32474 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Proposed Rules 

1 17 CFR 240.14a–101. 

2 15 U.S.C. 78a et seq. 

3Pub. L. 111–5, Title II, 110 Stat. (2009). 

4 12 U.S.C. 5221. 

5Section 111(e) of the EESA, as amended, 

states— 

(1) ANNUAL SHAREHOLDER APPROVAL OF 

EXECUTIVE COMPENSATION—Any proxy or 

consent or authorization for an annual or other 

meeting of the shareholders of any TARP recipient 

during the period in which any obligation arising 

from financial assistance provided under the TARP 

remains outstanding shall permit a separate 

shareholder vote to approve the compensation of 

executives, as disclosed pursuant to the 

compensation disclosure rules of the Commission 

(which disclosure shall include the compensation 

discussion and analysis, the compensation tables, 

and any related material). 

(2) NONBINDING VOTE—A shareholder vote 

described in paragraph (1) shall not be binding on 

the board of directors of a TARP recipient, and may 

not be construed as overruling a decision by such 

board, nor to create or imply any additional 

fiduciary duty by such board, nor shall such vote 

be construed to restrict or limit the ability of 

shareholders to make proposals for inclusion in 

proxy materials related to executive compensation. 

(3) DEADLINE FOR RULEMAKING—Not later 

than 1 year after the date of enactment of the 

American Recovery and Reinvestment Act of 2009, 

the Commission shall issue any final rules and 

regulations required by this subsection. 

6We do not believe this provision changes the 

Commission’s rules for a smaller reporting company 

that is a TARP recipient under the EESA with 

respect to the compensation discussion and 

analysis (‘‘CD&A’’) disclosure. Our compensation 

disclosure rules, as set forth in Item 402 of 

Regulation S–K [17 CFR 229.402], permit smaller 

reporting companies to provide scaled disclosure 

that does not include CD&A. 

7Section 111 of the EESA defines this period to 

not include any period during which the Federal 

Government ‘‘only holds warrants to purchase 

common stock of the TARP recipient.’’ See 12 

U.S.C. 5221(a)(5). 

8Section 111(e)(2) of the EESA [12 U.S.C. 

5221(e)(2)]. 

9Rule 14a–8 under the Exchange Act will 

continue to apply to shareholder proposals that 

relate to executive compensation. Rule 14a–8 

provides shareholders with an opportunity to place 

a proposal in a company’s proxy materials for a vote 

at an annual or special meeting of shareholders. 

Under this rule, a company generally is required to 

include the proposal unless the shareholder has not 

complied with the rule’s procedural requirements 

or the proposal falls within one of the rule’s 13 

substantive bases for exclusion. To date, the staff of 

Service Bulletin No. 57–005, dated August 

30, 2007; Pilatus Aircraft Ltd. Pilatus PC–6 

Service Bulletin No. 57–004, dated April 16, 

2007; and Chapter 57–00–02 of Pilatus 

Aircraft Ltd. Pilatus PC–6 Aircraft 

Maintenance Manual, dated November 30, 

2008 (referenced as revision 9 in EASA AD 

No.: 2007–0241R3), for related information. 

Issued in Kansas City, Missouri, on July 1, 

2009. 

Scott A. Horn, 

Acting Manager, Small Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. E9–16142 Filed 7–7–09; 8:45 am] 

BILLING CODE 4910–13–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR PART 240 

[Release No. 34–60218; File No. S7–12–09] 

RIN 3235–AK31 

Shareholder Approval of Executive 

Compensation of TARP Recipients 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Proposed rule. 

SUMMARY: We are proposing 

amendments to the proxy rules under 

the Securities Exchange Act of 1934 to 

set forth certain requirements for U.S. 

registrants subject to Section 111(e) of 

the Emergency Economic Stabilization 

Act of 2008. Section 111(e) of the 

Emergency Economic Stabilization Act 

of 2008 requires companies that have 

received financial assistance under the 

Troubled Asset Relief Program 

(‘‘TARP’’) to permit a separate 

shareholder advisory vote to approve 

the compensation of executives, as 

disclosed pursuant to the compensation 

disclosure rules of the Commission, 

during the period in which any 

obligation arising from financial 

assistance provided under the TARP 

remains outstanding. The proposed 

amendments are intended to help 

implement this requirement by 

specifying and clarifying it in the 

context of the federal proxy rules. 

DATES: Comments should be received on 

or before September 8, 2009. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/proposed.shtml); 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number S7–12–09 on the subject line; 

or 

• Use the Federal Rulemaking Portal 

(http://www.regulations.gov). Follow the 

instructions for submitting comments. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number S7–12–09. This file number 

should be included on the subject line 

if e-mail is used. To help us process and 

review your comments more efficiently, 

please use only one method. The 

Commission will post all comments on 

the Commission’s Internet Web site 

(http://www.sec.gov/rules/ 

proposed.shtml). Comments are also 

available for public inspection and 

copying in the Commission’s Public 

Reference Room, 100 F Street, NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. All comments received 

will be posted without change; we do 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. 

FOR FURTHER INFORMATION CONTACT: John 

Harrington, Attorney-Adviser, or N. 

