Securities Subsection LuncheonBusiness Law Section – Colorado Bar Association

February 16, 2006

EXECUTIVE COMPENSATION DISCLOSURE

Deborah J. FriedmanDavis Graham & Stubbs LLP

Introduction

SEC Release, January 27, 2006

• Interpretive guidance on perquisites

• Executive compensation disclosure changes

• Form 8-K changes

Interpretive Guidance - Perquisites

• Applicable to current disclosure• Is A Perk, if it confers a “direct or indirect benefit

that has a personal aspect”• Is Not A Perk, if it is “integrally and directly

related” to performance of executive’s duties• Company’s determination that an item is

“ordinary” or “necessary” business expense, or for benefit or convenience of company, is irrelevant

Executive Compensation Disclosure Changes

Proposed to be effective for:

• Form 10-Ks filed for fiscal years ending 60 days or more after final rules published

• Proxy statements filed 90 days or more after publication

• Registration statements becoming effective 120 days or more after publication

Compensation Discussion and Analysis (CD&A)

• Focus on narrative discussion of material factors and principles underlying executive compensation policies and decisions

• Required disclosure: Compensation objectives Description and purpose of each element Conventions for determining amount of each element

• “Filed” not “furnished”• Replaces current compensation committee report and

performance graph

Summary Compensation Table

• Revise existing table• New columns:

Total Compensation Stock Awards Option Awards Non-Stock Incentive Plan Compensation All Other Compensation – includes perquisites

with an aggregate value of $10,000 or more

Supplemental Tables

2 new tables:

• Grants of Performance-Based Awards

• Grants of All Other Equity Awards

Equity Compensation Tables

2 new tables replace current table:

• Outstanding Equity Awards at FiscalYear-End

• Option Exercises and Stock Vested

Post-Employment Compensation

2 new tables replace Pension Plan Table:• Retirement Plan Potential Annual Payments

and Benefits• Nonqualified Defined Contribution and Other

Deferred Compensation

Expanded narrative :• Termination and change-in-control agreements

Non-Employee Director Compensation Table

• Similar to revised Summary Compensation Table• Columns:

Total Compensation Cash Fees Stock and Option Awards Non-stock Incentive Plan Compensation All Other Compensation

• No supplemental tables, but footnote re equity awards at year-end

Related Person Disclosures

• Consolidates related person disclosure

• Disclosure based on whether person has direct or indirect material interest in transaction

• $120,000 threshold for disclosure (formerly $60,000)

• Describe material features of policies and procedures for review, approval or ratification of reportable related person transactions

Director Independence and Corporate Governance

• Narrative explanation of independence status of directors under company’s policies

• Disclosure about compensation committee similar to that required for audit and nominating committees

Form 8-K

Current Rules:• Item 1.01 – disclose within 4 business days

entry into a material definitive contract (S-K Item 601(b)(10)) outside ordinary course of business

• Item 5.02 – disclose within 4 business days appointment or departure of directors or specified officers

Form 8-K

New Rules:• Effectiveness – triggering events 60 days or more after

final rules published• Item 1.01 – Employment compensation arrangements

excluded• Item 5.02 – Proposed new Item 5.02(e) would include:

information regarding retirement, resignation, or termination of NEO, including brief description of any material plan, contract or arrangement for PEO, PFO, and NEOs, brief description of any material new compensatory plan, contract, arrangement, grant or award