that do not rely on Rule 10b5-1(c)(1). In those cases, companies and
officers and directors may have to expend additional effort to collect
this information about the trading plans of directors and officers and
prepare it for disclosure under proposed Item 408(a).
    Companies will have information about their insider trading
policies and procedures readily available. Identifying and preparing a
disclosure of such policies (and for companies without a specific
policy, the reasons for not having such a policy) is expected to result
in some additional direct costs, however, such costs are likely to be
relatively small.
    The proposed requirement to tag the proposed disclosures in Inline
XBRL will impose incremental compliance costs on issuers. Such costs
are expected to be modest, because issuers affected by the proposed
Inline XBRL requirements (including small filers) are already required
(or, in the case of business development companies, would be required
no later than February 2023) to use Inline XBRL to comply with other
disclosure obligations.\188\ Moreover, the scope of the disclosure
proposed to be reported using a structured data language is limited and
would thus likely require a relatively narrow in scope taxonomy of
additional tags (compared to the significantly more extensive
taxonomies used for financial statement disclosure tagging
requirements), thus limiting the initial and ongoing costs of complying
with the proposed tagging requirement.
---------------------------------------------------------------------------

    \188\ See Inline XBRL Filing of Tagged Data, Release No. 33-
10514 (June 28, 2018) [83 FR 40846, 40847 (Aug. 16, 2018)];
Securities Offering Reform for Closed-End Investment Companies,
Release No. 33-10771 (Apr. 8, 2020) [85 FR 33290 at 33318 (Jun. 1,
2020)].
---------------------------------------------------------------------------

    Next, we discuss the indirect costs that the proposed Item 408 and
related disclosure amendments could impose on insiders and companies.
Indirect costs could include potential reputational and investor
relations costs associated with the disclosure. For example, companies
that have not implemented specific insider trading policies and
procedures, as well as companies at which the adoption, modification,
or termination of trading plans appear to correlate to the release of
MNPI, may experience reputational and legal costs and a weakening of
investor confidence in their corporate governance after public
disclosure of this information. To the extent that the proposed
amendments to Rule 10b5-1(c)(1) eliminate or deter insider trading
based on MNPI under Rule 10b5-1 trading arrangements, these legal and
reputational costs of public disclosure should be minimal for such
plans. Relatedly, officers and directors that adopt, modify, or
terminate trading plans around the release of MNPI may also suffer
reputational or legal costs from the public disclosure of this
information.
    In the case of issuers conducting repurchases, the quarterly
disclosure of trading plans could in some circumstances result in
another type of indirect cost--the cost of potential partial revelation
of the issuer's future repurchase plans (including potential timing and
scale of future trades) to other market participants, which may be
further exacerbated if we were to adopt

the daily disclosure requirement for share repurchases that we are
proposing in a separate release.\189\ Issuers that continue to rely on
Rule 10b5-1(c)(1) to conduct repurchases might be able to mitigate such
costs by structuring their repurchases under a Rule 10b5-1 plan to have
a less predictable pattern of trades.\190\
---------------------------------------------------------------------------

    \189\ See Share Repurchase Disclosure Modernization, Release No.
34-93783 (Dec. 15, 2021).
    \190\ This approach of less predictable issuer purchases (such
as an algorithm-based plan or another plan other than a series of
equally-spaced, similar-sized trades) may emerge organically in
cases where the front-running costs are likely to be highest, for
example, when an issuer's management is repurchasing shares based on
the belief that the company is undervalued. In other cases, for
example, when issuer share purchases are intended to incrementally
adjust capital structure or pay out excess cash, rather than reflect
a belief about significant undervaluation, an issuer may opt for a
mechanical rule with equally spaced, similar-sized trades. While
such a trade pattern is more predictable to market participants, it
may also be more likely to be chosen in instances of repurchases for
which concerns about front-running the issuer's information may be
relatively less significant.
---------------------------------------------------------------------------

    Finally, some companies may implement new insider trading policies,
or update existing insider trading policies, in anticipation of the
proposed disclosure requirement regarding policies and procedures and
the ensuing public scrutiny of disclosed policies and procedures.
Additional restrictions on insider trading arrangements adopted in
anticipation of the public disclosure could result in economic costs
for insiders and in some instances, offsetting changes in insider
compensation and insider efforts to reduce their equity exposure in
light of the trading restrictions (broadly in line with the discussion
of the potential indirect costs of restrictions on insider use of
trading arrangements in Section IV.B.3 above). Costs incurred by
companies would be borne by their existing shareholders.
4. Effects on Efficiency, Competition, and Capital Formation
    We expect the proposed amendments to reduce the information
asymmetry between insiders and outside investors by providing more
granular and timelier detail about officers', directors', and
companies' trading plans and associated policies. The reduction in
information asymmetry as a result of the additional disclosure would
result in more informationally efficient stock prices. Because
disclosure of insider and issuer trading plans and insider trading
policies can inform investors about insider incentives and governance
practices, which could affect shareholder value as discussed in Section
IV.A above, the proposed additional disclosure about insider and issuer
trading arrangements and insider trading policies could also better
inform investment decisions (enabling more efficient allocation of
capital in investor portfolios) and shareholder voting decisions.
    Importantly, we expect the proposed amendments to draw market
scrutiny to officers', directors', and companies' use of Rule 10b5-
1(c)(1) or other trading arrangements, decreasing the ability of
insiders and companies to trade on MNPI through such trading
arrangements. As discussed in Section IV.B.4 above, this should reduce
insiders' incentive conflicts associated with insider trading. In
particular, it would decrease incentives for inefficient corporate
investment decisions and other corporate decisions. Further, it would
decrease insiders' incentives to influence corporate disclosures,
resulting in timelier and higher-quality disclosures (that enable more
informationally efficient share prices and more efficient allocation of
capital in investor portfolios).
    A lower risk of trading against an informed insider is expected to
increase investor confidence and the willingness of market participants
to buy, and trade in, the company's shares. This would indirectly make
it easier for the company to raise capital from investors. Companies
that disclose robust insider trading policies in particular may elicit
greater investor confidence, as well as interest from investors seeking
companies with stronger corporate governance practices, resulting in
capital formation benefits for such companies.
    Finally, in line with the discussion in Section IV.B.4 above, the
proposed amendments may affect competition. Decreasing the ability of
insiders and companies to trade on MNPI would weaken their competitive
edge in trading, promoting competition among other investors in the
market for the company's shares. As discussed above, a lower risk of an
insider with a significant private information advantage trading the
company's shares would strengthen the incentive of other market
participants to trade the company's shares and compete in gathering and
processing information about the company.
    To the extent that the proposed disclosure requirements impose a
fixed cost on companies, they would have a negative competitive effect
on smaller issuers subject to the amendments, as well as on issuers
that do not already disclose insider trading policies and trading
arrangements. The proposed Item 408(a) disclosure requirements would
not apply to foreign private issuers, potentially placing them at a
relative competitive advantage to domestic filers.\191\ With that
exception, because the proposed disclosure amendments would apply
broadly across domestic public companies, generally, we do not
anticipate it to result in meaningful competitive disparities in the
labor market for executive talent.\192\
---------------------------------------------------------------------------

    \191\ Foreign private issuers that file annual reports on Form
20-F would be subject to requirements similar to Item 408(b), as
proposed. Further, foreign private issuers listed on U.S. exchanges
would remain subject to insider trading laws and exchange listing
standards.
    \192\ We do not expect significant effects on the labor market
competition for executive talent between public and private
companies. While the proposed disclosures would increase costs for
public companies and, indirectly, their officers and directors,
these amendments are likely to have only a marginal effect on the
overall tradeoff of being an officer or director at a public company
(including the liability risk and costs of public scrutiny of the
insider's holdings, trades, and other actions).
---------------------------------------------------------------------------

    All of the effects described above would be smaller to the extent
that companies already disclose insider trading policies and trading
arrangements today.
5. Reasonable Alternatives
    The proposed amendments would require quarterly disclosure of
adoption, modification, termination, and a description of the terms of
the trading arrangement of directors, Rule 16a-1(f) officers, and
companies, as well as disclosure of insider trading policies and
procedures in annual reports and proxy and information statements. As
an alternative, we could modify the scope and granularity of the
proposed disclosure of trading plans and/or of insider trading policies
and procedures. The alternatives of expanding or narrowing the scope of
the proposed disclosures could potentially provide greater or lesser
detail to investors, enabling better or less informed investment
decisions and more or less accurate assessment of the risk of the use
of MNPI for informed trading through trading plans, compared to the
proposal. However, the alternative of expanding or narrowing the scope
of the proposed disclosure could also increase or decrease disclosure
costs (discussed in greater detail in Section IV.C.3 above).
    As another alternative to the proposed quarterly disclosure of
adoption, termination, and the terms of trading arrangements, we could
require more or less frequent disclosure. Requiring more or less
frequent disclosure under Item 408(a) would provide timelier (or less
timely) information to investors about trading arrangements but also
impose

higher (or lower) costs on companies and insiders. A more detailed
discussion of the benefits and costs of the Item 408(a) disclosure is
included in Sections IV.C.2 and IV.C.3 above.
    As another alternative to the proposed quarterly disclosure, we
could narrow its scope to Rule 10b5-1 plans. Under this alternative,
issuers and officers and directors with trading arrangements not
reliant on Rule 10b5-1(c)(1) would not incur costs of the amendments.
However, investors would receive less information about insider trading
arrangements, compared to the proposal. This effect on investors would
be more pronounced if some issuers or insiders switch from Rule 10b5-1
plans to other trading arrangements.
    The proposed amendments would require the quarterly disclosures
regarding trading arrangements and the annual disclosures regarding
policies and procedures to be tagged using a structured data language
(specifically, Inline XBRL). Alternatively, we could change the scope
of the tagging requirement, such as by narrowing the requirement to
cover only quarterly disclosures required under proposed Item 408(a).
This alternative would provide incremental compliance cost savings for
filers, who would not be required to select, apply, and review Inline
XBRL tags for the annual report and proxy and information statement
disclosures regarding insider trading policies and procedures, although
such cost savings would likely be low given the limited number of
Inline XBRL tags that are expected to be needed to tag the proposed
disclosures. This alternative would also remove the informational
benefits to investors that would accrue from facilitating retrieval of
issuers' policies and procedures disclosures and comparing such
disclosures across issuers and time periods, compared to the proposal.
    As proposed, the disclosure requirement regarding trading
arrangements would only apply to domestic filers. The disclosure
requirement regarding insider trading policies and procedures would
apply to domestic filers and to Form 20-F filers. As an alternative, we
could exempt Form 20-F filers from the policies and procedures
disclosure requirement. As another alternative, we could extend the
disclosure requirement regarding trading arrangements to Form 20-F
filers. Generally speaking, exempting Form 20-F filers from the scope
of the proposed disclosure requirements would prevent such foreign
private issuers from incurring the direct and indirect costs of the
rule (as described in detail in Section IV.C.3 above). Exempting Form
20-F filers also would decrease the amount of information available to
investors about the insider trading incentives and policies at such
issuers, potentially limiting investor ability to make informed
decisions with respect to such issuers. Exempting Form 20-F filers also
could lead to incrementally greater competitive disparities due to the
higher compliance burden of domestic issuers with respect to this
requirement. Because foreign private issuers that file annual reports
on Form 20-F do not have a quarterly reporting obligation equivalent to
a Form 10-Q, the incremental benefit of the alternative of extending
requirements similar to Item 408(a) to Form 20-F filers could be
relatively more modest (due to the less timely disclosure of
information on trading arrangements, if it were required to be
disclosed in annual reports).
    The proposed amendments to Forms 4 and 5 (a mandatory Rule 10b5-1
checkbox and the date of plan adoption) would require disclosure only
with respect to Rule 10b5-1 trading arrangements. The date of trading
plan adoption and the fact that the trade is conducted under a trading
plan would not be required to be disclosed for plans that do not rely
on Rule 10b5-1(c)(1) but could be disclosed voluntarily at the option
of the filer. As an alternative, we could require disclosure of
reliance on a non-Rule 10b5-1 plan and the date of adoption of such a
plan. This alternative could provide investors with more comprehensive
information about insider trades under trading arrangements. Combined
with the proposed Item 408 disclosures about officer and director
trading arrangements (including ones not reliant on Rule 10b5-1), it
also could enable greater transparency into whether insider trading is
occurring under other trading plans, and potentially deter such
trading. To the extent that trading arrangements that do not use Rule
10b5-1 can take a wide variety of forms, requiring trades under such
trading arrangements to be identified on Forms 4 and 5 separately from
other insider trades conducted without a trading arrangement would
likely be less meaningful to investors.
6. Request for Comment
    57. What are the economic effects of the proposed Item 408
disclosures? Would the proposed disclosures benefit investors, such as
by providing additional information to investors or by limiting
potential use of MNPI for trading through trading plans?
    58. What would be the costs of the proposed Item 408 disclosures?
    59. What are the economic effects of applying the proposed Item 408
disclosure requirements regarding plan adoption, modification,
termination, and material terms to all trading plans (including both
ones that rely and ones that do not rely on Rule 10b-1), as proposed?
    60. What are the benefits and costs of the proposed quarterly
disclosure regarding plan adoption, modification, termination, and
material terms? What are the benefits and costs of alternative
reporting requirements or frequencies?
    61. What are the economic effects of the proposed Item 408
requirement to disclose the issuer's insider trading policies and
procedures governing the purchase, sale, and other dispositions of the
registrant's securities on Form 10-K or proxy or information statement?
What are the economic effects of extending similar requirements to
filers of annual reports on Form 20-F, as proposed?
    62. Would the proposed requirement to structure Item 408
disclosures in Inline XBRL benefit investors? What would be the costs
of such a requirement for filers? How would the costs and benefits vary
if we were to narrow the scope of structured data requirements, for
example to include only the quarterly disclosures that would be
required under proposed Item 408(a) of Regulation S-K?
    63. How often do officers and directors rely on Rule 10b5-1 plans
today but elect not to disclose such reliance on beneficial ownership
forms (Forms 4 and 5)?
    64. Would investors benefit from the proposed requirement to
disclose the use of a Rule 10b5-1 plan on Forms 4 and 5?
    65. What would be the costs of the proposed requirement to disclose
the use of a Rule 10b5-1 plan on Forms 4 and 5?
    66. What alternative disclosure requirements related to insider
trading arrangements should we consider, and what would be the benefits
and costs of such alternatives?