Sean Harrison, Special Counsel, 

Division of Corporation Finance, at 

(202) 551–3430, or Division of 

Corporation Finance, at (202) 551–3430, 

U.S. Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–3628. 

SUPPLEMENTARY INFORMATION: We are 

proposing a new Rule 14a–20 and 

amendments to Schedule 14A1 under 

the Securities Exchange Act of 1934 

(‘‘Exchange Act’’).2

I. Background 

The American Recovery and 

Reinvestment Act of 2009 (‘‘ARRA’’) 

was enacted on February 17, 2009.3

Section 7001 of the ARRA amended the 

executive compensation and corporate 

governance provisions of Section 111 of 

the Emergency Economic Stabilization 

Act of 2008 (‘‘EESA’’).4 Section 111(e) of 

the EESA,5 as amended, requires any 

entity that has received or will receive 

financial assistance under the Troubled 

Asset Relief Program (‘‘TARP’’) to 

‘‘permit a separate shareholder vote to 

approve the compensation of 

executives, as disclosed pursuant to the 

compensation disclosure rules of the 

Commission (which disclosure shall 

include the compensation discussion 

and analysis, the compensation tables, 

and any related material).’’ 6 Companies 

that have received financial assistance 

under the TARP are required to provide 

this separate shareholder vote during 

the period in which any obligation 

arising from financial assistance 

provided under the TARP remains 

outstanding.7 The shareholder vote 

required by Section 111(e) of the EESA 

is not binding on the board of directors 

of a TARP recipient, and such vote will 

not be construed as overruling a board 

decision or as creating or implying any 

additional fiduciary duty by the board.8

The vote also will not be construed to 

restrict or limit the ability of 

shareholders to make proposals for 

inclusion in proxy materials related to 

executive compensation.9

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Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Proposed Rules 32475 

the Division of Corporation Finance has considered 

two requests in which TARP recipients requested 

the staff’s concurrence that, given the shareholder 

advisory vote provision in Section 111(e) of the 

EESA, the companies could rely on Rule 14a–8(i)(9) 

[17 CFR 240.14a–8(i)(9)] or Rule 14a–8(i)(10) [17 

CFR 240.14a–8(i)(10)] to exclude from their proxy 

materials shareholder proposals that requested 

policies of holding annual shareholder advisory 

votes on executive compensation. The staff of the 

Division of Corporation Finance declined to concur 

with either request. See Bank of America Corp. 

(Mar. 11, 2009); CoBiz Financial Inc. (Mar. 25, 

2009) (available at http://www.sec.gov/divisions/ 

corpfin/cf-noaction/2009_14a-8.shtml). 

10Section 111(a)(3) of the EESA defines TARP 

recipient as ‘‘any entity that has received or will 

receive financial assistance under the financial 

assistance provided under the TARP.’’ See 12 

U.S.C. 5221(a)(3). 

11Section 111(e)(3) of the EESA requires the 

Commission to issue any final rules required by 

Section 111(e) within one year after the enactment 

of the ARRA. See 12 U.S.C. 5221(e)(3). 

12The Commission agrees with the view 

previously expressed by the Division of Corporation 

Finance that a separate shareholder vote on 

executive compensation is required only with 

respect to an annual meeting of shareholders for 

which proxies will be solicited for the election of 

directors or a special meeting in lieu of such annual 

meeting. See Compliance and Disclosure 

Interpretations: American Recovery and 

Reinvestment Act of 2009 (Updated February 26, 

2009), Question 1, available at http://www.sec.gov/ 

divisions/corpfin/guidance/arrainterp.htm. 

Although Section 111(e)(1) of the EESA refers to an 

annual ‘‘or other meeting of the shareholders,’’ the 

subsection is titled ‘‘Annual Shareholder Approval 

of Executive Compensation.’’ Proposed Rule 14a–20 

is intended to result in TARP recipients conducting 

the required advisory vote annually in connection 

with the election of directors, in which case our 

rules call for disclosure of executive compensation. 

13See note 6 above. 

14We are not proposing to require registrants to 

use any specific language or form of resolution. 

However, as stated in Section 111(e)(1) of the EESA, 

the vote must be to approve ‘‘the compensation of 

executives, as disclosed pursuant to the 

compensation disclosure rules of the Commission 

(which disclosure shall include the compensation 

discussion and analysis, the compensation tables, 

and any related material).’’ We believe that a vote 

to approve a proposal on a different subject matter, 

such as a vote to approve only compensation 

policies and procedures, would not satisfy the 

requirements of Section 111(e)(1) of the EESA or 

proposed Rule 14a–20. 

Likewise, a shareholder proposal that asks the 

company to adopt a policy providing for periodic, 

non-binding shareholder votes on executive 

compensation in the future would not satisfy the 

requirement of Section 111(e) of the EESA or 

proposed Rule 14a–20. Section 111(e) requires a 

vote to approve the compensation of executives. A 

vote to request a voting policy that would apply at 

future meetings would not satisfy the EESA or 

proposed Rule 14a–20. 

15See Item 4 of Part II of Exchange Act Form 10– 

Q [17 CFR 249.308a] and Item 4 of Part I of 

Exchange Act Form 10–K [17 CFR 249.310]. 

16 17 CFR 249.308. 

