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Perk Disclosures: Reminders for Executives and Directors

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Jun 10, 2017

On June 10, 2017, the Harvard Law School Forum on Corporate Governance and Financial Regulation published on article on the settlement MDC Partners’ made with the SEC related to two sets of federal securities laws violations. In addition to the compensation disclosure failures and the absence of appropriate internal controls, the SEC found that MDC violated the disclosure requirements for non-GAAP measures.

The article notes that there are important lessons for companies and their directors and officers from this SEC enforcement, including:

  • Recognize Auditor’s Responsibilities Relating to Executive Compensation Disclosure under AS 18: Executive compensation is not a matter for internal audit alone. Auditing Standard No. 18 requires auditors to perform specific procedures to obtain an understanding of the company’s financial relationships and transactions with its executive officers, including with respect to compensation.
  • Carefully Prepare Responses to D&O Questionnaires
  • The Determination of a “Perk” May Require Analysis of the Facts and Circumstances
  • Remember that the CEO and CFO Certifications in Form 10-K Also Cover the Executive Compensation Disclosures in the Proxy Statement
  • Maintain Internal Control Procedures and Compliance Relating to Compensation and Expenses

Review the article on the Harvard Law School Forum's website.

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