When the SEC changed the public company reporting requirements under Form 8-K several weeks ago, one nearly buried provision called for prompt disclosure of the creation, termination, or material amendment of executive compensation agreements.

The recent amendments to Form 8-K increased the number and type of events to be reported, and reduced the time for filing most items to four business days.

One category of matters to be disclosed relates to material contracts. Form 8-K requires reporting of the entry into, or termination of, material contracts that are not made in the ordinary course of business.

Contracts of that sort are typically easy to spot: Mergers, major financings, and significant business relationships stand out. They are the subject of press releases. They get a lot of attention from the Board of Directors.

But the instructions to Form 8-K go further, and incorporate other SEC rules that result in the required reporting under Form 8-K of executive compensation agreements.

That is to say, by definition, all compensation agreements with executives are material under the new Form 8-K, and need to be reported as they are formed or terminated, or if they are materially amended.

What is disclosed about executive compensation did not change, but the four business days filing requirement under Form 8-K accelerates the timing of the disclosure and makes executive compensation the subject of a separate filing, rather than an exhibit to a larger quarterly or annual disclosure.

The revisions to Form 8-K also require companies to disclose the material terms of compensation agreements with individuals who become directors and principal officers, as well as the announcement of their election or appointment to office.

Historically; companies that have wanted to maintain provisions of executive compensation agreements in confidence applied to the SEC for confidential treatment of such provisions. The accelerated Form 8-K disclosure deadline does not prevent a company from seeking confidential treatment, because the agreements can be filed as exhibits to the subsequent quarterly or annual report, rather than being filed with the Form 8-K.

The description of what is required to be filed (which comes from SEC Regulation S-K Item 601(b) (10), which the Form 8-K instructions incorporate) includes:

(A) Any management contract or any compensatory plan, contract or arrangement, including but not limited to plans relating to options, warrants or tights, pension, retirement or deferred compensation or bonus, incentive or profit sharing (or if not set forth in any formal document, a written description thereof) in which any director or any of the named executive officers of the registrant... participates shall be deemed material and shall be filed; and any other management contract or any other compensatory plan, contract, or arrangement in which any other executive officer of the registrant participates shall be filed unless immaterial in amount significance.

(B) Any compensatory plan, contract or arrangement adopted without the approval of security holders pursuant to which equity may be awarded, including, but not limited to, options, warrants or rights (or if not set forth in any formal document, a written description thereof), in which any employee (whether or not an executive officer of the registrant) participates shall be filed unless immaterial in amount or significance. A consolidation or other acquisition transaction pursuant to which the registrant may make further grants or awards of its equity securities shall be considered a compensation plan of the registrant for purposes of the preceding sentence.

Boards and compensation committees that are considering changes in executive compensation should bear in mind that such changes, like many other corporate developments in the post-Sarbanes-Oxley world that public companies inhabit, require consideration of the public disclosure requirements.

There can be when matters of executive pay will be sensitive to shareholders. Boards that are adopting executive pay packages should keep in mind that companies are obligated to break the news about executive pay much sooner than in the annual proxy statement.

Bruce Dravis is a partner at Downey Brand LLP operating primarily in the firm’s Sacramento and Roseville offices, specializing in corporate, securities and business law. His column appears in The Daily Journal on the third Monday of each month.