17 In the Proxy Disclosure and Solicitation 

Enhancements Release, the Commission is 

proposing amendments that would require 

reporting companies to disclose on Form 8–K the 

results of a shareholder vote, and to file that 

information within four business days after the end 

of the meeting at which the vote was held. 18 17 CFR 240.14a–6(a). 

II. Discussion of the Proposed 

Amendments 

We are proposing new Rule 14a–20 

under the Exchange Act to help 

implement the requirement under 

Section 111(e)(1) of the EESA that 

‘‘TARP recipients’’ under Section 

111(a)(3) of the EESA 10 provide a 

separate shareholder vote to approve the 

compensation of the company’s 

executives.11 Under proposed Rule 14a– 

20, registrants that are TARP recipients 

would be required to provide this 

separate shareholder vote in proxies 

solicited during the period in which any 

obligation arising from financial 

assistance provided under the TARP 

remains outstanding. Proposed Rule 

14a–20 would clarify that the separate 

shareholder vote required by Section 

111(e)(1) of the EESA would only be 

required on a proxy solicited for an 

annual (or special meeting in lieu of the 

annual) meeting of security holders for 

which proxies will be solicited for the 

election of directors.12 We are proposing 

an instruction to new Rule 14a–20 to 

clarify that smaller reporting companies 

would not be required to provide a 

compensation discussion and analysis 

in order to comply with the 

requirements of Rule 14a–20.13

We are also proposing an amendment 

to Item 20 of Schedule 14A that would 

be applicable to registrants that are 

TARP recipients and are required to 

provide a separate shareholder vote on 

executive compensation pursuant to 

Section 111(e)(1) of the EESA and 

proposed Rule 14a–20. Pursuant to this 

amendment, such registrants would be 

required to disclose in the proxy 

statement that they are providing a 

separate shareholder vote on executive 

compensation pursuant to the 

requirements of the EESA, and to briefly 

explain the general effect of the vote, 

such as whether the vote is nonbinding.14 Under our current disclosure 

rules, a company is required to report 

the results of the vote in its periodic 

report for the period in which the vote 

is taken.15 This includes the results of 

the vote required under the EESA and 

proposed Rule 14a–20. We are 

proposing in a separate release also 

considered by the Commission today to 

accelerate the filing schedule for 

reporting results of shareholder votes 

generally by moving the requirement 

from Forms 10–Q and 10–K to Form 8– 

K.16 If that proposal is adopted, it would 

apply to reporting results of the vote 

required by Rule 14a–20.17

It is our intent that the proposed Rule 

14a-20 and the proposed amendments to 

Schedule 14A afford registrants that are 

TARP recipients adequate flexibility to 

meet their obligations under Section 

111(e) of the EESA. At the same time, 

we believe that the proposed 

amendments, by helping to implement 

the requirements of Section 111(e) of the 

EESA in our proxy rules, would provide 

clarity for registrants that are TARP 

recipients regarding how they must 

comply with their obligations under 

Section 111(e) of the EESA. We also 

believe that a discussion of the reason 

why the registrant is providing a 

separate shareholder vote on the 

compensation of executives and an 

explanation of the effect of that vote 

would provide investors with 

information that would help them to 

make informed voting decisions. 

Rule 14a–6 under the Exchange Act 

generally requires registrants to file 

proxy statements in preliminary form at 

least ten calendar days before definitive 

proxy materials are first sent to 

shareholders, unless the items included 

for a shareholder vote in the proxy 

statement are limited to specified 

matters.18 During the time before final 

proxy materials are filed, our staff has 

the opportunity to comment on the 

disclosures and registrants are able to 

incorporate the staff’s comments in their 

final proxy materials. The matters that 

do not require filing of preliminary 

materials include various items that 

regularly arise at annual meetings, such 

as the election of directors, ratification 

of the selection of auditors, approval or 

ratification of certain employee benefits 

plans, and shareholder proposals under 

Rule 14a–8. 

Absent an amendment to Rule 14a–6, 

a proxy statement that includes the vote 

on executive compensation required by 

Section 111(e) of EESA and proposed 

Rule 14a-20 must be filed in preliminary 

form. We are not proposing to amend 

Rule 14a–6 at this time to add the vote 

required for TARP recipients to the list 

of items that do not trigger a preliminary 

filing. In light of the early stage of the 

development of disclosures under these 

requirements and the special policy 

considerations relating to this 

shareholder vote for TARP recipients, 

we believe it is appropriate to provide 

our staff the opportunity to comment on 

the disclosure before final proxy 

materials are filed. However, as 

indicated below, we are requesting 

comment on this issue. 

Request for Comment 

We request and encourage any 

interested person to submit comments 

regarding the proposed amendments 

described above. In particular, we solicit 

comment on the following questions: 

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32476 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Proposed Rules 

19 44 U.S.C. 3501 et seq. 

20 44 U.S.C. 3507(d) and 5 CFR 1320.11. 

21Our staff made this estimate from publiclyavailable information about TARP recipients. The 

estimate is based on the number of TARP recipients 

that are subject to our proxy rules and that have not 

repaid their TARP obligations. 

22We estimate an hourly cost of $400 per hour 

for the service of outside professionals based on our 

consultations with several registrants and law firms 

and other persons who regularly assist registrants 

in preparing and filing proxy statements and related 

disclosures with the Commission. 