D. Additional Disclosure of the Timing of Option Grants and Related
Company Policies and Practices (Amendments to Item 402 of Regulation S-
K)

    The Commission is proposing to amend Item 402 of Regulation S-K to
enhance the transparency regarding companies' grants of stock options,
SARs, or similar instruments before or after the filing of a periodic
report, or the filing or furnishing of a current report on Form 8-K
that contains MNPI.

1. Baseline and Affected Parties
    The proposed amendments to Item 402 disclosure requirements would
apply to filers of annual reports on Form 10-K and proxy and
information statements.\193\ During calendar year 2020, we estimate
that there were approximately 5,900 affected filers.
---------------------------------------------------------------------------

    \193\ Current filing requirements of Form 10-K permit filers to
incorporate by reference executive compensation disclosures from a
proxy or information statement involving the election of directors.
See supra note 78. These estimates exclude registered investment
companies and asset-backed securities issuers, which would not be
subject to the proposed requirements.
---------------------------------------------------------------------------

    Existing Item 402 requires disclosure of option grant dates thus
potentially enabling investors today to compare the timing of grant
dates and historical filings of a periodic report or another EDGAR
filing that contains MNPI. The Commission provided interpretive
guidance regarding option grants in the 2006 executive compensation
disclosure release.\194\ In considering the timing of option grants in
coordination with the release of MNPI, the Commission explained in the
release that if the company has such a program, plan, or practice, the
company should disclose that the board of directors or compensation
committee may grant options at times when the board or committee is
aware of MNPI.\195\ To the extent that the existing disclosures of
companies that allow the timing of option grants around MNPI reflect
such guidance, the incremental effects of a mandate to disclose
policies and procedures related to option grants around MNPI would be
relatively smaller.
---------------------------------------------------------------------------

    \194\ See Executive Compensation and Related Person Disclosure,
supra note 65.
    \195\ Id.
---------------------------------------------------------------------------

    Some studies have noted that the regulatory reforms of the early
and mid-2000s have led to the decline, if not disappearance, of
questionable option timing practices.\196\ However, there is some
evidence that option spring-loading and bullet-dodging persists.\197\
For example, one study, which examined 4,852 scheduled CEO stock option
grants from 2007 through 2011, finds that ``managers accelerate bad
news before a grant (bullet dodging) and delay good news until after a
grant (spring loading) . . . market reactions to SEC Form 8-K filings
(which report material corporate events) tend to be negative in the
months immediately before a scheduled CEO option grant and positive in
the months after the grant. Executives also appear to move earnings
from the pre-grant period to the post-grant period, for example, by
changing a firm's accounting choices (e.g., accruals management) and
perhaps even by timing investments (e.g., real earnings management).''
\198\ Another study finds that spring-loading partly replaced the
disappearing practice of option backdating.\199\ A different study
documents spring-loading around stock splits but does not disaggregate
the 1992-2012 period into pre- and post-2006 sub-periods.\200\
---------------------------------------------------------------------------

    \196\ Randall Heron and Erik Lie, What Fraction of Stock Option
Grants to Top Executives Have Been Backdated or Manipulated?, 55(4)
Management Science 513-525 (2009); M.P. Narayanan and H. Nejat
Seyhun, The Dating Game: Do Managers Designate Option Grant Dates to
Increase Their Compensation? 21(5) Review of Financial Studies,
1907-1945 (2008); Lucian Bebchuk, Yaniv Grinstein, and Urs Peyer,
Lucky CEOs and Lucky Directors, 65(6) Journal of Finance, 2363-2401
(2010); Linxiao Liu, Harrison Liu, and Jennifer Yin, Stock Option
Schedules and Managerial Opportunism, 41(5-6) Journal of Business
Finance and Accounting, 652-684 (2014); Rik Sen, The Returns to
Spring-Loading, New York University (Working Paper) (2008).
    \197\ See also ``Insider Trading and Stock Option Grants: An
Examination of Corporate Integrity in the Covid-19 Pandemic,''
Memorandum from FSC Majority Staff to Members, Committee on
Financial Services, September 17, 2020, available at https://financialservices.house.gov/uploadedfiles/hhrg-116-ba16-20200917-sd002.pdf, at pp. 2-5.
    \198\ See Robert M. Daines, Grant R. McQueen, and Robert J.
Schonlau, Right on Schedule: CEO Option Grants and Opportunism,
53(3) Journal of Financial and Quantitative Analysis, 1025-1058
(2018) (finding that: ``some CEOs have manipulated stock prices to
increase option compensation, documenting negative abnormal returns
before scheduled option grants and positive abnormal returns
afterward;'' ``document[s] several mechanisms used to lower stock
price, including changing the substance and timing of disclosures;''
and further contends that such opportunism ``distorts stock prices,
leading to capital misallocation, and may dissipate firm value if
executives postpone valuable projects.'' See also David Aboody and
Ron Kasznik, CEO Stock Option Awards and the Timing of Corporate
Voluntary Disclosures, 29(1) Journal of Accounting and Economics,
73-100 (2000) (focusing on CEO option awards with fixed award
schedules and showing that ``CEOs make opportunistic voluntary
disclosure decisions that maximize their stock option
compensation,'' based on changes in share prices, analyst earnings
forecasts, and management earnings forecasts); Keith W. Chauvin, and
Catherine Shenoy, Stock Price Decreases Prior to Executive Stock
Option Grants, 7(1) Journal of Corporate Finance, 53-76 (2001)
(finding, in a May 1991 to February 1994 sample covering 313 CEOs,
``a statistically significant abnormal decrease in stock prices
during the 10-day period immediately preceding the grant date'' and
concluding that ``[e]xecutives who expect to be granted stock
options have the incentive, opportunity and ability to affect the
exercise price with their inside information'').
    \199\ See Giulian Bianchi, Stock Options: From Backdating to
Spring Loading, 59 Quarterly Review of Economics and Finance, 215-
221 (2016) (examining data through 2011).
    \200\ See Erik Devos, William Elliott, and Richard Warr, CEO
Opportunism? Option Grants and Stock Trades around Stock Splits,
60(1) Journal of Accounting and Economics, 18-35 (2015).
---------------------------------------------------------------------------

2. Benefits
    As discussed in Section II above, certain practices related to the
timing of executive compensation option grants raise concerns about the
use of MNPI. Improved disclosure would potentially mitigate the
economic costs of the associated incentive distortions as these
practices would have greater visibility to investors and inform their
investment and voting decisions.
    Spring-loading and bullet-dodging potentially increase the value of
the options granted to the executive, upon MNPI becoming public.\201\
Holding the number of the granted options and the policy to grant
options with the strike price equal to the current observable market
price (``at-the-money'') constant, this leads to the executive
effectively receiving a higher compensation award than if the timing of
option grants were completely independent of MNPI releases.\202\
Regardless of any potential impact of the expected public release of
MNPI on compensation cost recognized for the option awards, strategic
timing of option awards around MNPI releases increases the value of the
compensation award.\203\ Further, lowering an option's strike price
through timing of an option award around MNPI release affects the
sensitivity of the awarded options to changes in the company's share
price.\204\ Some have argued that these practices may be the result of
an optimal compensation policy.\205\ Whether such

practices constitute an optimal compensation policy or not, a lack of
transparency about such compensation awards may limit investor ability
to fully gauge the key terms of compensation arrangements and their
implications for executives' incentives, and thus, firm value.
---------------------------------------------------------------------------

    \201\ Past studies have focused primarily on options. In this
context, the same economic effects can be expected in the case of
awards of SARs and similar instruments. For purposes of this
analysis, the term ``option'' includes stock options, SARs and
similar instruments with option-like features.
    \202\ See David Yermack, Good Timing: CEO Stock Option Awards
and Company News Announcements, 52(2) Journal of Finance, 449-476
(1997). See also Iman Anabtwai, Secret Compensation, 82(3) North
Carolina Law Review, 835-890 (2004).
    \204\ Spring-loading can cause a call to be in-the-money when it
would have otherwise been at-the-money, assuming favorable MNPI is
about to be released. Everything else equal, the value of an in-the-
money call would have a higher sensitivity to the share price than
the value of an at-the-money call. Bullet-dodging can cause a call
to be at-the-money when it would have otherwise been out-of-the-
money, assuming negative MNPI is about to be released. Generally
speaking, the value of an at-the-money call would have a higher
sensitivity to the share price than the value of an out-of-the-money
call. The effects of such changes would depend on the objectives of
the overall compensation package with respect to inducing optimal
executive incentives and the role of option and SAR awards in this
package.
    \205\ See, e.g., Erik Devos, William Elliott, and Richard Warr,
CEO Opportunism? Option Grants and Stock Trades around Stock Splits,
60(1) Journal of Accounting and Economics, 18-35 (2015) (stating
that ``it is not clear whether shareholders are necessarily harmed
by this apparent option grant timing, as it is possible that this is
just another way by which the [board of directors] attempts to
reward and retain a high performing CEO''). See also Speech by SEC
Commissioner: Remarks Before the International Corporate Governance
Network 11th Annual Conference by Commissioner Paul S. Atkins, U.S.
Securities and Exchange Commission, July 6, 2006, available at
https://www.sec.gov/news/speech/2006/spch070606psa.htm.
---------------------------------------------------------------------------

