This new memo from Simpson Thacher includes suggested questions to add to the company's standard D&O Questionnaire that are designed to elicit the information that will be required from directors and director nominees to satisfy the level of diligence required under Nasdaq's new golden leash disclosure rule. As previously reported, the rule includes a "safe harbor" such that companies won't be deemed deficient with the new disclosure requirement if they have undertaken reasonable efforts - e.g., via appropriate inquiry in the D&O questionnaire - to identify all covered compensation agreements and arrangements. The memo notes:
The following questions would elicit the required information:
• If you are a director or director nominee, are there any agreements, arrangements or understandings between you and any person or entity (other than the company) relating to compensation or other payment (including non-cash payment) in connection with your candidacy or service as a director?
• If yes, please describe below all material terms of the agreement, arrangement or understanding and name the other person(s) that are parties to this agreement, arrangement or understanding.
The memo also suggests companies take this opportunity to review the entirety of their D&O questionnaires to ensure that they elicit all of the SEC-required third-party compensation information.
See our additional recent reports on this rule here and here.