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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The Securities and Exchange Commission (SEC) has adopted changes to the rules requiring disclosure of executive and director compensation, related pension transactions, corporate governance matters, and security ownership of officers and directors. The rules require that most disclosures be provided in plain English, easily understandable to both shareholders and boards of directors to enable them to make better decisions about the appropriate amount to pay those running their companies.
"Investors will now be provided with one number for total annual compensation for each named executive officer," commented John W. White, Director of the SEC's Division of Corporation Finance. "The clarity and comparability of this one number will be complemented by the principles-based narrative disclosures in our new Compensation Discussion and Analysis section and by the requirement that these disclosures be made in plain English."
The rules refine the currently required tabular disclosure and combines it with improved narrative disclosure to result in a clearer and more complete disclosure of the compensation of the chief executive officer, chief financial officer, and the three other highest paid executive officers (the "named" executive officers), as well as the directors. Currently, the CEO and the other four most highly paid executive officers are the five "named" executive officers.
The Summary Compensation Table will be the principal disclosure vehicle for executive compensation, showing compensation for each named executive officer over the last three years. The Summary Compensation Table will be accompanied by narrative disclosure and a Grants of Plan-Based Awards Table that will help explain the compensation information presented in the table. The Summary Compensation Table will include, in addition to columns for salary and bonus:
A dollar value for all equity-based awards, shown in separate columns for stock and stock options, measured at grant date fair value;
A column reporting the amount of compensation under non-equity incentive plans;
A column reporting the annual change in the actuarial present value of accumulated pension benefits and above-market or preferential earnings on nonqualified deferred compensation, so that these amounts can be deducted from total compensation for purposes of determining the named executive officers;
A column showing the aggregate amount of all other compensation not reported in the other columns of the table, including perquisites. Perquisites will be included in the table unless the aggregate amount is less than $10,000, and interpretive guidance will be provided for determining what is a perquisite; and
A column reporting total compensation.
Other features of disclosure include a Compensation Discussion and Analysis and a new Compensation Committee Report. Disclosure regarding option grants, director compensation for the last fiscal year, and related pension transactions will also be required.
For more information on this and related topics, consult the CCH Pension Plan Guide.
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