Companies Can Safeguard Pay Data, With Limits, SEC Staff Says

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By Phyllis Diamond

Companies may use safeguards in delivering certain information about executive pay packages electronically, the SEC staff said Nov. 6.

However, the safeguards can’t be so burdensome that recipients effectively are unable to access the required disclosures, the Securities and Exchange Commission Division of Corporation Finance said.

The division offered its views in a Compliance and Disclosure Interpretation. CDIs represent the staff’s views only. They aren’t SEC rules and the commission hasn’t approved or disapproved the staff’s interpretation.

In a question and answer format, the staff responded to an inquiry about investor disclosures under 1933 Securities Act Rule 701(e). The regulation allows companies to use unregistered securities as part of a compensatory benefit plan. The plan must be delivered to investors, electronically or otherwise.The staff said it understands that companies using electronic delivery are concerned about the possible disclosure of sensitive corporation information, and that standard safeguards, such as log-in requirements, are permissible. However, the safeguards can’t be unduly burdensome, according to the staff.

To contact the reporter on this story: Phyllis Diamond in Washington at

To contact the editor responsible for this story: Seth Stern at

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