This is “Payments to Directors and Officers”, section 1.9 (from appendix 1) from the book Governing Corporations (v. 1.0). For details on it (including licensing), click here.

For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. To download a .zip file containing this book to use offline, simply click here.

Has this book helped you? Consider passing it on:
Creative Commons supports free culture from music to education. Their licenses helped make this book available to you. helps people like you help teachers fund their classroom projects, from art supplies to books to calculators.

12.9 Payments to Directors and Officers

Sarbanes-Oxley and subsequent SEC directives stipulate that

  • no public company may make a personal loan to a director or officer, and existing loans may not be materially modified or renewed;
  • the CEO and CFO of a public company that restates its financial statements as a result of misconduct will have to forfeit any bonuses, incentives, equity-based compensation, and profits on sales of company stock realized during the 12-month period following the first public issuance of the financial document or report containing the inaccurate financial statements;
  • the SEC has the authority to freeze any extraordinary payments by the company to any of its directors or officers while an investigation is ongoing;
  • the SEC can bar a person who has violated section 17(a) of the Securities Act of 1933 or section 10(b) of the Exchange Act from serving as a public company director or officer;
  • directors, officers, and 10% of stockholders of public companies are required to report changes in beneficial ownership within 2 business days after the relevant transaction;
  • directors and executive officers are prohibited from buying or selling equity securities during a blackout period;
  • nonmanagement directors are required to meet in regularly scheduled executive sessions without management present.