• Should we include more specific 

requirements regarding the manner in 

which registrants that are TARP 

recipients should present the 

shareholder vote on executive 

compensation? For example, should we 

designate the specific language to be 

used and/or require TARP recipients to 

frame the shareholder vote to approve 

executive compensation in the form of 

a resolution? 

• Should we require registrants that 

are TARP recipients to disclose the 

reasons why they are providing for a 

separate shareholder vote on executive 

compensation and an explanation of the 

effect of that vote, as proposed? 

• Should we require any additional 

disclosures about TARP recipients or 

the requirements of Section 111(e) of the 

EESA to be included with the vote to 

approve executive compensation? If so, 

what disclosures should we consider? 

• Should we require any additional 

disclosures to be included with a TARP 

recipient’s compensation discussion 

and analysis or other disclosures 

provided under Item 402 of Regulation 

S–K? 

• Should we clarify by instruction, as 

proposed, that smaller reporting 

companies that are TARP recipients are 

not required to include a compensation 

discussion and analysis in their proxy 

statements in order to comply with our 

proposed amendments? 

• Should language be added to 

proposed Rule 14a–20 to indicate 

explicitly that, as required by Section 

111(e) of the EESA, the separate 

shareholder vote on the compensation 

of executives would be a non-binding 

advisory vote, or is the statutory 

reference sufficient for this purpose? 

• Should we amend Rule 14a–6(a) 

under the Exchange Act so that 

registrants that are TARP recipients are 

not required to file a preliminary proxy 

statement as a consequence of providing 

a separate shareholder vote on executive 

compensation? 

III. Paperwork Reduction Act 

A. Background 

The proposed amendments contain 

‘‘collection of information’’ 

requirements within the meaning of the 

Paperwork Reduction Act of 1995 

(‘‘PRA’’).19 We are submitting the 

proposed amendments to the Office of 

Management and Budget (‘‘OMB’’) for 

review in accordance with the PRA.20

The title for the collection of 

information is: 

‘‘Schedule 14A’’ (OMB Control No. 

3235–0059). 

Schedule 14A was adopted under the 

Exchange Act and sets forth the 

disclosure requirements for proxy 

statements filed by U.S. issuers to help 

shareholders make informed voting 

decisions. The hours and costs 

associated with preparing, filing and 

sending the form constitute reporting 

and cost burdens imposed by each 

collection of information. An agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless it 

displays a currently valid OMB control 

number. Compliance with the proposed 

amendments by affected U.S. issuers 

would be mandatory. Responses to the 

information collections would not be 

kept confidential and there would be no 

mandatory retention period for the 

information disclosed. 

As discussed in more detail above, we 

are proposing a new Rule 14a–20 under 

the Exchange Act and an amendment to 

Item 20 of Schedule 14A. Rule 14a–20 

would help implement the requirement 

under Section 111(e)(1) of the EESA to 

provide a separate shareholder vote to 

approve the compensation of 

executives. Pursuant to the proposed 

amendment to Item 20 of Schedule 14A, 

registrants required to provide a 

separate shareholder vote pursuant to 

new Rule 14a–20 would be required to 

disclose the EESA requirement to 

provide such a vote and the general 

effect of the vote. 

B. Burden and Cost Estimates Related to 

the Proposed Amendments 

We believe that the proposed Rule 

14a–20 and amendments to Schedule 

14A will result in only a modest 

increase in the burden and cost of 

preparing and filing a Schedule 14A 

because they will not cause TARP 

recipients to collect or disclose any 

significant additional information. 

Section 111(e) of the EESA already 

increased the burdens and costs for 

registrants that are TARP recipients by 

requiring a separate shareholder vote on 

executive compensation and already 

applied during the 2009 proxy season. 

Our proposed amendments address the 

EESA requirement in the context of the 

federal proxy rules, thereby creating 

only an incremental increase in the 

burdens and costs for such registrants. 

We believe the proposed amendments 

will remove uncertainty while still 

providing registrants that are TARP 

recipients adequate flexibility to comply 

with Section 111(e) of the EESA. 

For purposes of this analysis, we 

estimate the burden of disclosing the 

general effect of the vote and otherwise 

ensuring conformity with the federal 

proxy rules when complying with 

Section 111(e)(1) of the EESA will 

increase by one hour per registrant that 

is a TARP recipient. We estimate there 

are approximately 275 registrants that 

are TARP recipients with outstanding 

obligations that would be subject to our 

proposed amendments.21 Therefore, the 

total annual PRA burden attributable to 

the proposed rules is 275 hours. For 

proxy statements, consistent with our 

customary assumptions, we estimate 

that 75% of the burden of preparation 

is carried by the company internally and 

that 25% of the burden is carried by 

outside professionals retained by the 

company to review corporate disclosure 

at an average cost of $400 per hour.22

The portion of the burden carried by 

outside professionals is reflected as a 

cost, while the portion of the burden 

carried by the company internally is 

reflected in hours. Based on the 

foregoing, we calculated the additional 

annual compliance burdens resulting 

from the proposed amendments at 206.5 

hours (this is 75% of the total 275 hours 

in increased burden carried by the 

company internally) and $27,500 (this is 

25% of the total increased hourly 

burden carried by outside professionals 

and reflected as a cost). The current 

total annual burden hours and cost of 

Schedule 14A approved by the OMB is 

555,683 hours and $63,709,987. Giving 

effect to the incremental increases in 

burden hours and costs as a result of the 

proposed amendments, the total annual 

burden hours and cost of Schedule 14A 

would be 555,889.5 hours and 

$63,737,487. 

