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Memorandum RE: Pay v. Performance Disclosure Rules

Item 402(v) of Regulation S-K

On August 25, 2022, the Securities and Exchange Commission (SEC) adopted Item 402(v) of Regulation S-K, requiring companies to provide certain “pay versus performance” disclosures regarding the relationship between executive compensation actually paid and the company’s financial performance in any proxy statement or information statement for which Item 402 executive compensation disclosure is required. 

To Which Companies Does the Pay v. Performance Rule Apply?

With the exception of emerging growth companies (EGCs), foreign private issuers, or registered investment companies, all issuers must provide the information required by Item 402(v). Smaller reporting companies (SRCs) that have ceased to be EGCs will be permitted to provide scaled disclosures.

What Must Issuers Subject to the Pay v. Performance Rule Provide?

Issuers must provide a Pay v. Performance Table in the applicable formats set forth below. For registrants other than SRCs, the table must disclose specified executive compensation and financial performance measures for the registrant’s five most recently completed fiscal years; SRCs, instead, will provide information for the three most recently completed fiscal years.

Issuers Other than SRCs

Year Summary Compensation Table Total for Principal Executive Officer (PEO) Compensation Actually Paid to PEO Average Summary Compensation Table Total for Non-PEO Named Executive Officers (NEOs) Average Compensation Actually Paid to Non-PEO NEOs Value of Initial Fixed $100 Investment Based On: Net Income [Company-Selected Measure](3)
Total Shareholder Return (TSR)(1) Peer Group Total Shareholder Return(2)
(a) (b) (c) (d) (e) (f) (g) (h) (i)


(1) Calculated using the same method as required under Item 201(e) of Regulation S-K for the registrant’s stock performance graph: divide (i) the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the registrant’s share price at the end and the beginning of the measurement period, by the share price at the beginning of the measurement period.

(2) Registrants may use either the same peer group used for purposes of Item 201(e) of Regulation S-K, or a peer group used in the registrant’s Compensation Discussion and Analysis for purposes of disclosing a registrant’s compensation benchmarking practices, weighted as described in Item 402(v).

(3) Registrants may use either the same peer group used for purposes of Item 201(e) of Regulation S-K, or a peer group used in the registrant’s Compensation Discussion and Analysis for purposes of disclosing a registrant’s compensation benchmarking practices, weighted as described in Item 402(v).



Year Summary Compensation Table Total for PEO Compensation Actually Paid to PEO Average Summary Compensation Table Total for Non-PEO NEOs Average Compensation Actually Paid to Non-PEO NEOs Value of Initial Fixed $100 Investment Based On TSR(1) Net Income
(a) (b) (c) (d) (e) (f) (g)

(1) Calculated using the same method as required under Item 201(e) of Regulation S-K for the registrant’s stock performance graph: divide (i) the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the registrant’s share price at the end and the beginning of the measurement period, by the share price at the beginning of the measurement period.

Further Requirements: Per the SEC’s Small Entity Compliance Guide, in addition to the Pay v. Performance Tables, issuers must provide the following:

Footnotes to the table. Under the amendments, registrants are required to disclose specified information in footnotes to the table, including the name of each PEO and each non-PEO NEO included in the average compensation amount and amounts deducted or added to calculate executive compensation actually paid.

Relationship disclosure. Item 402(v) also requires a registrant to provide a clear description of the relationships between (1) each of the financial performance measures included in the table and (2) the executive compensation actually paid to its PEO and, on average, to its other NEOs over the registrant’s five most recently completed fiscal years (or three most recently completed fiscal years for SRCs). Registrants other than SRCs are required to also include a description of the relationship between the registrant’s TSR and its peer group TSR. Registrants may present the descriptions of these relationships by means of graphical or narrative disclosures or a combination of both.

Tabular List. Registrants other than SRCs are also required to provide a list (“Tabular List”) of three to seven financial performance measures that the registrant determines are its most important measures (using the same approach as taken for the Company-Selected Measure). Registrants are permitted, but not required, to include non-financial measures in the Tabular List if they considered such measures to be among their three to seven “most important” measures.

Inline XBRL. All registrants are required to use Inline XBRL to tag their pay versus performance disclosure in the relevant proxy or information statement, subject to a transition period for SRCs described below. Registrants will be required to separately tag each value in the Pay v. Performance Table, block-text tag the footnote and relationship disclosures and, for non-SRCs, the Tabular List, and tag specific data within the footnote disclosures.