    The Commission is proposing to amend Item 402 of Regulation S-K to
require additional disclosure of option granting practices that would
provide a more comprehensive picture of whether the company uses MNPI
to time option awards. The proposed disclosure would present in a more
readily available way information about option grants around MNPI
releases, if any, as well as provide new disclosure of policies and
procedures related to option grant timing with respect to MNPI. The
proposed amendments would reduce information asymmetries between
companies and investors with respect to the timing of compensation
awards and applicable corporate policies and better inform investors
about executives' incentives to maximize shareholder value and the
company's executive compensation policies (the information that can
then be compared with the executive's on-the-job performance in
assessing the optimality of executive compensation). Besides
contributing to better informed investment decisions, the proposed
disclosure may inform shareholder say-on-pay votes and votes in
director elections.\206\
---------------------------------------------------------------------------

    \206\ See, e.g., 2020 Proxy Paper Guidelines: An Overview of the
Glass Lewis Approach to Proxy Advice--United States, available at
https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_US.pdf, at 12-13, 41-42 (stating that ``that ``[w]hen a
company has engaged in spring-loading or bullet-dodging, Glass Lewis
will consider recommending voting against the compensation committee
members where there has been a pattern of granting options at or
near historic lows.'' Furthermore, ``it will also recommend voting
against executives serving on the board who benefited from the
spring-loading or bullet-dodging.'' Spring-loading has also been the
subject of shareholder suits alleging breach of fiduciary duty. See,
e.g., Howland v. Kumar, C.A. No. 2018-0804, 2019 WL 2479738, at 1
(Del. Ch. June 13, 2019), available at https://courts.delaware.gov/Opinions/Download.aspx?id=290950; Verified Stockholder Derivative
Complaint 3-5, Knight v. Miller, C.A. No.2021-0581, 2021 WL 3018402
(Del. Ch. filed July 9, 2021). See also, e.g., Iman Anabtwai, Secret
Compensation, 82(3) North Carolina Law Review 835-890 (2004)
(stating that ``under state law fiduciary duty principles, a manager
who receives stock options while in possession of inside information
that will raise the stock price when it is later released discharges
her fiduciary duty of loyalty through full disclosure to and
ratification by a disinterested board. It is then the board's
responsibility, pursuant to its fiduciary duty of disclosure, to
inform the corporation's shareholders of the favorable timing of the
grant, if it disseminates to them information about the company's
executive compensation arrangements''); Matthew E. Orso, `Spring-
Loading' Executive Stock Options: An Abuse in Need of a Federal
Remedy, 53(2) Saint Louis University Law Journal 629-662 (2009);
Jonathan Tompkins, Opportunity Knocks, But the SEC Answers:
Examining the Manipulation of Stock Options Through the Spring-
Loading of Grants and Rule 10b-5, 26 Washington University Journal
of Law and Policy, 413-458 (2008).
---------------------------------------------------------------------------

    Another potential benefit of the proposed disclosure is that, to
the extent option grants around MNPI releases were not the result of a
value-maximizing compensation policy but rather an outcome of agency
conflicts (such as executives' attempts to extract additional
compensation without drawing investor scrutiny to the full amount of
such compensation),\207\ and to the extent companies forgo such grants
in anticipation of the proposed additional disclosure, the proposed
disclosure requirement would improve shareholder value. The benefit
would be lower if the extra compensation is currently optimally
awarded.\208\
---------------------------------------------------------------------------

    \207\ One article notes that ``[t]here are, of course,
constraints that check the extent to which the level and structure
of executive compensation can deviate from what would be optimal for
shareholders. . . To circumvent such pressures, managers will want
to enhance their compensation as discreetly as possible. By
`camouflaging' elements of their pay, managers can maximize their
compensation while minimizing adverse reaction. Timing option grants
is an especially attractive way to enhance executive compensation
both because it is difficult to detect and because it has generally
eluded attention.'' See Iman Anabtwai, Secret Compensation, 82(3)
North Carolina Law Review, 835-890 (2004). See also, e.g., Giuliano
Bianchi, Stock Options: From Backdating to Spring Loading, 59
Quarterly Review of Economics and Finance, 215-221 (2016) (stating
that ``[o]pportunistic option timing is found to be associated with
weaker corporate governance. Indeed, practices such as backdating
and spring loading raise governance concerns . . . Eventually, the
opportunistic option timing casts doubt on the efficacy of
incentives to address the principal agent models.'').
    \208\ See, e.g., Jonathan J. Tompkins, Opportunity Knocks, but
the SEC Answers: Examining the Manipulation of Stock Options through
the Spring-Loading of Grants and Rule 10b-5, 26 Washington
University Journal of Law and Policy, 413-458, 444-445, 447 (2008).
---------------------------------------------------------------------------

    Further, to the extent that the practice of option grants around
MNPI in some instances contributed to incentives of executives to
change the timing and content of MNPI disclosures around option grant
dates in an attempt to increase the economic value of compensation
awards,\209\ the proposed amendments could partly mitigate such
incentives if they contribute to a decrease in such option grant
practices. In those instances, the indirect effect of the proposed
amendments could result in an improvement in the information content,
timeliness, and quality of disclosures, and more efficient share prices
and better informed investment decisions.
---------------------------------------------------------------------------

    \209\ See supra note 198 and accompanying and following text.
---------------------------------------------------------------------------

    The described benefits of the proposed tabular disclosure would be
limited by the fact that investors today can research and assess, based
on historical option grant dates required to be disclosed under Item
402, how grant timing relates to EDGAR filings containing MNPI and
share price changes around such filings (information that is publicly
accessible, albeit not in one location). However, the proposed
disclosure would aggregate this information in a more readily available
and more salient tabular format in one location, potentially
incrementally lowering investor search costs and increasing investor
awareness of option grant timing around MNPI.
    These benefits could also be modest if investors find the proposed
disclosure to be of limited use (for example, if the tabular disclosure
is too extensive and/or difficult to parse for companies with multiple
MNPI filings and option grants for different executives, or because
other factors may affect the share price notwithstanding the disclosure
of MNPI).
    The proposed amendments would require the additional quantitative
disclosure to be submitted in Inline XBRL. This proposed requirement is
expected to benefit investors by facilitating automated extraction of
the disclosure information for purposes of aggregation, analysis, and
comparison (across time periods and filers), potentially enabling more
informed investment and voting decisions.
    The proposed annual disclosure of policies and practices related to
option grant timing around MNPI would offer new information that is not
presently available to investors. The disclosure of the presence or
absence of such policies and practices could inform investment and
shareholder voting decisions, with the caveat that such disclosure may
be of lower utility if it uses a ``boilerplate'' format. The
anticipation of public disclosure may also lead companies to adopt
policies and practices disallowing option grants around MNPI, leading
to the benefits discussed above.
    In general, the discussed benefits of the proposed amendments would
be modest at companies that rely less on stock options and primarily or
exclusively grant restricted stock, or do not grant equity-linked
compensation.\210\ At companies that use

stock options extensively as part of executive compensation, the
effects of the proposed amendments might be more modest if other
factors serve to deter spring-loading and bullet-dodging (for example,
best practices implemented by the compensation committee or generally
robust internal corporate governance mechanisms). The effects of the
proposed amendments on executives might be smaller if companies adjust
compensation to offset the decline in spring-loading and bullet-dodging
under the amendments (e.g., by changing option terms, the allocation of
compensation between cash, options, and restricted stock, or the
overall amount of compensation).
---------------------------------------------------------------------------

    \210\ The proportion of companies that grant options to
executives has declined substantially after the introduction of FAS
123R in 2004 (now codified in Accounting Standards Codification
Topic 718). See, e.g., Prevalence of Options Decreases as Companies
Tie Awards to Performance, August 23, 2018, Equilar, available at
https://www.equilar.com/press-releases/103-prevalence-of-options-decreases-as-companies-tie-awards-to-performance; Aubrey Bout, Brian
Wilby, and Perla Cruz, S&P 500 CEO Compensation Increase Trends,
Harvard Law School Forum on Corporate Governance, (February 11,
2020), available at https://corpgov.law.harvard.edu/2020/02/11/sp-500-ceo-compensation-increase-trends-3/. Based on the analysis of
Execucomp data for fiscal year 2020 (retrieved on September 14,
2021), approximately 32 percent of companies reported option grants.
Execucomp data covers S&P 1500 companies and thus may not be
representative of option compensation at smaller companies.
Registrants other than small business issuers and small business
issuers, respectively, were required to comply with FAS 123R
beginning with the first reporting period of the first fiscal year
beginning on or after June 15, 2005 and December 15, 2005,
respectively. See Amendment to Rule 4-01(a) of Regulation S-X
Regarding the Compliance Date for Statement of Financial Accounting
Standards No. 123 (Revised 2004), Share-Based Payment, Release No.
33-8568 (Apr. 15, 2005) [70 FR 20717 (Apr. 21, 2005)].
---------------------------------------------------------------------------

3. Costs
    The proposed amendments to Item 402 requiring additional disclosure
of the timing of option awards and related corporate policies would
result in direct compliance-related costs for affected filers of
compiling the information required in amended Item 402 for inclusion in
the annual report or proxy statement. Because companies either already
provide such information for other disclosures (option grant
information and dates) or can readily obtain the information (daily
share prices and dates of EDGAR filings), the direct costs are expected
to be modest. Companies also would incur minor costs of aggregating
such existing information into the proposed tabular format. Further,
companies would incur some compliance-related costs to assess which of
the filings from the reporting period contained MNPI and thus would be
subject to the scope of the proposed tabular disclosure. Finally, while
companies are likely to have information readily available about
policies and practices related to option grant timing, they would
likely incur some compliance-related costs to prepare that information
for public disclosure.
    Companies would incur compliance costs of structuring the proposed
quantitative tabular disclosure in Inline XBRL. Such costs would be
higher for filers with more option grants subject to the new
disclosure. However, because the vast majority of filers subject to the
proposed amendments already are subject to other structured disclosure
requirements (e.g., Inline XBRL requirements for financial statement
information and cover page information in certain filings), the
incremental cost of submitting the proposed compensation disclosure in
a structured data language would likely be relatively modest.
    The proposed amendments are also expected to result in indirect
costs for companies and executives. Disclosure of spring-loading or
bullet-dodging practices could result in reputational harms for
companies or individual executives, including unfavorable say-on-pay
votes. Outside scrutiny in response to the proposed disclosure could
cause companies to forgo spring-loading and bullet-dodging. For
companies at which such practices arose from efforts to implement an
economically optimal compensation policy,\211\ deviating from such a
policy could result in less optimal compensation. However, companies
may be able to use other, readily available means to adjust
compensation terms to achieve a similar outcome.\212\ At companies that
forgo spring-loading and bullet-dodging but do not change other
compensation terms to offset it, executives could experience
effectively smaller, riskier compensation awards.
---------------------------------------------------------------------------

    \211\ See supra note 208.
    \212\ Companies could lower the strike price, increase the
number of options granted, decrease the proportion of options in
overall pay, increase overall pay, modify performance-based or other
compensation terms, or some combination of those.
---------------------------------------------------------------------------