C. Request for Comment 

Pursuant to 44 U.S.C. 3506(c)(2)(B), 

we request comment in order to: 

• Evaluate whether the proposed 

collections of information are necessary 

for the proper performance of the 

functions of the Commission, including 

whether the information will have 

practical utility; 

• Evaluate the accuracy of our 

estimate of the burden of the proposed 

collections of information; 

• Determine whether there are ways 

to enhance the quality, utility, and 

clarity of the information to be 

collected; 

• Evaluate whether there are ways to 

minimize the burden of the collections 

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Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Proposed Rules 32477 

23The cost-benefit analysis in this section 

addresses the costs and benefits of the proposed 

amendments. The analysis does not, however, 

address the costs and benefits of the requirement in 

Section 111(e)(1) of the EESA that TARP recipients 

conduct a separate shareholder vote on executive 

compensation. While the proposed amendments set 

forth the manner in which registrants that are TARP 

recipients would implement this requirement when 

complying with the federal proxy rules, such 

registrants are already subject to the provisions of 

Section 111(e)(1) of the EESA and thus we are only 

addressing the incremental costs and benefits of the 

proposed amendments. 24 5 U.S.C. 603. 

of information on those who respond, 

including through the use of automated 

collection techniques or other forms of 

information technology; and 

• Evaluate whether the proposed 

amendments will have any effects on 

any other collections of information not 

previously identified in this section. 

Any member of the public may direct 

to us any comments concerning the 

accuracy of these burden estimates and 

any suggestions for reducing the 

burdens. Persons who desire to submit 

comments on the collection of 

information requirements should direct 

their comments to the OMB, Attention: 

Desk Officer for the Securities and 

Exchange Commission, Office of 

Information and Regulatory Affairs, 

Washington, DC 20503, and send a copy 

of the comments to Elizabeth M. 

Murphy, Secretary, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090, with 

reference to File No. S7–12–09. 

Requests for materials submitted to the 

OMB by us with regard to these 

collections of information should be in 

writing, refer to File No. S7–12–09 and 

be submitted to the Securities and 

Exchange Commission, Office of 

Investor Education and Advocacy, 100 F 

Street, NE., Washington, DC 20549– 

0213. Because OMB is required to make 

a decision concerning the collections of 

information between 30 and 60 days 

after publication, your comments are 

best assured of having their full effect if 

OMB receives them within 30 days of 

publication. 

IV. Cost-Benefit Analysis 

We are sensitive to the costs and 

benefits of the proposed amendments. 

In this section, we examine the benefits 

and costs of our proposed amendments. 

We request that commenters provide 

views and supporting information as to 

the benefits and costs associated with 

the proposals. We seek estimates of 

these costs and benefits, as well as any 

costs and benefits not already 

identified.23

A. Benefits 

We are proposing amendments to the 

federal proxy rules to help implement 

the requirement in Section 111(e)(1) of 

the EESA that TARP recipients provide 

a separate shareholder vote to approve 

the compensation of executives. Under 

the proposed amendments, this separate 

shareholder vote would be required 

when registrants that are TARP 

recipients solicit proxies during the 

period in which any obligation arising 

from financial assistance provided 

under the TARP remains outstanding, 

and the solicitation relates to an annual 

meeting (or a special meeting in lieu of 

an annual meeting) for which proxies 

will be solicited for the election of 

directors. Companies required to 

provide such a separate shareholder 

vote would also be required to disclose 

in their proxy statements the EESA 

requirement to provide such a vote, and 

to briefly explain the general effect of 

the vote. 

We believe the proposed amendments 

will benefit registrants that are TARP 

recipients by clarifying how they must 

comply with the requirements of 

Section 111(e)(1) of the EESA in the 

context of the federal proxy rules. The 

proposed amendments eliminate 

uncertainty that may exist among TARP 

recipients and other market participants 

regarding what is necessary under the 

Commission’s proxy rules when 

conducting a shareholder vote required 

under Section 111(e) of the EESA. In 

addition to these benefits, we believe 

the proposed amendments allow TARP 

recipients adequate flexibility under the 

proxy rules to comply with the 

requirements of the EESA. By providing 

clarity while maintaining adequate 

flexibility, we believe the proposed 

amendments could reduce the amount 

of management time and legal expenses 

necessary to ensure that registrants that 

are TARP recipients comply with their 

obligations under both the EESA and 

the federal proxy rules. This would 

benefit TARP recipients and their 

shareholders. 

We believe the proposed amendments 

will benefit investors by resulting in 

clear disclosure about the requirements 

of Section 111(e)(1) of the EESA as 

applied to Exchange Act registrants. 

