) or that it has with the named executive officers of
the acquiring issuer that relate to the merger transaction. In
addition, Item 402(t), as proposed, would supplement the requirements
of Section 14A(b)(1) by requiring disclosure of golden parachute
compensation arrangements between the acquiring company and the named
executive officers of the target company if the target company is the
soliciting person.
    Our proposed amendments to Item 5 of Schedule 14A would require
disclosure regarding golden parachute compensation arrangements in
accordance with Section 14A(b)(1) of the Exchange Act. We are also
proposing that additional disclosure regarding golden parachute
compensation arrangements be required in connection with other
transactions. We have proposed amendments to Regulation M-A, Schedule
14D-9 and Schedule 13E-3 that would require additional disclosure
regarding golden parachute compensation arrangements in connection with
Rule 13e-3 going-private transactions and tender offers.
    We are also proposing amendments to Item 402 of Regulation S-K to
require additional Compensation Discussion and Analysis disclosure
about the issuer's response to the shareholder vote on executive
compensation and to provide additional disclosure about golden
parachute compensation arrangements. We are also proposing amendments
to Form 10-K and Form 10-Q to require disclosure regarding the issuer's
action as a result of the shareholder advisory vote on the frequency of
shareholder votes on executive compensation.
    We are proposing an amendment to Rule 14a-4, which relates to the
form of proxy that issuers are required to include with their proxy
materials, to require that issuers present four choices to their
shareholders in connection with the advisory vote on frequency. We are
also proposing an amendment to Rule 14a-6 to add the shareholder votes
on executive compensation and the frequency of shareholder votes on
executive compensation required by Section 14A(a) to the list of items
that do not trigger the filing of a preliminary proxy statement. In
addition, we are proposing an amendment to Rule 14a-8, adding a note to
Rule 14a-8(i)(10) to clarify the status of shareholder proposals
relating to the approval of executive compensation or the frequency of
shareholder votes approving executive compensation.
    Our proposed rulemaking, which implements the relevant provisions
of the Dodd-Frank Act, will directly affect most public companies as
well as potential private acquirers. Our proposed rules implement the
shareholder advisory vote requirements of Section 14A, promulgate rules
for additional disclosure in accordance with Section 14A(b)(1), and
provide for additional disclosure, not required by Section 14A,
relating to the shareholder advisory votes. In addition, our proposed
rules expand the required disclosure of Section 14A(b)(1) to require
disclosure of arrangements between additional parties, namely
agreements between the acquiring company and named executive officers
of the target company, and require disclosure with respect to
additional transactions, including certain tender offers and Rule 13e-3
going-private transactions. As discussed below, the enhanced disclosure
required by our proposed rulemaking regarding the shareholder approval
of executive

compensation and companies' responses to shareholder votes would
provide shareholders and investors with timely information about such
votes that is consistent with the information required to be provided
under the Act and that would enhance the operation of our rules
pursuant to the Act. The enhanced disclosure regarding golden parachute
compensation would provide a more complete picture of the compensation
to shareholders as they consider voting and investment decisions
relating to mergers and similar transactions.

B. Benefits

    The proposed rulemaking is intended to implement and supplement the
requirements of Section 14A of the Exchange Act as set forth in Section
951 of the Dodd-Frank Act. The proposed amendments also provide for
enhanced disclosure relating to the shareholder advisory votes required
by Exchange Act Section 14A and how an issuer's consideration of such
votes affects its compensation policies and decisions. Our proposed
rules would not only implement the shareholder advisory votes required
by Section 14A, but would also require additional disclosure addressing
how issuers have considered these required shareholder advisory votes,
and if so, how such votes have affected the companies' compensation
policies and decisions.
    We believe the enhanced disclosures about the results of the
shareholder advisory vote on the frequency of the approval of executive
compensation would provide timely information to shareholders about the
issuer's plans for future shareholder advisory votes. Our proposed
enhanced disclosure and proposed amendments to the CD&A requirements in
Item 402(b) of Regulation S-K about an issuer's consideration of the
results of a shareholder vote to approve executive compensation and how
that consideration has affected its compensation policies and decisions
would benefit shareholders and other market participants by providing
potentially useful information for voting and investment decisions.
    Our proposed rules would also specify how the shareholder advisory
votes required by Section 14A(a) relate to existing shareholder
advisory votes required for issuers with outstanding indebtedness under
TARP. In our view, because of the similarity of the separate annual
say-on-pay vote requirements, a company with indebtedness under TARP
need only provide one annual shareholder advisory vote. As we have
discussed above, we have indicated that the annual shareholder advisory
vote under EESA would fulfill the requirements for the shareholder vote
pursuant to Section 14A(a)(1) and Rule 14a-21(a). We believe this
benefits such companies by reducing confusion and burdens of the two
requirements by specifying that two separate annual shareholder votes
are not required. In addition, because issuers with indebtedness under
TARP must conduct an annual shareholder advisory vote on executive
compensation, we have proposed an exemption from the frequency vote
required by Section 14A(a)(2) and Rule 14a-21(b) until the issuer
repays all indebtedness under TARP. We believe this benefits such
issuers and their shareholders by avoiding the cost and confusion of
conducting a vote on the frequency of a shareholder advisory vote when
the frequency of such a vote is mandated by another requirement.
    In our proposed rules, we also provide guidance for issuers and
shareholders regarding the interaction of the shareholder advisory
votes required by Section 14A and shareholder proposals under Rule 14a-
8 by proposing a note to Rule 14a-8(i)(10). The proposed note would
reduce potential confusion among shareholders and issuers with respect
to what may be excluded under our rules by providing for the exclusion
of certain shareholder proposals that the company has substantially
implemented, while preserving the ability of shareholders to make
proposals relating to executive compensation.
    New proposed Item 402(t) of Regulation S-K would require narrative
and tabular disclosure of golden parachute compensation arrangements in
the clear and simple form required by Section 14A(b)(1) of the Exchange
Act. Because Section 14A(b)(1) requires that disclosure not only be in
a clear and simple form, but also that it include an aggregate total of
all golden parachute compensation for each named executive officer, we
have proposed Item 402(t) to require that such disclosure appear in a
table. The tabular format is designed to provide investors with clear
disclosure about golden parachute compensation that is comparable
across different issuers and transactions and make the information more
accessible. In addition to the tabular disclosure, we are also
proposing narrative disclosure to provide additional context and
provide disclosure not suitable to the tabular format. Our approach is
similar to the existing approach to executive compensation disclosure
in Item 402 of Regulation S-K and provides a focused manner in which to
present and quantify golden parachute compensation. Narrative
disclosure supplements the tables by providing additional context and
discussion of the numbers presented in the table. We believe that the
proposed combination of narrative and tabular disclosure would provide
the clearest picture of the full scope of golden parachute compensation
in the clear and simple format required by Section 14A(b)(1).
    Because Section 14A(b)(1)'s disclosure requirements are limited to
agreements or understandings between the person conducting the
solicitation and any named executive officers of the issuer or any
named executive officers of the acquiring issuer if the person
conducting the solicitation is not the acquiring issuer, we have
formulated proposed Item 402(t) to require disclosure, in addition to
the disclosure mandated by Section 14A(b)(1), of agreements or
understandings between the acquiring company and the named executive
officers of the target company. As proposed, Item 402(t) would require
disclosure of all golden parachute compensation relating to the merger
among the target and acquiring companies and the named executive
officers of each in order to cover the full scope of golden parachute
compensation applicable to the transaction. By providing disclosure of
the full scope of golden parachute compensation, we believe issuers
would provide more detailed and comprehensive information to
shareholders to consider when making their voting or investment
decisions.
    Likewise, additional disclosure on golden parachute compensation,
without regard to whether the transaction is structured as a merger, a
tender offer or a Rule 13e-3 going-private transaction that is not
subject to Regulation 14A, would benefit shareholders and other market
participants by allowing them to timely and more accurately assess the
transaction and evaluate with greater acuity the golden parachute
compensation that named executive officers could expect to receive and
the related potential interests such officers might have in pursuing
and/or supporting a change in control transaction. While our existing
disclosure requirements include much of this disclosure, the
specificity and narrative and tabular format of proposed Item 402(t)
would allow for a clear presentation of the full scope of the
information. Furthermore, by standardizing disclosure of golden
parachute compensation arrangements across different transaction
structures, our proposed rules would enable