Where Must the Pay v. Performance Table be Located?

Item 402(v) affords reporting companies flexibility in determining where in the proxy or information statement to provide the Pay v. Performance Table, as the SEC believed that mandating disclosure in the Compensation Discussion & Analysis could cause confusion as it might suggest that the company considered the pay v. performance relationship in its compensation decisions, which may or may not be the case.  The information required by Item 402(v) will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, including Part III of Form 10-K, except to the extent that the company specifically incorporates it by reference.

What are the Compliance Dates for the Pay v. Performance Rule?

Registrants subject to Item 402(v) must begin to comply with these disclosure requirements in proxy and information statements that are required to include Item 402 of Regulation S-K disclosure for any annual meeting of shareholders for fiscal years ending on or after December 16, 2022. The rule outlines phase-in periods as set forth in the chart below:

Proxy or Information Statement Number of Years for which Disclosure Must Be Provided Inline XBRL Tagging Required?
Registrants (other than SRCs)
First filing providing disclosure Three years Yes
Second filing providing disclosure Four years Yes
Third filing providing disclosure Five Years Yes
First filing providing disclosure Two years No
Second filing providing disclosure Three years No
Third filing providing disclosure Three years Yes

For companies newly subject the Exchange Act’s reporting requirements, information for fiscal years prior to the last completed fiscal year will not be required.

For further information, please reference final rule here.

Client Alert: New York Adopts Revised Regulations for Individuals of Registered Investment Advisers


In an effort to modernize its registration function, to better conform to the federal securities registration regime, to cure industry confusion as to certain registration requirements and to better track exam requirement compliance of thousands of investment adviser representatives (“IARs”) providing investment advice to New Yorkers, the New York Investor Protection Bureau of the Department of Law (“Department”) has proposed revisions to its current regulations.

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2020 Income Tax Rates and Deductions

Sichenzia Ross Ference has prepared a tax chart showing all proposed tax changes under Biden vs. current under Trump.

It is a downloadable PDF titled “2020 Income Tax Rates and Deductions” that you can access by clicking the link below.

Click here for 2020 income tax rates and deductions


This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on as, specific tax, legal or accounting advice. Each individual’s situation is unique and may require customized advice.  We recommend that you consult your own tax and accounting advisors before engaging in any transaction.  Please contact Robert M. Birnbaum, Esq., or Carolyn M. Glynn, Esq. if you are interested in learning more about this or other estate planning topics.

60 Days And Counting: “Regulation Best Interest” Is Nearly Here. Are Independent Broker-Dealers Ready? What They Need to Know and Do

On June 5, 2019, the United States Securities and Exchange Commission (“Commission”) adopted Rule 15l-1 (“Regulation Best Interest”) under the Securities Exchange Act of 1934 (“Exchange Act”), which has a compliance date of June 30, 2020.[1]  Regulation Best Interest became effective September 10, 2019.  Notwithstanding the host of issues arising from the global pandemic, an economic recession and significant market volatility across essentially every sector, the Commission has made clear that the deadline for compliance with Regulation Best Interest and the related Form CRS requirements will not be delayed or extended.

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SRF CLIENT ALERT: Major Changes for Your IRA Account

Congress has made major changes for IRA accounts effective January 1, 2020:

The End of the Stretch IRA

Before 2020, anyone who inherited an IRA account was able to delay taking distributions from it over the course of his or her lifetime.  This frequently enabled the IRA beneficiary to stretch out the mandatory withdrawals over many decades, meanwhile allowing the IRA account to build up on a tax-deferred basis.  Beginning in 2020, with certain exceptions, anyone who inherits an IRA will have to take all of it out within 10 years.  The timing of the withdrawals during the 10 years is up to the beneficiary, but by the end of 10 years the entire account has to be taken down and all of the deferred income taxes have to be paid.

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Time to Make a Personal Estate Plan for Your (Financial) Exit or IPO

Your years of hard work have finally come to fruition.  Your company is going to go public or your business is going to be sold and what was once a dream is now about to become a reality.  This is the time when many entrepreneurs make million-dollar mistakes and forget about their partner Uncle Sam.  He has been waiting patiently in the wings for you to get rich; the richer you get, the happier he is.