When a separate shareholder vote on the 

compensation of executives is required 

by the EESA, proposed Rule 14a–20 

would specify and clarify that 

requirement in the context of the federal 

proxy rules. By doing so, we believe 

Rule 14a–20 would promote better 

compliance with the requirements of 

Section 111(e)(1) of the EESA when 

registrants that are TARP recipients 

conduct solicitations subject to our 

proxy rules. The proposed amendments 

to Schedule 14A would require 

disclosure about the EESA requirement 

to provide a separate shareholder vote 

and the general effects of such a vote. 

Together, the proposed amendments are 

intended to provide useful, comparable 

and consistent information to assist an 

informed voting decision when 

registrants that are TARP recipients 

present to investors the advisory vote on 

executive compensation required 

pursuant to Section 111(e)(1) of the 

EESA. The specification and 

clarification of the requirement in our 

proposed rule would also help provide 

certainty about the nature of the TARP 

recipient’s responsibility to hold the 

advisory vote, making it easier for 

companies to comply. 

B. Costs 

We believe the proposed amendments 

would not add any significant costs to 

those already created by the 

requirements of Section 111(e)(1) of the 

EESA and our proxy rules. The 

proposed amendments are intended to 

help implement the existing substantive 

EESA requirement in the context of the 

federal proxy rules. While our proposed 

amendments to Schedule 14A would 

require certain disclosures not explicitly 

required by EESA, we believe any 

incremental costs imposed by our 

proposed amendments would be 

minimal. For purposes of the PRA, we 

estimate the total annual incremental 

cost of the amendments to be 275 hours. 

We request comment on the amount of 

any additional costs issuers may incur 

as a result of the proposed amendments. 

V. Small Business Regulatory 

Enforcement Fairness Act 

For purposes of the Small Business 

Regulatory Enforcement Fairness Act of 

1996, or ‘‘SBREFA,’’ 24 we solicit data to 

determine whether the proposals 

constitute a ‘‘major’’ rule. Under 

SBREFA, a rule is considered ‘‘major’’ 

where, if adopted, it results or is likely 

to result in: 

• An annual effect on the economy of 

$100 million or more (either in the form 

of an increase or a decrease); 

• A major increase in costs or prices 

for consumers or individual industries; 

or 

• Significant adverse effects on 

competition, investment or innovation. 

We request comment on the potential 

impact of the proposed amendments on 

the U.S. economy on an annual basis, 

any potential increase in costs or prices 

for consumers or individual industries, 

and any potential effect on competition, 

investment or innovation. Commenters 

are requested to provide empirical data 

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32478 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Proposed Rules 

25 15 U.S.C. 78w(a). 

26 15 U.S.C. 78c(f). 

27 17 CFR 240.0–10. 

28See 17 CFR 240.14a-2. 

and other factual support for their views 

if possible. 

VI. Consideration of Impact on the 

Economy, Burden on Competition and 

Promotion of Efficiency, Competition 

and Capital Formation 

Section 23(a)(2) of the Exchange 

Act 25 also requires us, when adopting 

rules under the Exchange Act, to 

consider the impact that any new rule 

would have on competition. Section 

23(a)(2) prohibits us from adopting any 

rule that would impose a burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. In 

addition, Section 3(f) 26 of the Exchange 

Act requires us, when engaging in 

rulemaking where we are required to 

consider or determine whether an action 

is necessary or appropriate in the public 

interest, to also consider whether the 

action will promote efficiency, 

competition, and capital formation. 

We believe the proposed amendments 

would benefit registrants that are TARP 

recipients and their shareholders by 

providing certainty regarding how 

registrants that are TARP recipients 

must comply with the EESA 

requirement to hold an advisory vote on 

executive compensation in the context 

of the federal proxy rules, while 

maintaining adequate flexibility to 

comply with this requirement. The 

certainty should promote efficiency. 

The proposed amendments also would 

help ensure that shareholders receive 

disclosure regarding the required vote 

and the nature of a registrant’s 

responsibilities to hold the vote under 

the EESA. As discussed in greater detail 

above, we believe these benefits would 

be achieved without imposing any 

significant additional burdens on 

registrants that are TARP recipients. We 

do not anticipate any effect on 

competition or capital formation. We do 

believe the rules will make compliance 

with EESA more efficient. 

We request comment on whether the 

proposed amendments, if adopted, 

would impose a burden on competition. 

We also request comment on whether 

the proposed amendments, if adopted, 

would promote efficiency, competition, 

and capital formation. Commenters are 

requested to provide empirical data and 

other factual support for their view to 

the extent possible. 

VII. Regulatory Flexibility Act 

Certification 

The Commission hereby certifies 

pursuant to 5 U.S.C. 605(b), that the 

amendments contained in this release, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities. Rule 0–10 

under the Exchange Act defines small 

entities for these purposes as those with 

total assets of $5 million or less on the 

last day of their most recent fiscal 

year.27 The proposed amendments 

would only impact TARP recipients 

with a class of securities registered 

pursuant to Section 12 of the Exchange 

Act and thus subject to the federal proxy 

rules.28 We believe no TARP recipients 

that are required to comply with our 

proxy rules are small entities. In 

addition, if any small entities become 

subject to our proposed amendments, 

we do not believe the proposed 

amendments would have a significant 

economic impact on them. Any small 

entity subject to our proposed 

amendments would already be subject 

to the requirements of Section 111(e)(1) 

of the EESA. Further, we do not believe 

the EESA requires ‘‘smaller reporting 

companies’’ to provide a compensation 

discussion and analysis. As discussed in 

greater detail above, we do not believe 

our proposed rules impose a significant 

additional cost. For these reasons, the 

proposed amendments should not have 

a significant economic impact on a 

substantial number of small entities. 