shareholders to compare more easily such compensation among various
types of change in control transactions and structures. In addition,
our proposed rules would also enable the shareholders of the acquirer
to timely and more accurately assess the cost of the acquisition
transaction in proxy statements for which additional disclosure is
required pursuant to Note A of Schedule 14A where acquirer shareholders
do not vote on the merger transaction but vote to approve another
proposal such as the issuance of shares or a stock split.
    We have proposed such disclosure in both tabular and narrative
formats, with disclosure of aggregate total compensation, in accordance
with the requirement of Section 14A(b)(1) that such disclosure be in a
clear and simple form. To the extent investors expect to see
information about all of the economic benefits that may accrue to an
executive in one location of the proxy statement (including golden
parachute arrangements and other compensation, such as future
employment contracts), the benefit of this disclosure may be limited
since, as proposed, the information about other executive compensation
that may be disclosed in proxy materials would not need to be included
in the tabular format pursuant to Item 402(t) of Regulation S-K.
    Our proposed rulemaking would also benefit issuers by specifying
how they must comply with the requirements of Exchange Act Section 14A
in the context of the federal proxy rules. The proposed rulemaking
would eliminate uncertainty that may exist among issuers and other
market participants, if we did not propose any rules, regarding what is
necessary under the Commission's proxy rules when conducting a
shareholder vote required under Exchange Act Section 14A. The proposed
rules would specify how the statutory requirements operate in
connection with the federal proxy rules and accordingly, we believe the
proposed rulemaking would promote better compliance with the
requirements of Exchange Act Section 14A and reduce the amount of
management time and financial resources necessary to ensure that
issuers comply with their obligations under both Exchange Act Section
14A and the federal proxy rules. This would benefit issuers, their
shareholders and other market participants.

C. Costs

    We recognize that the proposed amendments would impose new
disclosure requirements on companies and are likely to result in costs
related to information collection. The proposed rulemaking that
requires the disclosure of executive compensation in a tabular format
is likely to result in certain costs. We expect these costs, however,
to be limited since much of the compensation required to be disclosed
under our proposed rulemaking is currently required to be disclosed in
narrative format in the existing disclosure regime.
    We have proposed new Item 402(t) to implement the requirement of
Section 14A(b)(1) of the Exchange Act that we promulgate rules for
disclosure of golden parachute compensation arrangements in a clear and
simple form, which we believe is best provided in both narrative and
tabular format. In addition to the required disclosure under Section
14A(b)(1), we have also proposed expanding the disclosure to cover
agreements between the acquiring company and the named executive
officers of a target company in a merger or similar transaction. Though
this additional disclosure would result in certain additional costs for
issuers preparing a merger proxy, we believe that the additional
disclosure is appropriate in order to provide shareholders information
about the full scope of golden parachute compensation applicable to the
transaction. There may also be certain indirect costs to issuers and
shareholders as a result of our proposed rules, as the additional
disclosure of golden parachute compensation may result in increased
transactional expenses in the form of additional advisers and
consultants, increased time to prepare disclosure documents, and
increased time and expense to negotiate compensation arrangements.
    Furthermore, companies engaging in or subject to a third-party
tender offer or Rule 13e-3 going-private transaction may face increased
costs because of the required disclosure of golden parachute
compensation arrangements, including the required table and aggregate
totals, under the proposed rulemaking. In addition, companies
soliciting proxies or consents for transactions for which additional
disclosure is required pursuant to Note A of Schedule 14A may face
increased costs as well due to the additional disclosure requirements
of Item 5 of Schedule 14A. We have proposed these disclosure
requirements that go beyond the requirements of Section 14A(b)(1)
because we believe the proposed rules would reduce the regulatory
disparity that might otherwise result from treating such transactions
differently from mergers. As noted above, there may also be additional
indirect costs relating to such increased disclosure, as well as costs
associated with obtaining compensation information from the other
parties involved in a transaction in order to fulfill the issuer's
disclosure obligations.
    The expanded Compensation Discussion and Analysis disclosure under
the proposed rulemaking may also result in costs associated with
drafting disclosure that addresses whether, and if so, how the results
of a shareholder vote on executive compensation were considered in
determining the issuer's compensation policies and decisions and any
resultant effect on those compensation policies and decisions.
Similarly, the proposed revisions to the periodic reporting
requirements on Forms 10-K and 10-Q may result in costs associated with
assessing the results of a shareholder vote on the frequency of
shareholder votes to approve executive compensation and drafting the
additional disclosure regarding the company's plans to conduct votes in
the future. Some of these costs could include the cost of hiring
additional advisors, such as attorneys, to assist in the analysis and
drafting.
    We believe that these costs would not be unduly burdensome given
that most of the disclosure is covered by our existing disclosure
requirements, even though we are proposing that such disclosure be
included in both narrative and tabular format. In addition to the
existing narrative requirements, we are proposing tabular disclosure
with an aggregate total and no de minimis threshold for perquisites. We
expect that there will be incremental costs associated with drafting
the additional disclosure, but that much of the information would be
readily obtainable by the parties given existing disclosure
requirements and as part of the due diligence process prior to drafting
the transaction documents.
    In addition to the direct costs associated with the required
disclosure, the proposed rule might create additional indirect costs
for private companies that may be engaged in takeovers of public
companies. We do not expect, however, the specific and detailed
disclosure and the shareholder advisory vote regarding golden
parachutes to diminish the number of takeover transactions.
    Our proposed note to Rule 14a-8(i)(10) may also impose certain
costs on shareholders as our proposal would permit issuers to exclude
certain shareholder proposals that would otherwise not be excludable
under our rules. In addition, our proposals may impose certain indirect
costs on shareholders who might pursue alternative means to communicate
their