    As discussed in Section IV.D.2 above, the indirect costs of the
proposed tabular disclosure are likely to be modest relative to the
baseline of existing option disclosures.
    The proposed disclosure of policies and practices related to option
grant timing around MNPI would offer new public disclosure not
presently available to investors. Companies that lack such policies and
practices may incur reputational costs of such disclosure. The
anticipation of public disclosure may lead such companies to adopt
policies and practices disallowing option grants around MNPI. This may
impose costs on executives, to the extent other compensation terms are
not adjusted in an offsetting manner, as described above.
    As discussed in Section IV.D.2 above, the effects of the proposed
amendments would be modest at companies without, or with limited,
option compensation.
4. Effects on Efficiency, Competition, and Capital Formation
    We expect the proposed amendments to Item 402 to incrementally
decrease the information asymmetry between insiders and investors about
the company's option compensation awards and associated policies,
resulting in better information about the insiders' incentives related
to such option awards. This would result in more informationally
efficient prices and more efficient allocation of capital in investor
portfolios. Greater availability of information about option
compensation awards would also reduce shareholders' information
gathering costs and enable them to make more efficient voting decisions
in say-on-pay and director election votes.
    Importantly, we expect the proposed amendments to draw market
scrutiny to companies' use of MNPI in option awards, potentially
decreasing the incidence of option award timing around MNPI. This would
tend to reduce insiders' incentives to game corporate disclosures,
which may result in timelier and higher-quality disclosures (that
enable more informationally efficient share prices and more efficient
allocation of capital in investor portfolios).
    To the extent that the proposed Item 402 requirements impose a
fixed cost on companies, they would have a negative competitive effect
on smaller issuers subject to the amendments, as well as on issuers
that do not already disclose policies and practices related to option
award timing. The proposed disclosure requirements would not apply to
foreign private issuers, placing them at a relative competitive
advantage to domestic filers.
    Because the proposed disclosure amendments would apply broadly
across public companies, generally, we do not anticipate them to result
in meaningful competitive disparities in the labor market for executive
talent.\213\
---------------------------------------------------------------------------

    \213\ See supra note 192.
---------------------------------------------------------------------------

    The described effects would be attenuated to the extent investors
already can infer whether companies time option awards around MNPI
based on existing disclosures of option grant dates and other public
information. The described effects would also be attenuated to the
extent companies that

award options around MNPI already disclose such policies and practices
as a result of the 2006 interpretive guidance.
5. Reasonable Alternatives
    The proposed amendments to Item 402 involve both a new table with
information on individual option grants and the requirement to disclose
policies and practices regarding the timing of option awards around the
disclosure of MNPI. As an alternative, we could propose only one of
those requirements, which could reduce the costs of disclosure for
filers discussed in Section IV.D.3 above. However, omitting one of the
proposed disclosure requirements would provide investors with less
information about option compensation practices, resulting in
potentially less informed investment and voting decisions. For example,
omitting the tabular disclosure requirement could marginally reduce the
salience of information about the actual timing of option grants around
MNPI releases and the effects of such timing on the value of granted
options in cases where a company discloses that it does not have
policies restricting option awards around MNPI releases. In turn,
omitting the requirement to disclose the company's practices and
policies regarding the timing of option awards would reduce the amount
of information about potential future compensation practices, compared
to the proposal. Nevertheless, there is likely to be some substitution
between the information benefits of the two proposed requirements,
particularly in combination with the existing requirements to disclose
grant dates.
    The proposed amendments to Item 402 would require tabular
disclosure of awards made within 14 days before or after the filing of
a periodic report, or the filing or furnishing of Form 8-K that
discloses MNPI. A typical company issues multiple filings with MNPI in
a given year. Thus, it is likely that a typical company would include
multiple option and SAR awards in the new tabular disclosure.\214\ As
an alternative, we could use a shorter or longer time period around
filings with MNPI during which option awards would be subject to the
additional tabular disclosure (for example, one day, one week, or
thirty days). A shorter (longer) time period could result in less
(more) disclosure and thus incrementally lower (higher) disclosure
costs for filers, compared to the proposal. Because prices may change
for reasons other than the release of MNPI when a longer time period is
used, pre- and post-filing prices might be more informative for
assessing the effects of the MNPI release on the valuation of option
awards made during a shorter window around the filing. Shortening
(lengthening) the window under these alternatives would reduce
(increase) the amount of information aggregated in one location about
options granted in proximity to MNPI releases, potentially resulting in
marginally less (more) informed investment and voting decisions.
---------------------------------------------------------------------------

    \214\ During calendar year 2020, the average (median) filer
filed Forms 10-K, 10-Q, 8-K, or amendments to them, on 18 (16)
different days, resulting in a potential average (median) disclosure
coverage period (14 days before and after such filings) of
approximately 207 (221) days.
---------------------------------------------------------------------------

    Consistent with other provisions of Item 402, the proposed
amendments would apply to option awards to named executive officers.
This, would provide for greater consistency with other existing
compensation disclosures. It also would provide information about the
effects of option award timing on the amount of compensation and
structure of compensation incentives for the executives that are likely
to have the most influence on the company's business decisions. As an
alternative, we could limit the proposed disclosure to the CEO or
expand it to all executives. The alternative of narrowing (or
expanding) the set of executives whose option awards would be subject
to the new disclosure requirement would result in lower (or higher)
disclosure costs, compared to the proposal but also would result in
less (or more) information about the timing of option awards, and
executive incentives, compared to the proposal. These alternatives
would also result in less consistency with other existing compensation
disclosures compared with the proposal.
    The proposed amendments would require the additional disclosure to
be submitted using a structured (i.e., machine-readable) data language.
As an alternative, we could require the disclosure as proposed, but not
require the use of a structured data language. Compared to the
proposal, this alternative could make it harder for investors to
extract the disclosure information, potentially increasing the costs
they incur in making investment and voting decisions. However, this
alternative also would decrease costs for affected filers (particularly
for filers with more option grants subject to the new disclosure),
compared to the proposal.
6. Request for Comment
    67. How common is option spring-loading and bullet-dodging? What
are the principal costs and benefits of such practices? Would such
practices be likely to decline under the proposal? Do companies
typically have policies to avoid granting options around releases of
material nonpublic information? Why or why not?
    68. What would be the main benefits of the proposed amendments?
Would the proposed additional Item 402 disclosure requirements related
to option granting practices benefit investors? Would the proposed
amendments inform voting decisions? What would be the main costs of the
proposed amendments?
    69. Would the proposed new compensation table in Item 402 be useful
for investors? What are the benefits and costs of the proposed new
table?
    70. Should we require a different scope of tabular disclosure as
part of amended Item 402? Should we require the proposed tabular
disclosure to cover a different time frame around filings containing
MNPI (such as one day, one week, or thirty days before and after a
filing containing MNPI)? Should we require the proposed tabular
disclosure to cover only some filings containing MNPI (such as Form 10-
K, or Form 10-K and Form 10-Q)? If so, what would be the benefits and
costs of such alternative requirements?
    71. What alternative disclosure requirements related to the timing
of option compensation grants should we consider, and what would be the
benefits and costs of such alternatives?
    72. Would the proposed requirement to structure the additional
quantitative disclosure in Inline XBRL benefit investors? What would be
the costs of such a requirement for filers? How would the costs and
benefits vary if we were to expand or narrow the scope of structured
data requirements, for example to include the narrative disclosures
that would be added under the proposed requirements?

E. Additional Disclosure of Insider Gifts of Stock

    The Commission is proposing amendments that would require the
disclosure of insiders' gifts of stock within two business days on Form
4. This would be a change from the existing rules that allow a stock
gift to be disclosed on Form 5, which is required to be filed within 45
days of the end of the year during which the gift was made. This
proposed amendment would result in timelier disclosure of such
transactions across all affected insiders.

1. Baseline and Affected Parties
    The proposed amendments would affect insiders that make gifts of
stock and report them on Form 5 today. We estimate that approximately
700 insiders reported gifts of stock on Form 5 during calendar year
2020 (including a little over 100 insiders that reported gifts both on
Form 4 and Form 5).\215\ The majority of insiders already report gifts
of stock on Form 4. During calendar year 2020, we estimate that
approximately 2,700 insiders reported stock gifts on Form 4 (including
a little over 100 insiders that made both Form 4 and Form 5 filings
reporting stock gifts).
---------------------------------------------------------------------------

    \215\ The estimate is based on Form 5 data in Thomson Reuters/
Refinitiv insiders dataset. Gifts of stock are identified based on
transaction code ``G'' (``bona fide gift'').
---------------------------------------------------------------------------

2. Benefits
    The proposed amendments to Form 4 to require disclosure of insider
gifts of stock would result in timelier availability of information
about beneficial ownership by the company's insiders, to the extent
that some insiders are not already reporting such gifts of stock on
Form 4. Disposition of an insider's shares through a gift reduces that
insider's economic exposure to the company and potentially weakens the
alignment of incentives with the shareholder value maximization
objective. A scenario in which an insider gifts stock while aware of
MNPI and the recipient sells the gifted securities while the
information remains nonpublic and material is economically equivalent
to a scenario in which the insider trades on the basis of MNPI and
shares the trading profits with the recipient.
    While non-pecuniary motives may be more important in a gift than in
an open market sale, the timing of a gift can reveal the insider's
beliefs about the company's future share price. For an insider that has
decided to make a gift, finding the time when the shares are priced
higher (e.g., before the release of negative MNPI) would allow the
insider to reduce the effective cost of the gift. In light of this,
disclosure of timely information about the stock gift could be
informative for investors evaluating the company's share price and
making investment or sale decisions.\216\ However, these information
benefits would be lower if the officer or director does not consider
the cost of a gift (e.g., because the motive for the gift is solely
altruistic or the amount of the gift is inconsequential in the context
of the insider's overall net worth).
---------------------------------------------------------------------------

    \216\ One recent study finds evidence of informed timing of
gifts of stock by the subset of insiders that are beneficial owners.
See Sureyya Burcu Avci, Cindy A. Schipani, H. Nejat Seyhun, and
Andrew Verstein, Insider Giving, Duke Law Journal, 71 (2021)
(forthcoming). The study also points to gift backdating as a
potential consequence of delayed reporting of stock gifts. The
accelerated disclosure would likely reduce the potential for
backdating of insider gifts. Backdating of reported insider
disposition of stock on the beneficial ownership disclosure could
provide insufficient information to investors about the changes to
an insider's ownership incentives and the incentive alignment with
shareholder interests (limiting investors' ability to
retrospectively evaluate an insider's corporate decisions in
conjunction with the insider's ownership incentives and potentially
gauge the extent of agency conflicts).
---------------------------------------------------------------------------

    Finally, the proposed requirement to disclose insiders' stock gifts
on Form 4 would facilitate market scrutiny and discourage stock gifts
based on MNPI, thereby reducing the associated incentive distortions.
While an insider's benefit from using MNPI to time stock gifts is
likely smaller than in the case of timing trades, the ability to profit
from such stock gift timing is expected to have a similar direction of
the effect on insider incentives (such as incentives to pursue
inefficient corporate decisions or to distort disclosure, in line with
the discussion in Section IV.A above).
    These benefits of the proposed Form 4 requirements would be reduced
to the extent that many insider gifts of stock already are reported on
Form 4, as noted in Section IV.E.1 above.
3. Costs
    Amended Form 4 disclosure with regard to gifts of stock would
result in additional costs for insiders. Direct costs would include
additional compliance-related costs. Indirect costs could include
reputational and investor relations costs stemming from increased
market scrutiny of gifts of stock.
4. Effects on Efficiency, Competition, and Capital Formation
    We expect the proposed amendments to incrementally decrease the
information asymmetry between insiders and investors. Recent
disposition of shares through gifts of stock informs investors about
changes to officers' and directors' incentives derived from holdings of
company stock. Timely information about the disposition of shares
through stock gifts could in some circumstances inform investors about
officers' and directors' outlook on future changes to the company's
share prices. Both factors would tend to result in more informationally
efficient prices and more efficient allocation of capital in investor
portfolios.
    Importantly, we expect the proposed amendments to draw market
scrutiny to insiders' use of MNPI in the timing of stock gifts,
potentially decreasing the incidence of such stock gift timing. This
reduces insiders' incentives to manipulate corporate disclosures around
stock gifts, which could in turn yield more informationally efficient
share prices and more efficient allocation of capital in investor
portfolios. The amendments also could marginally reduce insider
incentives to pursue inefficient corporate investment decisions driven
by personal gain from gifts based on MNPI, in line with the discussion
in Section IV.E.2. and IV.A above.
    Because the proposed disclosure amendments would apply broadly
across all insiders' stock gifts, generally, we do not anticipate them
to result in meaningful competitive disparities among insiders.
5. Reasonable Alternatives
    We are proposing to require additional disclosure of insider gifts
of stock. As an alternative, we could narrow the scope of the proposed
disclosure to apply only to officers and directors, or only to a
certain type of gifts of stock (e.g., charitable gifts to charities
affiliated with the insider). Compared to the proposal, narrowing the
scope of gifts subject to the disclosure could provide less information
to market participants but also result in lower aggregate costs.
Further, because the majority of insiders already disclose gifts on
Form 4, the economic significance of potential exemptions under this
alternative may be modest. The proposed requirement would provide
consistency in the timeliness of reporting of stock gifts across
insiders.
6. Request for Comment
    73. Would the proposed additional Form 4 disclosure requirements
related to insider gifts of stock benefit investors? What would be the
main benefits of the proposed Form 4 amendments for investors?
    74. What would be the costs of the proposed Form 4 amendments for
filers?
    75. How prevalent is the timing of insider gifts of stock around
material nonpublic information?
    76. Do companies have policies or practices to prevent insider
gifts of stock in connection with material nonpublic information?
    77. What alternative disclosure requirements related to insider
gifts of stock should we consider, and what would be the benefits and
costs of such alternatives?