We solicit written comments 

regarding this certification. We request 

that commenters describe the nature of 

any impact on small entities and 

provide empirical data to support the 

extent of the impact. 

VIII. Statutory Authority and Text of 

the Proposed Amendments 

The amendments described in this 

release are being proposed under the 

authority set forth in Section 111(e) of 

the Emergency Economic Stabilization 

Act of 2008 (12 U.S.C. 5221(e)) and 

Sections 14(a) and 23(a) of the 

Securities Exchange Act of 1934 (15 

U.S.C. 78n(a) and 78w(a)). 

List of Subjects in 17 CFR Part 240 

Reporting and recordkeeping 

requirements, Securities. 

Text of the Proposed Amendments 

For the reasons set out in the 

preamble, the Commission proposes to 

amend title 17, chapter II, of the Code 

of Federal Regulations as follows: 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

1. The general authority citation for 

Part 240 is revised to read as follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 

78j–1, 78k, 78k–1, 78l, 78m, 78n, 78o, 78p, 

78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a– 

20, 80a–23, 80a–29, 80a–37, 80b–3, 80b–4, 

80b–11, and 7201 et seq., 18 U.S.C. 1350, and 

12 U.S.C. 5221(e)(3), unless otherwise noted. 

* * * * * 

2. Add § 240.14a–20 to read as 

follows: 

§ 240.14a–20 Shareholder Approval of 

Executive Compensation of TARP 

Recipients. 

If a solicitation is made by a registrant 

that is a TARP recipient, as defined in 

section 111(a)(3) of the Emergency 

Economic Stabilization Act of 2008 (12 

U.S.C. 5221(a)(3)), during the period in 

which any obligation arising from 

financial assistance provided under the 

TARP, as defined in section 3(8) of the 

Emergency Economic Stabilization Act 

of 2008 (12 U.S.C. 5202(8)), remains 

outstanding and the solicitation relates 

to an annual (or special meeting in lieu 

of the annual) meeting of security 

holders for which proxies will be 

solicited for the election of directors, as 

required pursuant to section 111(e)(1) of 

the Emergency Economic Stabilization 

Act of 2008 (12 U.S.C. 5221(e)(1)), the 

registrant shall provide a separate 

shareholder vote to approve the 

compensation of executives, as 

disclosed pursuant to Item 402 of 

Regulation S–K (§ 229.402 of this 

chapter), including the compensation 

discussion and analysis, the 

compensation tables, and any related 

material. 

Note to § 240.14a–20: TARP recipients that 

are smaller reporting companies entitled to 

provide scaled disclosure pursuant to Item 

402(l) of Regulation S–K are not required to 

include a compensation discussion and 

analysis in their proxy statements in order to 

comply with this section. In the case of these 

smaller reporting companies, the required 

vote must be to approve the compensation of 

executives as disclosed pursuant to Item 

402(m) through (r) of Regulation S–K. 

3. Amend § 240.14a–101 by adding a 

sentence at the end of Item 20 to read 

as follows: 

§ 240.14a–101 Schedule 14A. Information 

required in Proxy Statement. 

Schedule 14A Information 

* * * * * 

Item 20. Other proposed action. * * * 

Registrants required to provide a 

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Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Proposed Rules 32479 

separate shareholder vote pursuant to 

section 111(e)(1) of the Emergency 

Economic Stabilization Act of 2008 (12 

U.S.C. 5221(e)(1)) and § 240.14a–20 

shall disclose that they are providing 

such a vote as required pursuant to the 

Emergency Economic Stabilization Act 

of 2008, and briefly explain the general 

effect of the vote. 

* * * * * 

July 1, 2009. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–16037 Filed 7–7–09; 8:45 am] 

BILLING CODE P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 80, 85, 86, 94, 1027, 1033, 

1039, 1042, 1043, 1045, 1048, 1051, 

1054, 1060, 1065, and 1068 

[EPA–HQ–OAR–2007–0121; FRL–8927–6] 

RIN 2060–AO38 

Public Hearing for the Category 3 

Marine Rule 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Notice of public hearings. 

SUMMARY: The EPA is announcing a 

public hearing to be held for the 

proposed rule ‘‘Control of Emissions 

from New Marine Compression-Ignition 

Engines at or Above 30 Liters per 

Cylinder’’ (the proposed rule is 

hereinafter referred to as the ‘‘Category 

3 Marine Rule’’), which will be 

published separately in the Federal 

Register. There will be two hearings, 

one held in New York, NY, on August 

4, 2009, and one held in Long Beach, 

CA on August 6, 2009. 