positions regarding the frequency of say-on-pay votes.
    For purposes of the PRA, we have estimated the collection of
information burden and cost. However, we acknowledge that the PRA
estimates do not reflect the full magnitude of the economic costs
considered above. The estimates of total amount of time and resources
spent in preparing are 25,202 labor hours and $8,142,000 costs. Of
these, 15,300 labor hours and $2,040,000 are estimated for annual
meeting proxy and information statements, 5,409 labor hours and
$721,200 are estimated for periodic reports, 272 labor hours and
$327,200 for Securities Act registration statements (excluding Forms S-
4 and F-4), Exchange Act registration statements, and Investment
Company Act registration statements, and 4,211 labor hours and
$5,052,800 for merger proxies and information statements, registration
statements on Forms S-4 and F-4, tender offer statements and Schedules
13E-3 for Rule 13e-3 transactions that are not otherwise subject to
Regulation 14A.

D. Request for Comment

    We request data to quantify the costs and the value of the benefits
described above. We seek estimates of these costs and benefits, as well
as any costs and benefits not already defined, that may result from the
adoption of these proposed amendments. We also request qualitative
feedback on the nature of the benefits and costs described above and
any benefits and costs we may have overlooked.

V. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996, or ``SBREFA,'' \154\ we solicit data to determine whether
the proposals constitute a ``major'' rule. Under SBREFA, a rule is
considered ``major'' where, if adopted, it results or is likely to
result in:
---------------------------------------------------------------------------

    \154\ 5 U.S.C. 603.
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more
(either in the form of an increase or a decrease);
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment or
innovation.
    We request comment on the potential impact of the proposed
amendments on the U.S. economy on an annual basis, any potential
increase in costs or prices for consumers or individual industries, and
any potential effect on competition, investment or innovation.
Commentators are requested to provide empirical data and other factual
support for their views if possible.

VI. Consideration of Impact on the Economy, Burden on Competition, and
Promotion of Efficiency, Competition and Capital Formation

    Section 23(a)(2) of the Exchange Act \155\ also requires us, when
adopting rules under the Exchange Act, to consider the impact that any
new rule would have on competition. Section 23(a)(2) prohibits us from
adopting any rule that would impose a burden on competition not
necessary or appropriate in furtherance of the purposes of the Exchange
Act. In addition, Section 2(b) \156\ of the Securities Act and Section
3(f) \157\ of the Exchange Act require us, when engaging in rulemaking
where we are required to consider or determine whether an action is
necessary or appropriate in the public interest, to also consider
whether the action will promote efficiency, competition, and capital
formation.
---------------------------------------------------------------------------

    \155\ 15 U.S.C. 78w(a).
    \156\ 15 U.S.C. 77b(b).
    \157\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    Our proposed amendments would implement the Section 14A requirement
for shareholder advisory votes to approve executive compensation, the
frequency of such votes, and golden parachute compensation arrangements
in connection with merger and similar transactions. We have proposed
certain additional disclosure requirements to provide investors with
additional information about these required votes and to apply the
required disclosure from Section 14A(b)(1) to certain other agreements
and transaction structures. We do not believe that the additional
disclosure we have proposed in our rulemaking would impose a burden on
competition.
    The proposed amendments would not only implement the requirements
of Section 14A of the Exchange Act, but would also help ensure that
shareholders receive disclosure regarding the required votes, the
nature of an issuer's responsibilities to hold the votes under Section
14A, and the issuer's consideration of the results of the votes and the
effect of such consideration on the issuer's compensation policies and
decisions. The proposed amendments would also enhance the transparency
of a company's compensation policies. As discussed in greater detail
above, we believe these benefits would be achieved without imposing any
significant additional burdens on issuers. As a result, the proposed
amendments should improve the ability of investors to make informed
voting and investment decisions, and, therefore lead to increased
efficiency and competitiveness of the U.S. capital markets.
    We believe the proposed amendments would also benefit issuers and
their shareholders by specifying how issuers must comply with the Dodd-
Frank Act requirements, in the context of the federal proxy rules and
our disclosure rules. By specifying how issuers must comply with the
shareholder advisory votes and enhanced disclosure requirements from
Section 14A, our proposed rules would allow for more consistent
disclosure from all entities and clearer disclosure for shareholders.
By reducing uncertainty, our proposed rules would permit issuers to
more efficiently plan and draft disclosure documents, including annual
meeting proxy statements, merger proxies, and tender offer and going-
private documents.
    Our rules as proposed would require enhanced disclosure of golden
parachute compensation arrangements in merger and similar transactions,
regardless of how such transactions are structured. We believe the
uniformity of our proposed disclosure requirements across different
types of transactions would help competition as issuers would be able
to structure such transactions as they see fit, without the additional
disclosure required by Section 14A(b) weighing in favor of a particular
transaction structure. Though our proposed rules would create
additional, incremental disclosure burdens, we believe that our
proposed rules would enhance capital formation by allowing for clearer
disclosure, more informed voting decisions by investors, and
consistency across different types of transactions.
    We request comment on whether the proposed amendments, if adopted,
would impose a burden on competition. We also request comment on
whether the proposed amendments, if adopted, would promote efficiency,
competition, and capital formation. Commentators are requested to
provide empirical data and other factual support for their view to the
extent possible.

VII. Initial Regulatory Flexibility Act Analysis

    This initial Regulatory Flexibility Analysis (IRFA) has been
prepared in accordance with the Regulatory Flexibility Act. It relates
to proposed revisions to the rules under the Exchange Act regarding the
proxy

solicitation process and related executive compensation disclosures.