The United States does not have a wealth tax yet, and it may never have one unless Elizabeth Warren is elected President.  However, it does have a death tax and so do a number of states, including New York; the less you plan the higher the death tax will be.  Whether your company will be going public or will be sold privately, you will be in a position to potentially save millions in estate taxes by putting a solid estate plan in place to protect your family.

Here’s the bad news: right now, the federal government has a death tax that will take 40% of everything you own over $11,400,000.  The amount exempt from tax is scheduled to be cut in half in a few years and possibly sooner, depending on the 2020 election.  Many States take a bite as well; for example if you live in New York, the State government has a death tax with rates that could take up to 16% of your assets.

But there’s good news: your company going public or selling your business presents you with an opportunity to potentially save millions in taxes.  It also enables you to structure a plan that will benefit your family and provide for their future well-being for many decades to come.  For more information and guidance on how this can be accomplished, please get in touch with Robert Birnbaum at or Jodi Zimmerman at of our Trusts and Estates department. You can also call our office at (212) 930-9700 to speak with our attorneys.

Client Alert: U.S. Senate and House of Representatives Approve 2018 Farm Bill

The long-awaited resurgence of the Agriculture Improvement Act of 2018, colloquially referred to as the 2018 Farm Bill, became more promising yesterday as its latest iteration received overwhelming bipartisan approval as it decidedly passed through the Senate on Tuesday, by a vote of 87-to-13, and easily passed through the House of Representatives, by a vote of 369-to-47. Now, the reality of the 2018 Farm Bill awaits the hand of President Donald Trump, who is expected to sign it into law before the end of the month.

Most notable, the 2018 Farm Bill is set to legalize hemp, a plant that’s nearly identical to marijuana and is a key source of the highly popular health and wellness ingredient cannabinoid, or CBD. If signed into law, the 803-page Bill would be the most significant change to the Controlled Substances Act (the “CSA”) since 1971, which is illustrative of the federal government’s recognition that outdated federal regulations do not sufficiently distinguish between hemp, including CBD derived from hemp, and CBD derived from marijuana.

In contrast to its predecessor, the voluminous 2018 Farm Bill expressly and unambiguously provides that the definition of “marihuana” under the CSA would be amended to exclude “hemp”, which, in turn, is defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Succinctly, if signed into law, the 2018 Farm Bill would be the first piece of federal legislation that explicitly carves out certain permutations of CBD containing tetrahydrocannabinol (“THC”), the active ingredient that causes the psychoactive effect of marijuana, from the CSA.

Against this backdrop, financial institutions that have been reluctant to establish relationships with hemp-related business because of the inclusion of “hemp” in the CSA’s definition of “marihuana” and the February 14, 2014 guidance from the Department of the Treasury Financial Crimes Enforcement Network, may now turn a new leaf and embrace the estimated $1 billion industry.

Relatedly, and in furtherance of the federal government’s progressive initiative toward the proliferation of the rapidly increasing hemp market, the 2018 Farm Bill also places far-reaching limitations on the States’ abilities to prevent the transport of hemp across interstate commerce. Specifically, the 2018 Farm Bill states, in relevant part, that “No State or Indian Tribe shall prohibit the transportation or shipment of hemp or hemp products,” so long as such hemp or hemp products are produced in accordance with discrete guidelines set forth elsewhere in the 2018 Farm Bill.

Notwithstanding, this monumental shift in cannabis reform should not be misconstrued as a blanket legalization of hemp at the state level. Conversely, the 2018 Farm Bill provides a roadmap for states and Indian tribes to become the “primary regulators” of hemp production by submitting “a plan under which the State or Indian tribe monitors and regulates” the production of hemp within its borders. In this regard, those interested in getting involved in the hemp industry, in any capacity, are cautioned to review the applicable state law, which may carry more stringent restrictions than the 2018 Farm Bill, as well as any other pertinent federal authority.

Finally, it is worth noting that nothing in the 2018 Farm Bill implicates the status quo of marijuana or CBD derived from marijuana, both of which remain illegal under federal law. And while the legal landscape remains somewhat hazy, bipartisan agreement of the 2018 Farm Bill marks a long-overdue, massive step forward for the U.S. hemp industry.

About the authors

S. Ashley Jaber
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    Robert Volynsky
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