David Lynn, a partner at Goodwin Procter and formerly chief counsel of the SEC Division of Corporation Finance, served as a panelist at the roundtable. In a post about the event, he explained that before the executive compensation disclosure rule changes and interpretive guidance were released in 2006, companies would occasionally argue that all security arrangements were necessary benefits provided to executives and not perks. Companies would bolster their arguments by providing “security studies” to support the determination of whether the benefit must be taxed as income to the executive, according to Lynn. He noted the SEC decided to draw a line in the sand in 2006 so that the “tax outcome does not necessarily have any bearing on the disclosure outcome under Item 402 of Regulation S-K, creating very different outcomes for benefits like personal security and personal use of corporate aircraft.”
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