A. Reasons for, and Objectives of, the Proposed Action

    These proposals are designed to implement the requirements of
Section 951 of the Dodd-Frank Act, enhance the disclosure relating to
the shareholder advisory votes required by Exchange Act Section 14A,
and specify how our proxy rules would apply to such votes.
Specifically, the proposals amend the proxy rules to require
shareholder advisory votes to approve executive compensation, to
approve the frequency of shareholder votes to approve executive
compensation, and to approve golden parachute compensation arrangements
in connection with merger transactions. Our proposals also require
enhanced disclosure regarding an issuer's consideration of these votes
and the impact of such consideration on an issuer's compensation
policies and decisions.

B. Legal Basis

    We are proposing the amendments pursuant to Sections 13, 14(a),
14A, 23(a), and 36 of the Exchange Act.

C. Small Entities Subject to the Proposed Action

    The proposed amendments would affect some companies that are small
entities. The Regulatory Flexibility Act defines ``small entity'' to
mean ``small business,'' ``small organization,'' or ``small
governmental jurisdiction.'' \158\ The Commission's rules define
``small business'' and ``small organization'' for purposes of the
Regulatory Flexibility Act for each of the types of entities regulated
by the Commission. Securities Act Rule 157 \159\ and Exchange Act Rule
0-10(a) \160\ defines a company, other than an investment company, to
be a ``small business'' or ``small organization'' if it has total
assets of $5 million or less on the last day of its most recent fiscal
year. We estimate that there are approximately 1,210 companies, other
than investment companies, that may be considered small entities. The
proposed amendments would affect small entities that have a class of
securities that are registered under Section 12 of the Exchange Act. An
investment company, including a business development company,\161\ is
considered to be a ``small business'' if it, together with other
investment companies in the same group of related investment companies,
has net assets of $50 million or less as of the end of its most recent
fiscal year.\162\ We believe that certain proposals would affect small
entities that are business development companies who have a class of
securities registered under Section 12 of the Exchange Act. We estimate
that there are approximately 32 business development companies that may
be considered small entities.
---------------------------------------------------------------------------

    \158\ 5 U.S.C. 601(6).
    \159\ 17 CFR 230.157.
    \160\ 17 CFR 240.0-10(a).
    \161\ Business development companies are a category of closed-
end investment companies that are not required to register under the
Investment Company Act [15 U.S.C. 80a-2(a)(48)].
    \162\ 17 CFR 270.0-10(a).
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D. Reporting, Recordkeeping, and Other Compliance Requirements

    The proposed disclosure amendments are designed to enhance the
disclosure regarding the shareholder advisory votes required by Section
14A of the Exchange Act and provide additional disclosure about golden
parachute compensation arrangements. These amendments would require
small entities to provide:
     Disclosure of the shareholder advisory votes required by
Section 14A and the effects of such votes, including whether they are
non-binding;
     Disclosure of golden parachute arrangements described by
Section 14A(b)(1) of the Exchange Act in merger proxies, and additional
disclosure not required by Section 14A(b)(1) in connection with tender
offers and going private transactions; and
     Disclosure of the issuer's decision in light of the
shareholder vote on the frequency of shareholder votes to approve
executive compensation required by Section 14A(a)(2) of the Exchange
Act as to how frequently the issuer will include a shareholder vote on
the compensation of executives.

E. Duplicative, Overlapping, or Conflicting Federal Rules

    We believe the proposed amendments would not duplicate, overlap, or
conflict with other federal rules.

F. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider alternatives
that would accomplish our stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed disclosure amendments, we considered the following
alternatives:
     Establishing different compliance or reporting
requirements or timetables that take into account the resources
available to small entities;
     Clarifying, consolidating, or simplifying compliance and
reporting requirements under the rules for small entities;
     Use of performance rather than design standards; and
     Exempting small entities from all or part of the
requirements.
    Currently, small entities that are smaller reporting companies
under Exchange Act Rule 12b-12 are subject to some different compliance
or reporting requirements under Regulation S-K and the proposed
amendments would not affect these requirements.\163\ Under Regulation
S-K, smaller reporting companies are permitted to provide abbreviated
compensation disclosure with respect to the principal executive officer
and two most highly compensated executive officers for the last two
completed fiscal years. Specifically, smaller reporting companies may
provide the executive compensation disclosure specified in Items 402(l)
through (r) of Regulation S-K, rather than the corresponding disclosure
specified in Items 402(a) through (k) of Regulation S-K. Items 402(l)
through (r) do not require smaller reporting companies to provide CD&A.
Other than the proposed amendments to CD&A, the remaining proposed
disclosure requirements would apply to smaller reporting companies to
the same extent as larger issuers.
---------------------------------------------------------------------------

    \163\ Rule 12b-2 excludes business development companies from
the definition of ``smaller reporting companies.''
---------------------------------------------------------------------------

    As noted above, the proposed amendments to CD&A would not apply to
smaller reporting companies. We are not proposing to expand the
existing scaled disclosure requirements under Item 402 of Regulation S-
K, or establish additional different compliance requirements or an
exemption from coverage of the proposed amendments for smaller
reporting companies. The proposed amendments would provide investors
with enhanced disclosure regarding the shareholder votes required by
Section 14A of the Exchange Act and the issuers' consideration of the
votes.
    We are proposing amendments to Item 5 of Schedule 14A, as well as
other forms and schedules, to implement and supplement the requirement
of Section 14A(b)(1) to provide disclosure of golden parachute
compensation arrangements in a clear and simple form. Under our
proposed rules, all companies would be subject to the same golden
parachute disclosure requirements. As proposed, Schedule 14A would
require the disclosure pursuant to Item 402(t) of Regulation S-K with
respect to golden parachute compensation arrangements for merger
proxies. Though much of the disclosure

required by our proposed amendment to Item 5 of Schedule 14A is
currently required for all issuers, regardless of size, under our
proposed rules such disclosure would be required to be included in a
tabular format pursuant to Item 402(t) of Regulation S-K, which would
include an aggregate total and specific quantification of various
compensation elements. All companies, regardless of size, would also be
subject to these additional disclosure requirements in connection with
other transactions not required by Section 14A(b)(1), including certain
tender offers and Rule 13e-3 going-private transactions.
    In addition, our proposed amendments would require clear and
straightforward disclosure of issuer's responses to shareholder
advisory votes, and of golden parachute compensation arrangements in
connection with mergers and similar transactions. We have used design
rather than performance standards in connection with the proposed
amendments because, based on our past experience, we believe the
proposed amendments would be more useful to investors if there were
specific disclosure requirements. The proposed disclosures are intended
to result in more comprehensive and clear disclosure. In addition, the
specific disclosure requirements in the proposed amendments would
promote consistent and comparable disclosure among all companies.
    We seek comment on whether we should exempt small entities from any
of the proposed disclosures or scale the proposed amendments to reflect
the characteristics of small entities and the needs of their investors.