V. Paperwork Reduction Act

A. Summary of the Collections of Information

    Certain provisions of our rules, schedules, and forms that would be
affected by the rule amendments contain ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\217\ The Commission is submitting the proposed amendments to
the Office of Management and Budget (``OMB'') for review in accordance
with the PRA.\218\ The hours and costs associated with preparing,
filing, and sending the schedules and forms 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 comply with, a
collection of information unless it displays a currently valid OMB
control number. The titles for the collections of information are:
---------------------------------------------------------------------------

    \217\ 44 U.S.C. 3501 et seq.
    \218\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

     Form 10-K (OMB Control No. 3235-0063);
     Form 10-Q (OMB Control No. 3235-0070);
     Schedule 14A (OMB Control No. 3235-0059);
     Schedule 14C (OMB Control No. 3235-0057);
     Form 4 (OMB Control Number 3235-0287);
     Form 20-F (OMB Control Number 3235-0288);
     Form 5 (OMB Control Number 3235-0362);
     Regulation S-K (OMB Control No. 3235-0071);
     Regulation S-T (OMB Control No. 3235-0424); \219\ and
---------------------------------------------------------------------------

    \219\ The paperwork burdens for Regulation S-K and Regulation S-
T are imposed through the forms, schedules and reports that are
subject to the requirements in these regulations and are reflected
in the analysis of those documents. To avoid a PRA inventory
reflecting duplicative burdens and for administrative convenience,
we assign a one-hour burden to Regulations S-K and S-T.
---------------------------------------------------------------------------

     Rule 10b5-1 (a proposed new collection of information).
    The forms, schedules, and regulations listed above were adopted
under the Securities Act and/or the Exchange Act. These regulations,
schedules, and forms set forth the disclosure requirements for
registration statements, periodic and current reports, distribution
reports, and proxy and information statements filed by registrants to
help investors make informed investment and voting decisions.
Compliance with these information collections is mandatory. Responses
to these information collections are not kept confidential and there is
no mandatory retention period for the information disclosed.
    The Commission is also proposing amendments to Rule 10b5-
1(c)(1)(ii) that would impose a certification requirement as a
condition to the Rule 10b5-1(c)(1) affirmative defense. Under the
proposed amendment, if a director or officer (as defined in Rule 16a-
1(f)) of the issuer of the securities adopts a Rule 10b5-1(c)(1)
trading arrangement, as a condition to the availability of the
affirmative defense, such director or officer would be required to
furnish to the issuer a written certification. The use of the Rule
10b5-1(c)(1) affirmative defense is voluntary, and compliance with this
proposed information collection would be mandatory only if a respondent
chooses to rely on the affirmative defense. Responses to this
information collection would not be confidential and there is no
mandatory retention period for the collection of information.
    A description of the proposed amendments, including the need for
the information and its use, as well as a description of the likely
respondents, can be found in Section II above, and a discussion of the
economic effects of the proposed amendments can be found in Section IV
above.

B. Estimates of the Proposed Amendments' Effects on the Collections of
Information

    The following table summarizes the estimated effects of the
proposed amendments on the paperwork burdens associated with the
affected forms.\220\
---------------------------------------------------------------------------

    \220\ The OMB PRA filing inventories represent a three-year
average. These averages may not align with the actual number of
filings in any given year.

     PRA Table 1--Estimated Paperwork Burden Effects of the Proposed
                               Amendments
------------------------------------------------------------------------
                                                       Estimated burden
       Proposed amendments          Affected forms         increase
------------------------------------------------------------------------
Item 402(x):
     Require disclosure   Forms 10-K * and    9 hour increase in
     of a registrant's policies    Schedules 14A,      compliance burden
     and practices on the timing   and 14C.            per form.
     of awards of stock options,
     SARs or similar instruments
     in relation to the
     disclosure of material
     nonpublic information by
     the registrant, including
     how the board determines
     when to grant options,
     whether the board or
     compensation committee
     takes material nonpublic
     information into account
     when determining the timing
     and terms of an award; and
     whether the registrant has
     timed the disclosure of
     material nonpublic
     information for the purpose
     of affecting the value of
     executive compensation.
     Require tabular
     disclosure of each option
     award granted within 14
     calendar days before or
     after the filing of a
     periodic report, an issuer
     share repurchase, or the
     filing or furnishing of a
     current report on Form 8-K
     that contains material
     nonpublic information.
     Require information
     to be reported using a
     structured data language.
Item 408(a):
     Require disclosure   Forms 10-K and 10-  15 hour increase
     of the adoption or            Q.                  in compliance
     termination of any                                burden per form.
     contract, instruction or
     written plan for the
     purchase or sale of
     securities whether or not
     intended to satisfy the
     affirmative defense
     conditions of Rule 10b5-
     1(c), by the issuer,
     directors and officers (as
     defined in Exchange Act
     Rule 16a-1(f)), including
     the name and title of the
     director or officer; and a
     description of the material
     terms of the contract,
     instruction or written plan.

     Require information
     to be reported using a
     structured data language.
Item 16J/Item 408(b):
     Require disclosure   Forms 20-F and 10-  4 hour increase in
     of whether the registrant     K * and Schedules   compliance burden
     has adopted (and if not,      14A, and 14C.       per form.
     why) insider trading
     policies and procedures
     governing the purchase,
     sale, and other
     dispositions of the
     registrant's securities by
     directors, officers and
     employees that are
     reasonably designed to
     promote compliance with
     insider trading laws, rules
     and regulations, and any
     listing standards
     applicable to the
     registrant.
     Require information
     to be reported using a
     structured data language.
Form 4:
     Require reporting    Form 4............  0.5 hour increase
     of gifts of securities.                           in compliance
                                                       burden per form.
     Require new
     checkbox to indicate that a
     sale or purchase reported
     on the form was made
     pursuant to a Rule 10b5-
     1(c), and disclosure of the
     date of adoption of the
     plan.
     New optional
     checkbox that would permit
     a filer to indicate whether
     a sale or purchase reported
     on the form was made
     pursuant to a contract,
     instruction or written plan
     to purchase or sell
     securities not intended to
     satisfy the affirmative
     defense conditions of Rule
     10b5-1(c).
Form 5:
     Require new          Form 5............  0.25 hour increase
     checkbox to indicate that a                       in compliance
     sale or purchase reported                         burden per form.
     on the form was made
     pursuant to a Rule 10b5-
     1(c) plan, and disclosure
     of the date of adoption of
     the plan.
     New optional
     checkbox that would permit
     a filer to indicate whether
     a sale or purchase reported
     on the form was made
     pursuant to a contract,
     instruction or written plan
     to purchase or sell
     securities not intended to
     satisfy the affirmative
     defense conditions of Rule
     10b5-1(c).
Rule 10b5-1(c)(1)(ii):
     Require directors    ..................  1.5 hour
     and officers (as defined in                       compliance burden
     Exchange Act Rule 16a-                            per
     1(f)), as a condition to                          certification.
     the affirmative defense, to
     promptly furnish to the
     issuer a written
     certification.
------------------------------------------------------------------------
Notes:
* The burden estimate for Form 10-K assumes that Schedules 14A and 14C
  would be the primary disclosure documents for the information provided
  in response to proposed Item 402(w) and Item 408(b) of Regulation S-K
  and the disclosure requirement under Form 10-K would be satisfied by
  incorporating the information by reference from the proxy or
  information statement. Our PRA estimates include an estimated one hour
  burden for Form 10-K to account for the incorporation of the
  information.

C. Incremental and Aggregate Burden and Cost Estimates

    Below we estimate the incremental and aggregate increase in
paperwork burden as a result of the proposed amendments. These
estimates represent the average burden for all respondents, both large
and small. In deriving our estimates, we recognize that the burdens
will likely vary among individual respondents based on a number of
factors.
    We do not believe that the proposed amendments would change the
frequency of responses to the existing collections of information;
rather, we estimate that the proposed amendments would change only the
burden per response. For the new collection of information, we estimate
that there would be 7,200 responses based on the staff's analysis,
discussed in Section IV.B.1, of beneficial ownership filings on Forms
3, 4, and 5 made in the 2020 calendar year.\221\ Based on the data from
these filings, approximately 4,800 officers and directors reported a
transaction pursuant to a Rule 10b5-1 trading arrangement. As noted
above, the number of officers and directors using a Rule 10b5-1 trading
arrangement is likely larger. Accordingly, we adjusted the estimate
upward by 50 percent.
---------------------------------------------------------------------------

    \221\ See supra note 116 and accompanying text.
---------------------------------------------------------------------------

    The burden estimates were calculated by multiplying the estimated
number of responses by the estimated average amount of time it would
take a respondent to prepare and review disclosure required under the
proposed amendments. For purposes of the PRA, the burden is to be
allocated between internal burden hours and outside professional costs.
    The table below sets forth the percentage estimates we typically
use for the burden allocation for each form. We also estimate that the
average cost of retaining outside professionals is $400 per hour.\222\
---------------------------------------------------------------------------

    \222\ We recognize that the costs of retaining outside
professionals may vary depending on the nature of the professional
services, but for purposes of this PRA analysis, we estimate that
such costs would be an average of $400 per hour. This estimate is
based on consultations with several registrants, law firms, and
other persons who regularly assist registrants in preparing and
filing reports with the Commission.

  PRA Table 2--Standard Estimated Burden Allocation for Specified Forms
                              and Schedules
------------------------------------------------------------------------
                                                              Outside
           Form/schedule type              Internal (%)    professionals
                                                                (%)
------------------------------------------------------------------------
Forms 10-K, 10-Q, 20-F and Schedules 14A              75              25
 and 14C................................
Forms 4 and 5...........................             100  ..............
Rule 10b5-1.............................             100  ..............
------------------------------------------------------------------------

    The table below illustrates the incremental change to the total
annual compliance burden of affected forms and schedules, in hours and
in costs, as a result of the proposed amendments.

           PRA Table 3--Calculation of the Incremental Change in Burden Estimates of Current Responses Resulting From the Proposed Amendments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Estimated
                                            Number of       Estimated burden  Total incremental      Estimated         increase in       Total increase
             Form/schedule                  estimated        hour increase/      increase in        increase in          outside           in outside
                                             affected      affected response     burden hours     internal burden      professional       professional
                                            responses                                                  hours              hours            costs ($)
                                                (A) \223\                (B)    (C) = (A) x (B)        (D) = (C) x        (E) = (C) x   (F) = (E) x $400
                                                                                (allocation %)     (allocation %)
--------------------------------------------------------------------------------------------------------------------------------------------------------
10-K..................................              8,292                 16            132,672             99,504             33,168         13,267,200
10-Q..................................             22,925                 15            343,875         257,906.25          85,968.75         34,387,500
20-F..................................                729                  4              2,916              2,187                729            291,600
14A...................................              6,369                 13             82,797          62,097.75          20,699.25          8,279,700
14C...................................                569                 13              7,397           5,547.75           1,849.25            739,700
4.....................................            338,207                0.5          169,103.5          169,103.5                  0                  0
5.....................................              5,939               0.25           1,484.75           1,484.75                  0                  0
                                       -----------------------------------------------------------------------------------------------------------------
    Total.............................  .................  .................         740,245.25            597,831         142,414.25         56,965,700
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The following tables summarizes the requested paperwork burden
changes to existing information collections, including the estimated
total reporting burdens and costs, under the proposed amendments.
---------------------------------------------------------------------------

    \223\ The number of estimated affected responses is based on the
number of responses in the Commission's current OMB PRA filing
inventory. The OMB PRA filing inventory represents a three-year
average.

