Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comAuthor: Scarinci Hollenbeck, LLC|March 12, 2019
The Securities and Exchange Commission’s (SEC) Division of Corporation Finance recently published Compliance and Disclosure Interpretations (C&DIs) regarding the disclosure of self-identified specific diversity characteristics of board members and board nominees. With the approaching proxy season, companies should consider the SEC’s latest guidance when drafting their disclosures of the qualifications of board nominees and selection of board members.
Items 401 and 407 of Regulation S-K require companies to describe (1) the qualifications and skills of individual directors and nominees, and (2) whether diversity is a factor in the selection of board candidates.
The SEC’s latest Regulation S-K guidance, C&DIs 116.11 and 133.13, address circumstances where a director or board nominee self-identifies specific diversity characteristics, such as race, gender, ethnicity, religion, nationality, disability, sexual orientation or cultural background. The specific issue for filers is: “What disclosure of self-identified diversity characteristics is required under Item 401 and, with respect to nominees, under Item 407?”
The full response from the Division of Corporation Finance, which is identical for both C&DI 116.11 and C&DI 133.13, is:
Item 401(e) requires a brief discussion of the specific experience, qualifications, attributes, or skills that led to the conclusion that a person should serve as a director. Item 407(c)(2)(vi) requires a description of how a board implements any policies it follows with regard to the consideration of diversity in identifying director nominees. To the extent a board or nominating committee in determining the specific experience, qualifications, attributes, or skills of an individual for board membership has considered the self-identified diversity characteristics referred to above (e.g., race, gender, ethnicity, religion, nationality, disability, sexual orientation, or cultural background) of an individual who has consented to the company’s disclosure of those characteristics, we would expect that the company’s discussion required by Item 401 would include, but not necessarily be limited to, identifying those characteristics and how they were considered. Similarly, in these circumstances, we would expect any description of diversity policies followed by the company under Item 407 would include a discussion of how the company considers the self-identified diversity attributes of nominees as well as any other qualifications its diversity policy takes into account, such as diverse work experiences, military service, or socio-economic or demographic characteristics.
If you have any questions or if you would like to discuss the matter further, please contact me, Paul Lieberman, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
The Firm
201-896-4100 info@sh-law.comThe Securities and Exchange Commission’s (SEC) Division of Corporation Finance recently published Compliance and Disclosure Interpretations (C&DIs) regarding the disclosure of self-identified specific diversity characteristics of board members and board nominees. With the approaching proxy season, companies should consider the SEC’s latest guidance when drafting their disclosures of the qualifications of board nominees and selection of board members.
Items 401 and 407 of Regulation S-K require companies to describe (1) the qualifications and skills of individual directors and nominees, and (2) whether diversity is a factor in the selection of board candidates.
The SEC’s latest Regulation S-K guidance, C&DIs 116.11 and 133.13, address circumstances where a director or board nominee self-identifies specific diversity characteristics, such as race, gender, ethnicity, religion, nationality, disability, sexual orientation or cultural background. The specific issue for filers is: “What disclosure of self-identified diversity characteristics is required under Item 401 and, with respect to nominees, under Item 407?”
The full response from the Division of Corporation Finance, which is identical for both C&DI 116.11 and C&DI 133.13, is:
Item 401(e) requires a brief discussion of the specific experience, qualifications, attributes, or skills that led to the conclusion that a person should serve as a director. Item 407(c)(2)(vi) requires a description of how a board implements any policies it follows with regard to the consideration of diversity in identifying director nominees. To the extent a board or nominating committee in determining the specific experience, qualifications, attributes, or skills of an individual for board membership has considered the self-identified diversity characteristics referred to above (e.g., race, gender, ethnicity, religion, nationality, disability, sexual orientation, or cultural background) of an individual who has consented to the company’s disclosure of those characteristics, we would expect that the company’s discussion required by Item 401 would include, but not necessarily be limited to, identifying those characteristics and how they were considered. Similarly, in these circumstances, we would expect any description of diversity policies followed by the company under Item 407 would include a discussion of how the company considers the self-identified diversity attributes of nominees as well as any other qualifications its diversity policy takes into account, such as diverse work experiences, military service, or socio-economic or demographic characteristics.
If you have any questions or if you would like to discuss the matter further, please contact me, Paul Lieberman, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
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