G. Solicitation of Comments

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     How the proposed amendments can achieve their objective
while lowering the burden on small entities;
     The number of small entity companies that may be affected
by the proposed amendments;
     The existence or nature of the potential impact of the
proposed amendments on small entity companies discussed in the
analysis; and
     How to quantify the impact of the proposed amendments.
    Respondents are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. Such
comments will be considered in the preparation of the Final Regulatory
Flexibility Analysis, if the proposed rule amendments are adopted, and
will be placed in the same public file as comments on the proposed
amendments themselves.

VIII. Statutory Authority and Text of the Proposed Amendments

    The amendments described in this release are being proposed under
the authority set forth in Section 951 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, Sections 3(b), 6, 7, 10, and 19(a)
of the Securities Act of 1933, and Sections 13, 14(a), 14A, 23(a), and
36 of the Securities Exchange Act of 1934, as amended.

List of Subjects in 17 CFR Parts 229, 240 and 249

    Reporting and recordkeeping requirements, Securities.

Text of the Proposed Amendments

    For the reasons set out in the preamble, the Commission proposes to
amend title 17, chapter II, of the Code of Federal Regulations as
follows:

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K

    1. The authority citation for part 229 is amended by adding
authority for Sec.  229.402 and Sec.  229.1011 to read as follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 777iii,
77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w,
78ll, 78mm, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-31(c), 80a-37,
80a-38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350,
unless otherwise noted.

* * * * *
    Section 229.402 is also issued under sec. 951, Pub. L. 111-203,
124 Stat. 1376.
    Section 229.1011 is also issued under sec. 951, Pub. L. 111-203,
124 Stat. 1376.
* * * * *

    2. Amend Sec.  229.402 by:
    a. Revising the last sentence of paragraph (a)(6)(ii);
    b. Removing ``and'' at the end of paragraph (b)(1)(v);
    c. Removing the period and adding in its place ``; and'' at the end
of paragraph (b)(1)(vi);
    d. Adding paragraph (b)(1)(vii);
    e. Revising the last sentence of paragraph (m)(5)(ii); and
    f. Adding paragraph (t).
    The revisions read as follows:

Sec.  229.402  (Item 402) Executive compensation.

    (a) * * *
    (6) * * *
    (ii) * * * Except with respect to the disclosure required by
paragraph (t) of this Item, registrants may omit information regarding
group life, health, hospitalization, or medical reimbursement plans
that do not discriminate in scope, terms or operation, in favor of
executive officers or directors of the registrant and that are
available generally to all salaried employees.
* * * * *
    (b) * * *
    (1) * * *
    (vii) Whether and if so, how the registrant has considered the
results of previous shareholder advisory votes on executive
compensation required by section 14A of the Exchange Act (15 U.S.C.
78n-1) and previous shareholder advisory votes on executive
compensation required by Sec.  240.14a-20 of this chapter in
determining compensation policies and decisions and, if so, how that
consideration has affected the registrant's executive compensation
decisions and policies.
* * * * *
    (m) * * *
    (5) * * *
    (ii) * * * Except with respect to disclosure required by paragraph
(t) of this Item, smaller reporting companies may omit information
regarding group life, health, hospitalization, or medical reimbursement
plans that do not discriminate in scope, terms or operation, in favor
of executive officers or directors of the smaller reporting company and
that are available generally to all salaried employees.
* * * * *
    (t) Golden Parachute Compensation. (1) In connection with
    (i) Any proxy or consent solicitation material providing the
disclosure required by section 14A(b)(1) of the Exchange Act (15 U.S.C.
78n-1(b)(1)) or
    (ii) Any proxy or consent solicitation that includes disclosure
under Item 14 of Schedule 14A (Sec.  240.14a-101) pursuant to Note A of
Schedule 14A, with respect to each named executive officer of the
acquiring company and the target company, provide the information
specified in paragraphs (t)(2) and (3) of this section regarding any
agreement or understanding, whether written or unwritten, between such
named executive officer and the acquiring company or target company,
concerning any type of compensation, whether present, deferred or
contingent, that is based on or otherwise relates to an

acquisition, merger, consolidation, sale or other disposition of all or
substantially all assets of the issuer, as follows:

                                                              Golden Parachute Compensation
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Tax
                  Name                       Cash  ($)      Equity  ($)    Pension/NQDC    Perquisites/    reimbursement    Other  ($)      Total  ($)
                                                                                ($)        benefits  ($)        ($)
(a)                                                  (b)             (c)             (d)             (e)             (f)             (g)             (h)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PEO
--------------------------------------------------------------------------------------------------------------------------------------------------------
PFO
--------------------------------------------------------------------------------------------------------------------------------------------------------
A
--------------------------------------------------------------------------------------------------------------------------------------------------------
B
--------------------------------------------------------------------------------------------------------------------------------------------------------
C
--------------------------------------------------------------------------------------------------------------------------------------------------------

     (2) The table shall include, for each named executive officer:
    (i) The name of the named executive officer (column (a));
    (ii) The aggregate dollar value of any cash severance payments,
including but not limited to payments of base salary, bonus, and pro-
rated non-equity incentive compensation plan payments (column (b));
    (iii) The aggregate dollar value of:
    (A) Stock awards for which vesting would be accelerated;
    (B) In-the-money option awards for which vesting would be
accelerated; and
    (C) Payments in cancellation of stock and option awards (column
(c)):
    (iv) The aggregate dollar value of pension and nonqualified
deferred compensation benefit enhancements (column (d));
    (v) The aggregate dollar value of perquisites and other personal
benefits or property, and health care and welfare benefits (column
(e));
    (vi) The aggregate dollar value of any tax reimbursements (column
(f));
    (vii) The aggregate dollar value of any other compensation that is
based on or otherwise relates to the transaction not properly reported
in columns (b) through (f) (column (g)); and
    (viii) The aggregate dollar value of the sum of all amounts
reported in columns (b) through (g) (column (h)).