                                                           PRA Table 4--Requested Paperwork Burden Under the Proposed Amendments \224\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Current burden                           Program change                       Requested change in burden
                                                                --------------------------------------------------------------------------------------------------------------------------------
                                                                                Increase  in
                           Form/sch.                               Current      Current      Current cost    Number of   Increase in     outside       Annual
                                                                    annual       burden         burden        affected     internal   professional   responses    Burden hours     Cost burden
                                                                  responses      hours                       responses      hours         costs
                                                                         (A)          (B)              (C)          (D)          (E)           (F)    (G) = (A)     (H) = (B) +  (I) = (C) + (F)
                                                                                (E)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
10-K...........................................................        8,292   14,188,040   $1,893,793,119        8,292       99,504        33,168        8,292      14,287,544   $1,893,826,287
10-Q...........................................................       22,925    3,182,333      421,490,754       22,925      257,906        85,969       22,925       3,440,239      421,576,723
20-F...........................................................          729      479,261      576,824,025          729        2,187      $291,600          729         481,448      577,115,625
14A............................................................        6,369      777,590      103,678,712        6,369       62,098        20,699        6,369         839,688      103,699,411
14C............................................................          569       56,356        7,514,944          569        5,548         1,849          569          61,904        7,516,793
4..............................................................      338,207      169,104                0      338,207      169,104             0      338,207         338,208                0
5..............................................................        5,939        5,939                0        5,939        1,485             0        5,939           7,424                0
                                                                --------------------------------------------------------------------------------------------------------------------------------
    Total......................................................  ...........  ...........  ...............  ...........  ...........  ............  ...........      19,456,455    3,003,734,839
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    PRA Table 5 summarizes the requested paperwork burden for the
proposed new collection of information--namely, the proposed new Rule
10b5-1(c)(1)(ii) certification, including the estimated total reporting
burdens and costs. For purposes of the PRA, we estimate that the Rule
10b5-1(c)(1)(ii) certification would entail a one hour compliance
burden per response with 7,200 annual responses.
---------------------------------------------------------------------------

    \224\ Figures in this table have been rounded to the nearest
whole number.

    PRA Table 5--Requested Paperwork Burden for the New Collection of
                               Information
------------------------------------------------------------------------
                                         Proposed paperwork burden
    Collection of information    ---------------------------------------
                                   Annual  responses     Burden hours
                                                 (A)             (A) x 1
------------------------------------------------------------------------
Rule 10b5-1(c)(1)(ii)                          7,200               7,200
 Certification..................
------------------------------------------------------------------------

Request for Comment
    Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order
to:
     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 whether the Commission's estimates of the burden
of the proposed collection of information are accurate;
     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 collection 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 would have any
effects on any other collection 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
these burdens. Persons submitting comments on the collection of
information requirements should direct their comments to the Office of
Management and Budget, Attention: Desk Officer for the U.S. Securities
and Exchange Commission, Office of Information and Regulatory Affairs,
Washington, DC 20503, and send a copy to, Vanessa A. Countryman,
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090, with reference to File No. S7-20-21.
Requests for materials submitted to OMB by the Commission with regard
to the collection of information should be in writing, refer to File
No. S7-20-21 and be submitted to the U.S. Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE, Washington DC
20549-2736. OMB is required to make a decision concerning the
collection of information between 30 and 60 days after publication of
this proposed rule. Consequently, a comment to OMB is best assured of
having its full effect if the OMB receives it within 30 days of
publication.

VI. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Analysis (``IRFA'') has been
prepared in accordance with the Regulatory Flexibility Act
(``RFA'').\225\ It relates to proposed amendments to Rule 10b5-1(c)(1);
Regulation S-K, Forms 10-K, 10-Q, 20-F, 4, and 5; and Schedules 14A and
14C.
---------------------------------------------------------------------------

    \225\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

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

    The purpose of the proposed amendments is to address potentially
abusive practices associated with Rule 10b5-1 trading arrangements,
grants of options and other equity instruments with similar features
and the gifting of securities. The proposed amendments are also
intended to provide greater transparency to investors about issuer and
insider trading arrangements and restrictions, as well as insider
compensation and incentives, enabling more informed voting and
investment and decisions about an issuer. The proposed amendments are
discussed in more detail in Section II above. We discuss the economic
impact and potential alternatives to the amendments in Section IV, and
the estimated compliance costs and burdens of the amendments under the
PRA in Section V above.

B. Legal Basis

    We are proposing the amendments under Sections 3(b), 6, 7, 10, 17,
19(a), and 28 of the Securities Act; Sections 3, 9, 10, 12, 13, 14,
15(d), 20A, 21A, 23(a), and 36 of the Exchange Act; and Sections 8,
20(a), 24(a), 30 and 38 of the Investment Company Act; and 15 U.S.C.
7264.

C. Small Entities Subject to the Proposed Rules

    The proposed amendments would apply to registrants that are small
entities. The Regulatory Flexibility Act defines ``small entity'' to
mean ``small business,'' ``small organization,'' or ``small
governmental jurisdiction.'' \226\ For purposes of the Regulatory
Flexibility Act, under our rules, a registrant, other than an
investment company, is a ``small business'' or ``small organization''
if it had total assets of $5 million or less on the last day of its
most recent fiscal year and is engaged or proposing to engage in an
offering of securities that does not exceed $5 million.\227\ Under 17
CFR 270.0-10, an investment company, including a business development
company, is considered to be a small entity 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. An investment company, including a business development
company,\228\ 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.\229\ Commission staff estimates that, as of
June 2021, there were 660 issuers,\230\ and 9 business development
companies that may be considered small entities that would be subject
to the proposed amendments.\231\
---------------------------------------------------------------------------

    \226\ 5 U.S.C. 601(6).
    \227\ See Exchange Act Rule 0-10(a) [17 CFR 240.0-10(a)].
    \228\ Business development companies are a category of closed-
end investment company that are not registered under the Investment
Company Act [15 U.S.C. 80a-2(a)(48) and 80a-53-64].
    \229\ 17 CFR 270.0-10(a).
    \230\ This estimate is based on staff analysis of Form 10-K
filings on EDGAR, or amendments thereto, filed during the calendar
year of January 1, 2020 to December 31, 2020, or filed by September
1, 2021, and on data from XBRL filings, Compustat, and Ives Group
Audit Analytics.
    \231\ These estimates are based on staff analysis of Morningstar
data and data submitted by investment company registrants in forms
filed on EDGAR as of June 30, 2021.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping, and Other Compliance Requirements

    The proposed amendments to Rule 10b5-1(c)(1) would apply to small
entities to the same extent as other entities, irrespective of size.
The proposed amendments to Rule 10b5-1(c)(1) would not directly impose
any

recordkeeping or compliance requirements on any small entities. We
anticipate that the nature of any benefits and costs associated with
the proposed amendments to Rule 10b5-1(c)(1) would be similar for large
and small entities. Accordingly, we refer to the discussion of the
proposed amendments' economic effects on all affected parties,
including small entities, in Section IV.B. above. Consistent with that
discussion, we anticipate that the economic benefits and costs likely
would vary widely among small entities based on a number of factors,
including the nature and conduct of their businesses, which makes it
difficult to project the economic impact on small entities with
precision. However, we request comment on how the proposed amendments
to Rule 10b5-1(c)(1) would affect small entities.
    The proposed disclosure amendments to Regulation S-K, Forms 10-K,
10-Q, and Schedules 14A and 14C are designed to provide greater
transparency about officer, director, and issuer trading arrangements;
policies and procedures with respect to insider trading; and the timing
of executive compensation option awards in relation to the release of
material nonpublic information. If adopted, these amendments generally
would:
     Disclosure regarding the adoption and termination of Rule
10b5-1(c) and non-Rule 10b5-1(c) trading arrangements of directors,
officers, and the issuer, as well as the material terms of such trading
arrangements;
     Disclosure of whether the issuer has adopted (and if not,
why) insider trading policies and procedures governing the purchase,
sale, and other dispositions of the issuer's securities by directors,
officers and employees that are reasonably designed to promote
compliance with insider trading laws, rules and regulations, and any
listing standards applicable to the issuer;
     Narrative disclosure of an issuer's policies and practices
on the timing of awards of stock options, SARs or similar instruments;
and
     Tabular disclosure of each option award granted to a named
executive officer within 14 calendar days before or after the filing of
a periodic report, an issuer share repurchase, or the filing or
furnishing of a current report on Form 8-K that contains material
nonpublic information.
    In addition, the proposed amendments to Forms 4 and 5 would:
     Add a Rule 10b5-1 checkbox to these that would require a
Form 4 or 5 filer to indicate whether a sale or purchase reported on
that form was made pursuant to a Rule 10b5-1 trading arrangement.
Filers would also be required to provide the date of adoption of the
Rule 10b5-1 trading arrangement;
     Add a second, optional checkbox to both of Forms 4 and 5
that would allow a filer to indicate whether a transaction reported on
the form was made pursuant to a contract, instruction, or written plan
that is not intended to satisfy the conditions of Rule 10b5-1(c)(1);
and
     Require the reporting of dispositions of bona fide gifts
of equity securities on Form 4.
    We anticipate that the direct costs of preparing disclosure in
response to the proposed amendments will likely be relatively small as
such information will be readily available to companies. To the extent
that the proposed disclosure requirements has a greater effect on small
filers relative to large filers, they could result in adverse effects
on competition. The fixed component of the legal costs of preparing the
disclosure could be one contributing factor. Compliance with the
proposed amendments may require the use of professional skills,
including legal skills. We request comment on how the proposed
disclosure amendments would affect small entities.

E. Duplicative, Overlapping, or Conflicting Federal Rules

    Proposed Item 408(b) may partially duplicate and overlap with an
existing disclosure requirement under Item 406 of Regulation S-K, which
requires an issuer to disclose whether it has adopted a code of ethics
that applies to its principal executive officer, chief financial
officer, and other appropriate executives and, if it has not adopted
such a code, to state why it has not done so. An issuer's existing code
of ethics may contain insider trading policies. In such instances, an
issuer could cross-reference to the particular components of its code
of ethics that constitute insider trading policies and procedures in
response to proposed Item 408(b)(2). Other than Item 408(b), the
proposed amendments would not duplicate, overlap, or conflict with
other Federal rules.
    We additionally note that in a separate release, we are, among
other things, proposing rule and form amendments that would require an
issuer to provide timely disclosure regarding repurchases of its equity
securities, and disclosure of whether the repurchases was pursuant to a
Rule 10b5-1 plan. In connection with the potential adoption of these
rules, we would plan to coordinate these rulemakings to avoid any
duplication, overlap or conflict between the rules.

