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U.S. emerging trends in Form 8-K filings disclosing COVID-19-driven compensation changes

Companies filed a flurry of Form 8-K filings last week announcing voluntary executive officer compensation reductions driven by the COVID-19 pandemic.  While some companies disclosed the compensation changes under Item 7.01 or 8.01 on Form 8-K and others simply issued a press release, we saw an uptick in the number of companies making the disclosure under Item 5.02(e) of Form 8-K, which is triggered when a company enters into, adopts or materially amends a material compensatory plan or arrangement with the principal executive officer, principal financial officer or named executive officer.

Among companies making the disclosure under Item 5.02(e) of Form 8-K (Ford , Nordstrom , Lands’ End and Briggs & Stratton, among others), the executives generally reduced their compensation by at least 20% (and in some cases, 50% or 100%), seemingly taking the position that salary decreases of 20% or more were generally viewed as material amendments to the executives’ compensation arrangement (in parallel to the view that salary increases of 20% or more would generally would be viewed as material), although it is difficult to predict how long the reductions will continue and the true impact on the executives’ overall compensation.

Companies relying on Item 7.01 or 8.01 or a stand-alone press release likely were comfortable that based on their specific facts and circumstances, either that the decrease was not material to the executives’ compensation arrangements or, in the case where employment agreements were in place, perhaps by analogy to SEC CDI 117.13, that

U.S. TriBar Committee opines on validity of electronic signatures in new comment; SEC relief on signatures on filings during COVID-19

TriBar Committee.  Last week the TriBar Opinion Committee issued a new Comment concerning the use of electronic signatures and third-party opinion letters, in response to COVID-19 and its impact on the giving of opinions on the execution of agreements signed electronically.  Although virtual closings have been the norm for some time, the Committee observed that COVID-19 has increased focus on giving opinions on the execution of agreements signed electronically. The Comment explains the legal basis for the conclusion underlying those opinions that the electronic signatures on those agreements have the same legal effect as manual signatures, focusing on the UETA and E-SIGN.

For more information on e-signing, see BCLP’s client alert on Executing U.S. Contracts While Working from Home.

SEC Relief.  On the same day, and in response to COVID -19, the SEC staff issued a statement, that while compliance with Rule 302 of Regulation S-T is still expected, they will not recommend enforcement action if:

  • the signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic filing and provides such document, as promptly as reasonably practicable, to the filer for retention in the ordinary course pursuant to Rule 302(b);
  • such document indicates the date and time when the signature was executed; and
  • the filer establishes and maintains policies and procedures governing this process.

As one example, the statement notes that if a signatory is teleworking,

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