Instructions to Item 402(t)(2)

    1. If this disclosure is included in a proxy or consent
solicitation seeking approval of an acquisition, merger, consolidation,
or proposed sale or other disposition of all or substantially all the
assets of the registrant, or in a proxy or consent solicitation that
includes disclosure under Item 14 of Schedule 14A (Sec.  240.14a-101)
pursuant to Note A of Schedule 14A, the disclosure provided by this
table shall be quantified assuming that the triggering event took place
on the latest practicable date, and that the price per share of the
registrant's securities is the closing market price as of the latest
practicable date. Compute the dollar value of in-the-money option
awards for which vesting would be accelerated by determining the
difference between this price and the exercise or base price of the
options.
    2. If this disclosure is included in a proxy solicitation for the
annual meeting at which directors are elected for purposes of
subjecting the disclosed agreements or understandings to a shareholder
vote under section 14A(a)(1) of the Exchange Act (15 U.S.C. 78n-
1(a)(1)), the disclosure provided by this table shall be quantified
assuming that the triggering event took place on the last business day
of the registrant's last completed fiscal year, and the price per share
of the registrant's securities is the closing market price as of that
date. Compute the dollar value of in-the-money option awards for which
vesting would be accelerated by determining the difference between this
price and the exercise or base price of the options.
    3. In the event that uncertainties exist as to the provision of
payments and benefits or the amounts involved, the registrant is
required to make a reasonable estimate applicable to the payment or
benefit and disclose material assumptions underlying such estimates in
its disclosure. In such event, the disclosure would require forward-
looking information as appropriate.
    4. For each of columns (b) through (g), include a footnote
quantifying each separate form of compensation included in the
aggregate total reported. Include the value of all perquisites and
other personal benefits or property. Individual perquisites and
personal benefits shall be identified and quantified as required by
Instruction 4 to Item 402(c)(2)(ix) of this section. For purposes of
quantifying health care benefits, the registrant must use the
assumptions used for financial reporting purposes under generally
accepted accounting principles.
    5. For each of columns (b) through (h), include a footnote
quantifying the amount payable attributable to a double-trigger
arrangement (i.e., amounts triggered by a change-in-control for which
payment is conditioned upon the executive officer's termination without
cause or resignation for good reason within a limited time period
following the change-in-control), specifying the time-frame in which
such termination or resignation must occur in order for the amount to
become payable, and the amount payable attributable to a single-trigger
arrangement (i.e., amounts triggered by a change-in-control for which
payment is not conditioned upon such a termination or resignation of
the executive officer).
    6. A registrant conducting a shareholder advisory vote pursuant to
Sec.  240.14a-21(c) of this chapter to cover new arrangements and
understandings, and/or revised terms of agreements and understandings
that were previously subject to a shareholder advisory vote pursuant to
Sec.  240.14a-21(a) of this chapter, shall provide two separate tables.
One table shall disclose all golden parachute compensation, including
both the arrangements and amounts previously disclosed and subject to a
shareholder advisory vote under section 14A(a)(1) of the Exchange Act
(15 U.S.C. 78n-1(a)(1)) and Sec.  240.14a-21(a) of this chapter and the
new arrangements and understandings and/or revised terms of agreements
and understandings that were previously subject to a shareholder
advisory vote. The second table shall disclose only the new
arrangements and/or revised terms

subject to the separate shareholder vote under section 14A(b)(2) of the
Exchange Act and Sec.  240.14a-21(c) of this chapter.
    7. In cases where this Item 402(t)(2) requires disclosure of
arrangements between an acquiring company and the named executive
officers of the soliciting target company, the registrant shall clarify
whether these agreements are included in the separate shareholder
advisory vote pursuant to Sec.  240.14a-21(c) of this chapter by
providing a separate table of all agreements and understandings subject
to the shareholder advisory vote required by section 14A(b)(2) of the
Exchange Act (15 U.S.C. 78n-1(b)(2)) and Sec.  240.14a-21(c) of this
chapter, if different from the full scope of golden parachute
compensation subject to Item 402(t) disclosure.
    (3) Provide a succinct narrative description of any material
factors necessary to an understanding of each such contract, agreement,
plan or arrangement and the payments quantified in the tabular
disclosure required by this paragraph. Such factors shall include, but
not be limited to a description of:
    (i) The specific circumstances that would trigger payment(s);
    (ii) Whether the payments would or could be lump sum, or annual,
disclosing the duration, and by whom they would be provided; and
    (iii) Any material conditions or obligations applicable to the
receipt of payment or benefits, including but not limited to non-
compete, non-solicitation, non-disparagement or confidentiality
agreements, including the duration of such agreements and provisions
regarding waiver or breach of such agreements.

Instruction to Item 402(t)

    1. A registrant that does not qualify as a ``smaller reporting
company,'' as defined by Sec.  229.10(f)(1) of this chapter, must
provide the information required by this Item 402(t) with respect to
the individuals covered by Items 402(a)(3)(i), (ii) and (iii) of this
section. A registrant that qualifies as a ``smaller reporting
company,'' as defined by Sec.  229.10(f)(1) of this chapter, must
provide the information required by this Item 402(t) with respect to
the individuals covered by Items 402(m)(2)(i) and (ii) of this section.
    2. The obligation to provide the information in this Item 402(t)
shall not apply to agreements and understandings described in paragraph
(t)(1) of this section with senior management of foreign private
issuers, as defined in Sec.  240.3b-4 of this chapter.
    3. Amend Sec.  229.1011 by redesignating paragraph (b) as paragraph
(c) and adding new paragraph (b):
    The addition reads as follows:

Sec.  229.1011  (Item 1011) Additional information.

* * * * *
    (b) Furnish the information required by Item 402(t)(2) and (3) of
this part (Sec.  229.402(t)(2) and (3)) and in the tabular format set
forth in Item 402(t)(1) of this part (Sec.  229.402(t)(1)) with respect
to each named executive officer
    (1) Of the subject company in a Rule 13e-3 transaction; or
    (2) Of the issuer whose securities are the subject of a third-party
tender offer, regarding any agreement or understanding, whether written
or unwritten, between such named executive officer and the subject
company, issuer, bidder, or the acquiring company, as applicable,
concerning any type of compensation, whether present, deferred or
contingent, that is based upon or otherwise relates to the Rule 13e-3
transaction or third-party tender offer.