F. Significant Alternatives

    The RFA directs us to consider alternatives that would accomplish
our stated objectives, while minimizing any significant adverse impact
on small entities. In connection with the amendments, we considered the
following alternatives:
     Establishing different compliance or reporting
requirements that take into account the resources available to small
entities;
     Clarifying, consolidating, or simplifying compliance and
reporting requirements under the rules for small entities;
     Using performance rather than design standards; and
     Exempting small entities from all or part of the
requirements.
    Insider trading imposes costs on the investors in a company.\232\
The proposed disclosure amendments and the amendments to Rule 10b5-
1(c)(1) are intended to provide greater transparency to investors and
decrease information asymmetries between corporate insiders and outside
investors and to deter potentially abusive and problematic practices
associated with the use of Rule 10b5-1(c)(1) trading arrangements,
grants of option awards, and the gifting of securities. Importantly, we
anticipate the proposed amendments will work in tandem to significantly
reduce improper insider trading through Rule 10b5-1(c)(1) trading
arrangements. As discussed in above in Section IV, deterring insider
trading will result in benefits for investor protection, capital
formation, and orderly and efficient markets. By deterring insider
trading, the amendments would disincentivize insider behavior that
undermines investor confidence and harms the securities markets. For
these reasons, we do not believe it would be appropriate to provide
simplified or consolidated reporting requirements, a differing
compliance timetable, or an exemption for small entities from all or
part of the proposed amendments.
---------------------------------------------------------------------------

    \232\ See supra Section IV.
---------------------------------------------------------------------------

    With respect to using performance rather than design standards, the
proposed amendments use a combination of design and performance
standards in order to promote uniform compliance requirements for all
registrants. We believe the proposed amendments would be more
beneficial to investors and small entities if there are uniform
requirements that must be satisfied for a trading arrangement to be
eligible for the Rule 10b5-1(c)(1) affirmative defense and specific

disclosure requirements that apply to all registrants. In addition, the
proposed disclosure amendments should result in more comprehensive and
clear disclosure.

G. Request for Comments

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comments regarding:
     The number of small entity issuers that may be affected by
the proposed amendments;
     The existence or nature of the potential impact of the
proposed amendments on small entity issuers discussed in the analysis;
     How the proposed amendments could further lower the burden
on small entities; and
     How to quantify the impact of the proposed amendments.
    Please 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 amendments are adopted, and will be placed in the same public
file as comments on the proposed amendments themselves.

VII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA''),\233\ the Commission must advise OMB as to
whether the proposed amendments constitute a ``major'' rule. Under
SBREFA, a rule is considered ``major'' where, if adopted, it results,
or is likely to result, in:
---------------------------------------------------------------------------

    \233\ Public Law 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     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 whether the proposed amendments would be a
``major rule'' for purposes of SBREFA. We solicit comment and empirical
data on: (a) the potential effect on the U.S. economy on an annual
basis; (b) any potential increase in costs or prices for consumers or
individual industries; and (c) any potential effect on competition,
investment or innovation. Commenters are requested to provide empirical
data and other factual support for their views to the extent possible.

VIII. Statutory Authority

    The amendments contained in this release are being proposed under
the authority set forth in Sections 3(b), 6, 7, 10, 17, 19(a), and 28
of the Securities Act; Sections 3, 9, 10, 12, 13, 14, 15(d), 20A, 21A,
23(a), and 36 of the Exchange Act; and Sections 8, 20(a), 24(a), 30 and
38 of the Investment Company Act; and 15 U.S.C. 7264.

List of Subjects in 17 CFR Parts 229, 232, 240, and 249

    Reporting and recordkeeping requirements, Securities.

    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

0
1. The authority citation for part 229 continues 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, 77iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78j-3, 78l, 78m, 78n, 78n-1, 78o, 78u-
5, 78w, 78ll, 78 mm, 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.; 18 U.S.C.
1350; sec. 953(b), Pub. L. 111-203, 124 Stat. 1904 (2010); and sec.
102(c), Pub. L. 112-106, 126 Stat. 310 (2012).
0
2. Further amend Sec.  229.402, as proposed to be amended at 80 FR
26330 (May 7, 2015) and 80 FR 41144 (July 14, 2015), by adding
paragraph (x) to read as follows:

Sec.  229.402   (Item 402) Executive compensation.

* * * * *
    (x) Narrative disclosure of the registrant's policies and practices
related to the grant of equity awards in coordination with the release
of material nonpublic information. (1) Discuss the registrant's
policies and practices on the timing of awards of stock options, SARs
or similar instruments in relation to the disclosure of material
nonpublic information by the registrant, including how the board
determines when to grant options (for example, whether awards are
granted on a predetermined schedule); whether the board or compensation
committee takes material nonpublic information into account when
determining the timing and terms of an award, and if so, how, the board
or compensation committee takes material nonpublic information into
account when determining the timing and terms of an award; and whether
the registrant has timed the disclosure of material nonpublic
information for the purpose of affecting the value of executive
compensation.
    (2)(i) If during the last completed fiscal year, a grant of stock
options, SARs or similar instruments was awarded to a named executive
officer within a 14-day period before or after the filing of a periodic
report on Form 10-Q or Form 10-K, an issuer share repurchase, or the
filing or furnishing of a current report Form 8-K that discloses
material nonpublic information (including earnings information),
provide the information specified in paragraph (x)(2)(ii) of this
section, concerning each such award for each of the named executive
officers on an aggregated basis in the following tabular format:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Market value of the         Market value of the
                                           Number of                                                 securities underlying       securities underlying
                                          securities      Exercise or strike    Grant date fair      award one trading day       award one trading day
      Name            Grant date        underlying the      price of option   value of stock and     before disclosure of         after disclosure of
                                         option award        award ($/Sh)        option award         material nonpublic          material  nonpublic
                                                                                information                 information
(a)               (b)                 (c)                 (d)                 (e)                 (f)                         (g)
--------------------------------------------------------------------------------------------------------------------------------------------------------
PEO
PFO
A
B
C
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (ii) The Table shall include:
    (A) The name of the executive officer (column (a));
    (B) On an award-by-award basis, the grant date for option awards
reported in the table (column (b));
    (C) On an award-by-award basis, the number of securities underlying
the options (column (c));
    (D) The per-share exercise or strike price of the option award
(column (d));
    (E) On an award-by-award basis, the grant date fair value of each
equity award computed in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) Topic 718 (column
(e));
    (F) If the award was made within 14 calendar days before the filing
of a periodic report on Form 10-Q or Form 10-K, an issuer share
repurchase, or the filing or furnishing of a current report on Form 8-K
that discloses material nonpublic information (including earnings
information), disclose for each instrument reported in column (c), the
market value of the securities underlying the award the trading day
before disclosure of material nonpublic information (column (f)); and
    (G) If the award was made within 14 calendar days after the filing
of a periodic report on Form 10-Q or Form 10-K, an issuer share
repurchase, or the filing or furnishing of a current Form 8-K that
discloses material nonpublic information, disclose for each instrument
reported in column (c), the market value securities underlying the
award the trading day after disclosure of material nonpublic
information (column (g)).
    Instruction 1 to Item 402(x)(2). 1. A registrant that is a smaller
reporting company may limit the disclosures in the table to its PEO,
the two most highly compensated executive officers other than the PEO
who were serving as executive officers at the end of the last completed
fiscal year, and up to two additional individuals who would have been
the most highly compensated but for the fact that the individual was
not serving as executive officers at the end of the last completed
fiscal year.
    2. Compute the market value of stock reported in column (f) by
multiplying the closing market price of the registrant's stock at the
end of the trading day before the disclosure of material nonpublic
information by the number of shares or units of stock or the amount of
equity incentive plan awards, respectively. Compute the market value of
stock reported in column (g) by multiplying the closing market price of
the registrant's stock at the end of the trading day after the
disclosure of material nonpublic information by the number of shares or
units of stock or the amount of equity incentive plan awards,
respectively.
    (3) Provide the disclosure required by this paragraph (x) in an
Interactive Data File as required by 17 CFR 232.405 (Rule 405 of
Regulation S-T) in accordance with the EDGAR Filer Manual.
* * * * *
0
3. Add Sec.  229.408 to read as follows:

Sec.  229.408   (Item 408) Insider trading arrangements and policies.

    (a)(1) Disclose whether, during the registrant's last fiscal
quarter (the registrant's fourth fiscal quarter in the case of an
annual report), the registrant has adopted or terminated any contract,
instruction or written plan for the purchase or sale of securities of
the registrant whether or not intended to satisfy the affirmative
defense conditions of Sec.  240.10b5-1(c) of this chapter (Rule 10b5-
1(c)), and provide a description of the material terms of the contract,
instruction or written plan, including:
    (i) The date of adoption or termination;
    (ii) The duration of the contract, instruction or written plan; and
    (iii) The aggregate amount of securities to be sold or purchased
pursuant to the contract, instruction or written plan.
    (2) Disclose whether, during the registrant's last fiscal quarter
(the registrant's fourth fiscal quarter in the case of an annual
report), any director or officer (as defined in Sec.  240.16a-1(f) of
this chapter) has adopted or terminated any contract, instruction or
written plan for the purchase or sale of securities of the registrant
whether or not intended to satisfy the affirmative defense conditions
of Rule 10b5-1(c) and provide a description of the material terms the
contract, instruction or written plan including:
    (i) The name and title of the director or officer;
    (ii) The date on which the director or officer adopted or
terminated the contract, instruction or written plan;
    (iii) The duration of the contract, instruction or written plan;
and
    (iv) The aggregate number of securities to be sold or purchased
pursuant to the contract, instruction or written plan.
    (3) Provide the disclosure required by this paragraph (a) in an
Interactive Data File as required by 17 CFR 232.405 (Rule 405 of
Regulation S-T) in accordance with the EDGAR Filer Manual.
    Note 1 to paragraph (a). As specified in 17 CFR 240.10b5-1, any
modification or amendment to a prior contract, instruction, or written
plan is deemed to be the termination of such prior contract,
instruction, or written plan, and the adoption of a new contract,
instruction, or written plan.
    (b)(1) Disclose whether the registrant has adopted insider trading
policies and procedures governing the purchase, sale, and other
dispositions of the registrant's securities by directors, officers and
employees that are reasonably designed to promote compliance with
insider trading laws, rules, and regulations, and any listing standards
applicable to the registrant. If the registrant has not adopted such
policies and procedures explain why it has not done so.
    (2) If the registrant has adopted insider trading policies and
procedures, disclose such policies and procedures.
    (3) Provide the disclosure required by this paragraph (b) in an
Interactive Data File as required by Rule 405 of Regulation S-T in
accordance with the EDGAR Filer Manual.

PART 232--REGULATION S-T -- GENERAL RULES AND REGULATIONS FOR
ELECTRONIC FILINGS

0
4. The general authority citation for part 232 continues to read as
follows:

    Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, 7201 et seq.; and 18 U.S.C. 1350,
unless otherwise noted.
* * * * *
0
5. Amend Sec.  232.405 by:
0
a. Removing the word ``and'' at the end of paragraph (b)(1)(i);
0
b. In paragraph (b)(1)(ii), removing ``Article 12 of Regulation S-X
(Sec. Sec.  210.12-01-210.12-29)'' and the period at the end of the
paragrpah and adding ``Sec. Sec.  210.12-01 through 210.12-29 of this
chapter (Article 12 of Regulation S-X)'' and ``; and'' in their places,
respectively;
0
c. Adding paragraph (b)(1)(iii);
0
d. Removing the word ``and'' at the end of paragraph (b)(3)(i)(A);
0
e. Adding the word ``and'' at the end of paragraph (b)(3)(i)(B); and
0
f. Adding paragraphs (b)(3)(i)(C) and (b)(4).
    The additions read as follows:

Sec.  232.405   Interactive Data File submissions.

* * * * *
    (b) * * *
    (1) * * *
    (iii) The disclosure set forth in paragraph (b)(4) of this section.
* * * * *

    (3) * * *
    (i) * * *
    (C) The disclosure set forth in paragraph (b)(4) of this section;
* * * * *
    (4) An Interactive Data File must consist of the disclosures
provided under 17 CFR part 229 (Regulation S-K) and related provisions
that are required to be tagged, including, as applicable:
    (i) Section 229.402(x)(2) of this chapter (Item 402(x)(b) of
Regulation S-K);
    (ii) Section 229.408(a)(3) of this chapter (Item 408(a)(3) of
Regulation S-K); and
    (iii) Section 229.408(b)(3) of this chapter (Item 408(b)(3) of
Regulation S-K).
* * * * *

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

0
6. The general authority citation for part 240 continues to read as
follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f,
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4,
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll, 78mm,
80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201 et
seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C.
1350; Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-
106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
0
7. Amend Sec.  240.10b5-1 by:
0
a. Removing the Preliminary Note; and
0
b. Revising paragraphs (a), (b), and (c)(1).
    The revisions read as follows:

Sec.  240.10b5-1   Trading ``on the basis of'' material nonpublic
information in insider trading cases.

