Hedging and Pledging of Employer Stock

Dodd-Frank Requirement:

  • Section 955 of the Act adds a new subsection (j) to Section 14 of the Exchange Act requires that issuers disclose their anti-hedging policies.
  • This provision is not effective until SEC rules are finalized.
  • 2015.Feb.09  SEC Proposed Rules. Discussed at Paul Hastings Alert

Sample Proxy Statement Disclosures:

Elizabeth Arden -- 2015.10.23  

[Concise re Anti-hedging, and extensive re pledging (see pages 31-32 of proxy statement).]

American International Group —April 12, 2010

AIG’s Code of Conduct prohibits employees from engaging in any hedging transactions with respect to any of AIG’s securities including trading in any derivative security relating to AIG’s securities.

Boston Scientific—March 26, 2010

Our executive officers, including our NEOs, are prohibited from entering into transactions which “hedge” the value of Boston Scientific stock. 

Comcast—April 9, 2010

Our policy prohibits any named executive officer from buying or selling any of our securities or options or derivatives with respect to our securities without obtaining prior approval from our General Counsel. This seeks to assure that the named executive officers will not trade in our securities at a time when they are in possession of inside information. We do not have a policy that specifically prohibits our named executive officers from hedging the economic risk of stock ownership. However, federal securities laws generally prohibit our named executive officers from selling “short” our stock.

Microsoft—September 30, 2010

The Board of Directors and our executive officers are prohibited from hedging their ownership of Microsoft stock, including trading in publicly-traded options, puts, calls, or other derivative instruments related to Microsoft stock or debt.