Instructions to Item 1011(b)

    1. The obligation to provide the information in paragraph (b) of
this section shall not apply where the issuer whose securities are the
subject of the Rule 13e-3 transaction or tender offer is a foreign
private issuer, as defined in Sec.  240.3b-4 of this chapter.
    2. In connection with any Schedule TO (Sec.  240.14d-100 of this
chapter), a bidder's disclosure obligation pursuant to paragraph (b) of
this section need be provided only to the extent known after making
reasonable inquiry.
    3. For purposes of Instruction 1 to Item 402(t)(2) of this part: If
the disclosure is included in a Schedule 13E-3 (Sec.  240.13e-100 of
this chapter), TO (Sec.  240.14d-100 of this chapter) or 14D-9 (Sec.
240.14d-101 of this chapter), the disclosure provided by this table
shall be quantified assuming that the triggering event took place on
the latest practicable date and that the price per share of the
securities of the subject company in a Rule 13e-3 transaction, or of
the issuer whose securities are the subject of the third-party tender
offer, is the closing market price as of the latest practicable date.
* * * * *

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

    4. The authority citation for Part 240 is amended by adding
authority for Sec.  240.13e-100, Sec.  240.14a-4, Sec.  240.14a-6,
Sec.  240.14a-8, Sec.  240.14a-21, Sec.  240.14a-101, and Sec.
240.14c-101 as follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5,
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4,
80b-11, and 7201 et seq., 18 U.S.C. 1350, and 12 U.S.C. 5221(e)(3),
unless otherwise noted.
* * * * *
    Section 240.13e-100 is also issued sec. 951, under Pub. L. 111-
203, 124 Stat. 1376.
    Section 240.14a-4 is also issued under sec. 951, Pub. L. 111-
203, 124 Stat. 1376.
    Section 240.14a-6 is also issued under sec. 951, Pub. L. 111-
203, 124 Stat. 1376.
    Section 240.14a-8 is also issued under sec. 951, Pub. L. 111-
203, 124 Stat. 1376.
    Section 240.14a-21 is also issued under sec. 951, Pub. L. 111-
203, 124 Stat. 1376.
    Section 240.14a-101 is also issued under sec. 951, Pub. L. 111-
203, 124 Stat. 1376.
    Section 240.14c-101 is also issued under sec. 951, Pub. L. 111-
203, 124 Stat. 1376.
* * * * *

    5. Amend Sec.  240.13e-100 by revising Item 15.
    The revisions read as follows:

Sec.  240.13e-100  Schedule 13E-3, Transaction statement under section
13(e) of the Securities Exchange Act of 1934 and Rule 13e-3 (Sec.
240.13e-3) thereunder.

* * * * *
    Item 15. Additional Information
    Furnish the information required by Item 1011(b) and (c) of
Regulation M-A (Sec.  229.1011(b) and (c) of this chapter).
* * * * *
    6. Amend Sec.  240.14a-4 by:
    (a) adding the phrase ``and votes to determine the frequency of
shareholder votes on executive compensation pursuant to Sec.  240.14a-
21(b) of this chapter'' at the end of the first sentence of paragraph
(b)(1);
    (b) adding paragraph (b)(3).
    The addition reads as follows:

Sec.  240.14a-4  Requirements as to proxy.

* * * * *
    (b) * * *
    (3) A form of proxy which provides for a shareholder vote on the
frequency of shareholder votes to approve the compensation of
executives required by section 14A(a)(2) of the Securities Exchange Act
of 1934 (15 U.S.C. 78n-1(a)(2)) shall provide means whereby the person
solicited is afforded an opportunity to specify by boxes a choice among
1, 2 or 3 years, or abstain.
    7. Amend Sec.  240.14a-6 by:
    (a) removing ``and/or'' at the end of paragraph (a)(6);
    (b) revising paragraph (a)(7);
    (c) adding paragraph (a)(8).
    The revisions read as follows:

Sec.  240.14a-6  Filing requirements.

    (a) * * *

    (7) A vote to approve the compensation of executives as required
pursuant to section 14A(a)(1) of the Securities Exchange Act of 1934
(15 U.S.C. 78n-1(a)(1)) and Sec.  240.14a-21(a) of this chapter, or
pursuant to section 111(e)(1) of the Emergency Economic Stabilization
Act of 2008 (12 U.S.C. 5221(e)(1)) and Sec.  240.14a-20 of this
chapter; and/or
    (8) A vote to determine the frequency of shareholder votes to
approve the compensation of executives as required pursuant to Section
14A(a)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 78n-
1(a)(2)) and Sec.  240.14a-21(b) of this chapter.
    8. Amend Sec.  240.14a-8 by adding Note to paragraph (i)(10) to
read as follows:

Sec.  240.14a-8  Shareholder proposals.

* * * * *
    (i) * * *
    (10) * * *

    Note to paragraph (i)(10):  A company may exclude, as
substantially implemented, a shareholder proposal that would provide
an advisory vote or seek future advisory votes to approve the
compensation of executives as disclosed pursuant to Item 402 of
Regulation S-K (Sec.  229.402 of this chapter) or any successor to
Item 402 (a ``say-on-pay'' vote) or that relates to the frequency of
say-on-pay votes, provided the company has adopted a policy on the
frequency of say-on-pay votes that is consistent with the plurality
of votes cast in the most recent shareholder vote required by Sec.
240.14a-21(b) of this chapter.

    9. Add Sec.  240.14a-21 to read as follows:

Sec.  240.14a-21  Shareholder approval of executive compensation,
frequency of votes for approval of executive compensation and
shareholder approval of golden parachute compensation.