    (a) Manipulative or deceptive devices. The ``manipulative or
deceptive devices or contrivances'' prohibited by Section 10(b) of the
Act (15 U.S.C. 78j) and Sec.  240.10b-5 (Rule 10b-5) thereunder
include, among other things, the purchase or sale of a security of any
issuer, on the basis of material nonpublic information about that
security or issuer, in breach of a duty of trust or confidence that is
owed directly, indirectly, or derivatively, to the issuer of that
security or the shareholders of that issuer, or to any other person who
is the source of the material nonpublic information.
    (b) Awareness of material nonpublic information. Subject to the
affirmative defenses in paragraph (c) of this section, a purchase or
sale of a security of an issuer is on the basis of material nonpublic
information for purposes of Section 10(b) and Rule 10b-5 if the person
making the purchase or sale was aware of the material nonpublic
information when the person made the purchase or sale. The law of
insider trading is otherwise defined by judicial opinions construing
Rule 10b-5 and this section does not modify the scope of insider
trading law in any other respect.
    (c) Affirmative defenses. (1)(i) Subject to paragraph (c)(1)(ii) of
this section, a person's purchase or sale is not ``on the basis of''
material nonpublic information if the person making the purchase or
sale demonstrates that:
    (A) Before becoming aware of the information, the person had:
    (1) Entered into a binding contract to purchase or sell the
security;
    (2) Instructed another person to purchase or sell the security for
the instructing person's account; or
    (3) Adopted a written plan for trading securities;
    (B) The contract, instruction, or plan described in paragraph
(c)(1)(i)(A) of this section:
    (1) Specified the amount of securities to be purchased or sold and
the price at which and the date on which the securities were to be
purchased or sold;
    (2) Included a written formula or algorithm, or computer program,
for determining the amount of securities to be purchased or sold and
the price at which and the date on which the securities were to be
purchased or sold; or
    (3) Did not permit the person to exercise any subsequent influence
over how, when, or whether to effect purchases or sales; provided, in
addition, that any other person who, pursuant to the contract,
instruction, or plan, did exercise such influence must not have been
aware of the material nonpublic information when doing so; and
    (C) The purchase or sale that occurred was pursuant to the
contract, instruction, or plan. A purchase or sale is not ``pursuant to
a contract, instruction, or plan'' if, among other things, the person
who entered into the contract, instruction, or plan altered or deviated
from the contract, instruction, or plan to purchase or sell securities
(whether by changing the amount, price, or timing of the purchase or
sale) or entered into or altered a corresponding or hedging transaction
or position with respect to those securities.
    (ii) Paragraph (c)(1)(i) of this section is applicable only when:
    (A) The contract, instruction, or plan to purchase or sell
securities was given or entered into and operated in good faith and not
as part of a plan or scheme to evade the prohibitions of this section;
    (B) If the person who entered into the contract, instruction, or
plan is a director or officer (as defined in Sec.  240.16a-1(f) (Rule
16a-1(f)) of the issuer, no purchases or sales occur until expiration
of a cooling-off period of at least 120 days after the date of the
adoption of the contract, instruction, or plan; if the person who
entered into the contract, instruction, or plan is the issuer of the
securities, no purchases or sales occur until expiration of a cooling-
off period of at least 30 days after the date of the adoption of the
contract, instruction, or plan;
    (C) If the person who entered into the contract, instruction, or
plan is a director or officer (as defined in Rule 16a-1(f) of the
issuer (or a subsidiary of such issuer) of the securities, such
director or officer on the date of adoption of the contract,
instruction, or plan has promptly furnished to the issuer a written
certification that they are not aware of any material nonpublic
information about the security or issuer or any subsidiary of the
issuer; and that they are adopting the contract, instruction, or plan
in good faith and not as part of a plan or scheme to evade the
prohibitions of this section;
    Instruction 1 to paragraph (c)(1)(ii)(C). Officers and directors
seeking to rely on the affirmative defense should retain a copy of the
certification provided to the issuer for a period of ten years after
providing such certification.
    (D) The person who entered into the contract, instruction, or plan,
has no outstanding (and does not subsequently enter into an additional)
contract, instruction, or plan for open market purchases or sales of
the same class of securities; and
    (E) If the contract, instruction, or plan is designed to effect the
purchase or sale of the total amount of securities as a single
transaction, the person who entered into the contract, instruction, or
plan has not during the prior 12-month period executed a contract,
instruction, or plan that effected the purchase or sale of the total
amount of securities in a single transaction.
    Note 1 to paragraph (c)(1). For the purpose of this section, any
modification or amendment to a prior contract, instruction, or written
plan is deemed to be the termination of such prior contract,
instruction, or written plan, and the adoption of a new contract,
instruction, or written plan.
* * * * *

0
8. Amend Sec.  240.14a-101 by revising paragraph (b) introductory text
of Item 7 to read as follows:

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

* * * * *
    Item 7. * * *
    (b) The information required by Items 401, 404(a) and (b), 405, 407
and 408(b) of Regulation S-K (Sec. Sec.  229.401, 229.404(a) and (b),
229.405, 229.407, and 229.408(b) of this chapter), other than the
information required by:
* * * * *
0
9. Amend Sec.  240.16a-3 by revising paragraphs (f)(1)(i)(A) and (g)(1)
to read as follows:

Sec.  240.16a-3  Reporting transactions and holdings.

* * * * *
    (f) * * *
    (1) * * *
    (i) * * *
    (A) Exercises and conversions of derivative securities exempt under
either Sec.  240.16b-3 or Sec.  240.16b-6(b), dispositions by bona fide
gifts exempt under Sec.  240.16b-5, and any transaction exempt under
Sec.  240.16b-3(d), (e), or (f), (these are required to be reported on
Form 4);
* * * * *
    (g)(1) A Form 4 must be filed to report: All transactions not
exempt from section 16(b) of the Act; all transactions exempt from
section 16(b) of the Act pursuant to Sec.  240.16b-3(d), (e), or (f);
and dispositions by bona fide gifts and all exercises and conversions
of derivative securities, regardless of whether exempt from section
16(b) of the Act. Form 4 must be filed before the end of the second
business day following the day on which the subject transaction has
been executed.
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
10. The general authority citation for part 249 continues to read as
follows:

    Authority:  15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C.
5461 et seq.; 18 U.S.C. 1350; Sec. 953(b) Pub. L. 111-203, 124 Stat.
1904; Sec. 102(a)(3) Pub. L. 112-106, 126 Stat. 309 (2012), Sec. 107
Pub. L. 112-106, 126 Stat. 313 (2012), Sec. 72001 Pub. L. 114-94,
129 Stat. 1312 (2015), and secs. 2 and 3 Pub. L. 116-222, 134 Stat.
1063 (2020), unless otherwise noted.
* * * * *
0
11. Amend Form 4 (referenced in Sec.  249.104) by:
0
a. Adding new General Instruction 10; and
0
b. Adding text and two check boxes at the top of the first page
immediately below the text ``Check this box if no longer subject to
Section 16. Form 4 or Form 5 obligations may continue. See Instruction
1(b).''
    The additions read as follows:

    Note:  The text of Form 4 does not, and this amendment will not,
appear in the Code of Federal Regulations.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 4

* * * * *
General Instructions
* * * * *

Rule 10b5-1(c) and Non-Rule 10b5-1(c) Transaction Indication

    Indicate by check mark whether a transaction was made pursuant to a
contract, instruction or written plan for the purchase or sale of
equity securities of the issuer that satisfies the conditions of Rule
10b5-1(c) under the Exchange Act [Sec.  240.10b5-1(c) of this chapter].
Provide the date of adoption of the Rule 10b5-1(c) plan in the
``Explanation of Responses'' portion of the Form.
    If a transaction was made pursuant to a contract, instruction or
written plan for the purchase or sale of equity securities of the
issuer that did not satisfy the conditions of Rule 10b5-1(c), a
reporting person may elect to check the optional non-Rule 10b5-1(c) box
appearing on this Form.
* * * * *
    [squ] Check this box to indicate that a transaction was made
pursuant to Rule 10b5-1(c). See Instruction 10.
    [squ] A reporting person may elect to check this box to indicate
that a transaction was made pursuant to a contract, instruction or
written plan for the purchase or sale of equity securities of the
issuer that did not satisfy the conditions of Rule 10b5-1(c) under the
Exchange Act. See Instruction 10.
* * * * *
0
12. Amend Form 5 (referenced in Sec.  249.105) by:
0
a. Adding new General Instruction 10; and
0
b. Adding text and two check boxes at the top of the first page
immediately below the text ``Form 4 Transactions Reported''.
    The additions read as follows:

    Note:  The text of Form 5 does not, and this amendment will not,
appear in the Code of Federal Regulations.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 5

* * * * *
General Instructions
* * * * *

Rule 10b5-1(c) and Non-Rule 10b5-1(c) Transaction Indication

    Indicate by check mark whether a transaction was made pursuant to a
contract, instruction or written plan for the purchase or sale of
equity securities of the issuer that satisfies the conditions of Rule
10b5-1(c) under the Exchange Act [Sec.  240.10b5-1(c) of this chapter].
Provide the date of adoption of the Rule 10b5-1(c) plan in the
``Explanation of Responses'' portion of the Form.
    If a transaction was made pursuant to a contract, instruction or
written plan for the purchase or sale of equity securities of the
issuer that does not satisfy the conditions of Rule 10b5-1(c), a
reporting person may elect to check the optional non-Rule 10b5-1(c) box
appearing on this Form.
* * * * *
    [squ] Check this box to indicate that a transaction was made
pursuant to Rule 10b5-1(c). See Instruction 10.
    [squ] A reporting person may elect to check this box to indicate
that a transaction was made pursuant to a contract, instruction or
written plan for the purchase or sale of equity securities of the
issuer that did not satisfy the conditions of Rule 10b5-1(c) under the
Exchange Act. See Instruction 10.
* * * * *
0
13. Amend Form 20-F (referenced in Sec.  249.220f) by adding new Item
16J to read as follows:

    Note:  The text of Form 20-F does not, and this amendment will
not, appear in the Code of Federal Regulations.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 20-F

* * * * *

Item 16J. Insider trading policies

    (a) Disclose whether the registrant has adopted insider trading
policies and procedures governing the purchase, sale, and other
dispositions of the registrant's securities by directors, senior
management, and employees that are reasonably designed to promote
compliance with applicable insider trading laws, rules and regulations,
and listing standards. If the registrant has not adopted such policies
and

procedures, explain why it has not done so.
    (b) If the registrant has adopted insider trading policies and
procedures, disclose such policies and procedures.
    (c) Provide the disclosure required by Item 16J in an Interactive
Data File as required by Rule 405 of Regulation S-T (17 CFR 232.405) in
accordance with the EDGAR Filer Manual.
    Instruction to Item 16J: Item 16J applies only to annual reports,
and does not apply to registration statements, on Form 20-F.
* * * * *
0
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.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

* * * * *

Part II--Other Information

* * * * *

Item 5. Other Information.

* * * * *
    (c) Furnish the information required by Item 408(a) of Regulation
S-K (17 CFR 229.408(a)).
* * * * *
0
15. Amend Form 10-K (referenced in Sec.  249.310) by revising Item 10
in Part III 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.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

* * * * *

Part III

* * * * *

Item 10. Directors, Executive Officers and Corporate Governance.

    Furnish the information required by Items 401, 405, 406, 407(c)(3),