EGC Corporate Governance Practices (May 2018)

A Survey and Related Resources PAGE B-4 Disclosure Requirements (cont’d) PRIOR TO JOBS ACT UNDER THE JOBS ACT AND THE FAST ACT Executive Compensation Disclosure  Must comply with executive compensation disclosure requirements, unless a smaller reporting company (which is subject to reduced disclosure requirements)  Beginning for fiscal years starting on or after January 1, 2017, will be required to calculate and disclose the median compensation of all employees compared to the CEO  May comply with executive compensation disclosure requirements by complying with the reduced disclosure requirements generally available to smaller reporting companies  Exempt from requirement to calculate and disclose the median compensation of all employees compared to the CEO  FPIs entitled to rely on other executive compensation disclosure requirements Say-on-Pay  Must hold non-binding advisory stockholder votes on executive compensation arrangements Exempt from requirement to hold non-binding advisory stockholder votes on executive compensation arrangements for one to three years after no longer an EGC “Testing-the-Waters”  The Securities Act prohibits all “offers” in whatever form prior to the filing of a registration statement.  Prior to the JOBS Act, non-public companies and most public companies were prohibited from communicating with potential investors about a proposed offering without having filed a registration statement (“gun jumping”).  Title I of the JOBS Act expands permissible communications during a securities offering by amending the Securities Act to permit an EGC, or any person authorized to act on behalf of an EGC, either before or after the filing of a registration statement, to “test-the-waters” by:  engaging in oral or written communications with potential investors that are QIBs or institutions that are accredited investors to determine whether such investors might have an interest in a contemplated securities offering.  This concept changes the communications framework for offerings:  “Test-the-waters” communications will not be considered “gun jumping”;  The communications may be oral or written;  If the communications are written, the communications need not comply with the requirements for a prospectus; and  These communications still are subject to securities law liability.  An EGC can use these communications in order to gain important insights into the views of QIBs and institutional accredited investors.