    (a) If a solicitation is made by a registrant and the solicitation
relates to an annual or other meeting of shareholders for which the
rules of the Commission require executive compensation disclosure
pursuant to Item 402 of Regulation S-K (Sec.  229.402 of this chapter),
the registrant shall, for the first annual or other meeting of
shareholders on or after January 21, 2011 and not less frequently than
once every 3 years thereafter, include a separate resolution subject to
shareholder advisory vote to approve the compensation of its named
executive officers, as disclosed pursuant to Item 402 of Regulation S-
K.
    (b) If a solicitation is made by a registrant and the solicitation
relates to an annual or other meeting of shareholders for which the
rules of the Commission require executive compensation disclosure
pursuant to Item 402 of Regulation S-K (Sec.  229.402 of this chapter),
the registrant shall, for the first annual or other meeting of
shareholders on or after January 21, 2011 and not less frequently than
once every 6 years thereafter, include a separate resolution subject to
shareholder advisory vote as to whether the shareholder vote required
by paragraph (a) of this section should occur every 1, 2 or 3 years.
Registrants required to provide a separate shareholder vote pursuant to
Sec.  240.14a-20 of this chapter shall include the separate resolution
required by this section for the first annual or other meeting of
shareholders after the registrant has repaid all obligations arising
from financial assistance provided under the TARP, as defined in
section 3(8) of the Emergency Economic Stabilization Act of 2008 (12
U.S.C. 5202(8)), and not less frequently than once every 6 years
thereafter.
    (c) If a solicitation is made by a registrant for a meeting of
shareholders at which shareholders are asked to approve an acquisition,
merger, consolidation or proposed sale or other disposition of all or
substantially all the assets of the registrant, the registrant shall
provide a separate shareholder vote to approve any agreements or
understandings and compensation disclosed pursuant to Item 402(t) of
Regulation S-K (Sec.  229.402(t) of this chapter), unless such
agreements or understandings have been subject to a shareholder
advisory vote under paragraph (a) of this section. Consistent with
section 14A(b) of the Exchange Act (15 U.S.C. 78n-1(b)), any agreements
or understandings between an acquiring company and the named executive
officers of the registrant, where the registrant is not the acquiring
company, are not required to be subject to the separate shareholder
advisory vote under this paragraph.

Instructions to Sec.  240.14a-21

    1. Disclosure relating to the compensation of directors required by
Item 402(k) and Item 402(r) of Regulation S-K (Sec.  229.402(r) of this
chapter) is not subject to the shareholder vote required by paragraph
(a) of this section. If a registrant includes disclosure pursuant to
Item 402(s) of Regulation S-K (Sec.  229.402(s) of this chapter) about
the registrant's compensation policies and practices as they relate to
risk management and risk-taking incentives, these policies and
practices would not be subject to the shareholder vote required by
paragraph (a) of this section. To the extent that risk considerations
are a material aspect of the registrant's compensation policies or
decisions for named executive officers, the registrant is required to
discuss them as part of its Compensation Discussion and Analysis under
Sec.  229.402(b) of this chapter, and therefore such disclosure would
be considered by shareholders when voting on executive compensation.
    2. If a registrant includes disclosure of golden parachute
compensation arrangements pursuant to Item 402(t) (Sec.  229.402(t) of
this chapter) in an annual meeting proxy statement, such disclosure
would be subject to the shareholder vote required by paragraph (a) of
this section.
    3. Registrants that are smaller reporting companies entitled to
provide scaled disclosure in accordance with Item 402(l) of Regulation
S-K (Sec.  229.402(l) of this chapter) are not required to include a
Compensation Discussion and Analysis in their proxy statements in order
to comply with this section. For smaller reporting companies, the vote
required by paragraph (a) of this section must be to approve the
compensation of the named executive officers as disclosed pursuant to
Item 402(m) through (q) of Regulation S-K (Sec.  229.402(m) through (q)
of this chapter).
    10. Amend Sec.  240.14a-101 by:
    (a) removing the dash that appears before paragraph (a) of Item 5
and adding in its place an open parenthesis;
    (b) adding paragraph (a)(5) of Item 5;
    (c) adding paragraph (b)(3) of Item 5;
    (d) adding Item 24.
    The revisions read as follows:

Sec.  240.14a-101  Schedule 14A. Information required in proxy
statement.

Schedule 14A Information
* * * * *
    Item 5. Interest of Certain Persons in Matters To Be Acted Upon.
    (a) * * *
    (5) If the solicitation is made on behalf of the registrant,
furnish the information required by Item 402(t) of Regulation S-K
(Sec.  229.402(t) of this chapter).
* * * * *
    (b) * * *
    (3) If the solicitation is made on behalf of the registrant,
furnish the information required by Item 402(t) of Regulation S-K
(Sec.  229.402(t) of this chapter).
* * * * *
    Item 24. Shareholder Approval of Executive Compensation.
Registrants required to provide any of the separate shareholder votes
pursuant to Sec.  240.14a-21 of this chapter shall disclose that they
are providing each such vote as required pursuant to section 14A of the
Securities Exchange

Act (15 U.S.C. 78n-1), and briefly explain the general effect of each
vote, such as whether each such vote is non-binding.
    11. Amend Sec.  240.14c-101 by adding paragraph (c) of Item 3.
    The revisions read as follows:

Sec.  240.14c-101  Schedule 14C. Information required in information
statement.

Schedule 14C Information
* * * * *
    Item 3. * * *
    (c) Furnish the information required by Item 402(t) of Regulation
S-K (Sec.  229.402(t) of this chapter).
    12. Amend Sec.  240.14d-101 by revising Item 8 to add the words
``and (c)'' after ``Item 1011(b)''.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    13. The authority citation for part 249 is amended by adding
authority for Sec.  308a and Sec.  310 to read as follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C.
1350, unless otherwise noted.
* * * * *
    Section 249.308a is also issued under sec. 951, Pub. L. 111-203,
124 Stat. 1376.
    Section 249.310 is also issued under sec. 951, Pub. L. 111-203,
124 Stat. 1376.
* * * * *
    14. Amend Form 10-Q (referenced in Sec.  249.308a) by adding
paragraph (c) to Item 5 in Part II to read as follows:

    Note: The text of Form 10-Q does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 10-Q
* * * * *
Part II--Other Information
* * * * *
Item 5. Other Information
* * * * *
    (c) If an annual or other meeting of shareholders relating to the
election of directors has occurred during the period covered by this
report at which shareholders voted on the frequency of shareholder
votes on the compensation of executives as required by section 14A of
the Securities Exchange Act of 1934 (15 U.S.C. 78n-1), disclose the
company's decision in light of such vote as to how frequently the
company will include a shareholder vote on the compensation of
executives for the six years subsequent to such meeting.
    15. Amend Form 10-K (referenced in Sec.  249.310) by adding a
second sentence to Item 9B in Part II to read as follows:

    Note: The text of Form 10-K does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 10-K
* * * * *
Part II--Other Information
* * * * *
Item 9B. Other Information
    (a) * * * If an annual or other meeting of shareholders relating to
the election of directors has occurred during the fourth fiscal quarter
in the period covered by this report at which shareholders voted on the
frequency of shareholder votes on the compensation of executives as
required by section 14A of the Securities Exchange Act of 1934 (15
U.S.C. 78n-1), disclose the company's decision in light of such vote as
to how frequently the company will include a shareholder vote on the
compensation of executives for the six years subsequent to such
meeting.
* * * * *

    Dated: October 18, 2010.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-26535 Filed 10-27-10; 8:45 am]
BILLING CODE 8011-01-P