In a separate notice of proposed 

rulemaking, EPA is proposing emission 

standards for new marine diesel engines 

with per cylinder displacement at or 

above 30 liters (called Category 3 marine 

diesel engines) installed on U.S. vessels, 

under section 213 of the Clean Air Act 

(CAA or ‘‘the Act’’). The proposed 

engine standards are equivalent to the 

nitrogen oxides (NOX) limits recently 

adopted in the amendments to Annex VI 

to the International Convention for the 

Prevention of Pollution from Ships 

(MARPOL Annex VI) and are based on 

the position advanced by the United 

States Government as part of those 

international negotiations. The nearterm standards for newly-built engines 

would apply beginning in 2011. Longterm standards would begin in 2016 and 

are based on the application of highefficiency aftertreatment technology. We 

are also proposing a change to our diesel 

fuel program that would forbid the 

production and sale of marine fuel oil 

above 1,000 ppm sulfur for use in the 

waters within the proposed U.S. ECA 

and internal U.S. waters and allow for 

the production and sale of 1,000 ppm 

sulfur fuel for use in Category 3 marine 

vessels. 

The proposal is part of a coordinated 

strategy to ensure that all ships that 

affect U.S. air quality meet stringent 

NOX and fuel sulfur requirements. In 

addition, on March 27, 2009, the U.S. 

Government forwarded a proposal to the 

International Maritime Organization 

(IMO) to amend MARPOL Annex VI to 

designate an Emission Control Area 

(ECA) off U.S. coasts. If this proposed 

amendment is not timely adopted by 

IMO, we intend to take supplemental 

action to control emissions from vessels 

affecting U.S. air quality. 

The proposed regulations also include 

technical amendments to our motor 

vehicle and nonroad engine regulations. 

Many of these changes involve minor 

adjustments or corrections to our 

recently finalized rule for new nonroad 

spark-ignition engines, or adjustments 

to other regulatory provisions to align 

with this recently finalized rule. Our 

coordinated strategy also includes 

proposed regulations to implement 

MARPOL Annex VI pursuant to the Act 

to Prevent Pollution from Ships. 

DATES: The public hearings will be held 

on Tuesday, August 4, 2009 in New 

York, NY, and on Thursday, August 6, 

2009, in Long Beach, CA. If you would 

like to speak at a public hearing, please 

notify the contact person listed under 

FOR FURTHER INFORMATION CONTACT at 

least ten days before the hearing. See 

SUPPLEMENTARY INFORMATION for other 

detailed information regarding the 

public hearings for the Category 3 

Marine Rule. 

ADDRESSES: The hearings will be held at 

the following two locations: New York 

Marriott Downtown, 85 West Street, 

New York, NY 10006; and Westin Long 

Beach, 333 East Ocean Boulevard, Long 

Beach, CA 90802. Written comments on 

the proposed rule may also be submitted 

to EPA electronically, by mail, by 

facsimile, or through hand delivery/ 

courier. Please refer to the notice of 

proposed rulemaking for the addresses 

and detailed instructions for submitting 

written comments. 

FOR FURTHER INFORMATION CONTACT: 

Amy Kopin, U.S. EPA, Office of 

Transportation and Air Quality, 

Assessment and Standards Division 

(ASD), Environmental Protection 

Agency, 2000 Traverwood Drive, Ann 

Arbor, MI 48105; telephone number: 

(734) 214–4417; fax number: (734) 214– 

4050; e-mail address: 

Kopin.Amy@epa.gov; or Assessment and 

Standards Division Hotline, telephone 

number: (734) 214–4636. 

SUPPLEMENTARY INFORMATION: The 

proposal for which EPA is holding the 

public hearing will be published 

separately in the Federal Register. A 

pre-publication copy of the notice of 

proposed rulemaking is available on the 

following Web site: http://www.epa.gov/ 

otaq/oceanvessels.htm. 

Public Hearings: The public hearings 

will provide interested parties the 

opportunity to present data, views, or 

arguments concerning the proposed 

rule. The EPA may ask clarifying 

questions during the oral presentations, 

but will not respond to the 

presentations at that time. Written 

statements and supporting information 

submitted during the comment period 

will be considered with the same weight 

as any oral comments and supporting 

information presented at the public 

hearings. Written comments must be 

received by the last day of the comment 

period, as specified in the proposal of 

the Category 3 Marine Rule. 

The public hearings will be held on 

August 4, 2009 in New York, and 

August 6, 2009, in Long Beach, CA. 

These hearings will both start at 10 a.m. 

local time and continue until everyone 

has had a chance to speak. If you would 

like to speak at a public hearing, please 

notify the contact person listed under 

FOR FURTHER INFORMATION CONTACT at 

least ten days before the hearing. 

Verbatim transcripts of the hearings and 

written statements will be included in 

the rulemaking docket. 

How Can I Get Copies of This 

Document, the Proposed Rule, and 

Other Related Information? 

The EPA has established a docket for 

this action under Docket ID No. EPA– 

HQ–OAR–2007–0121. When the 

proposed rule is published in the 

Federal Register, a complete set of 

documents related to the proposal will 

be available for public inspection at the 

EPA Docket Center, located at 1301 

Constitution Avenue, NW., Room 3334, 

Washington, DC, between 8:30 a.m. and 

4:30 p.m., Monday through Friday, 

excluding legal holidays. A reasonable 

fee may be charged for copying. 

Documents are also available through 

the electronic docket system at http:// 

www.regulations.gov. Please refer to the 

notice of proposed rulemaking for 

detailed information on accessing 

information related to the proposal. 

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