The Securities & Exchange Commission ("SEC") has substantially amended the rules relating to the disclosure of compensation practices by public companies.

These regulations require that the company provide a "clear, concise and understandable disclosure of all plan and non-plan compensation" of all named executive officers ("NEOs") and directors. This disclosure must be contained in a "Compensation Discussion & Analysis" ("CD&A") that is filed with the SEC. A separate "Compensation Committee Report" ("CCR") must also be furnished to the SEC.

The CD&A requires companies to provide information about their executive compensation practices both in narrative and tabular format. The CD&A must be accompanied by seven tables, consisting of a summary compensation table, and six other tables describing the various forms of compensation reported on the summary compensation table.

Note: The following discussion applies only to filers of Form 10-K; small-business filers of Form 10-KSB are subject to slightly modified rules.

These new rules by the following topics are addressed in greater detail, below

Named Executive Officers
Compensation Discussion & Analysis
Summary Compensation Table
Supplemental Grants of Plan-Based Awards
Outstanding Equity Awards at Fiscal Year-End
Options Exercised & Stock Vested
Pension Benefits
Non-Qualified Deferred Compensation
Change-In-Control/Termination Payments
Director Compensation
Compensation Committee Report
Filing Deadlines

Named Executive Officers

1. Who are the NEOs?

   The NEOs include the following:

   • The principal executive officer ("PEO"), regardless of compensation;

   • The principal financial officer ("PFO"), regardless of compensation;

   • The three most highly compensated individuals (other than PEO and PFO) serving as executive officers at the end of the prior fiscal year; and

   • Up to two additional individuals for whom disclosure would be required but for the fact that they were not service as executive officers at the end of the prior fiscal year.

2. How are the most highly compensated executive officers determined?

   The determination of a company's most highly compensated executive officers is based on "total compensation" for the most recent fiscal year. It may be appropriate to include an executive officer of a subsidiary in accordance with Rule 3b-7 of the Exchange Act.

   No disclosure, however, need be made for any executive officer (other than the PEO and PFO) whose total compensation does not exceed $100,000.

Compensation Discussion & Analysis

3. What is the CD&A?

   The CD&A is intended to provide investors with material information about the company's compensation policies and decisions with respect to NEOs. The SEC has repeatedly cautioned against including "boilerplate" discussion in the CD&A

   The CD&A should contain include the seven compensation tables, and associated discussion, as well as the disclosures required by Item 402.

   The CD&A may need to cover actions taken after the fiscal year end, such as the adoption or implementation of new or modified programs and policies or specific decisions that could affect a fair understanding of a NEO's compensation for the prior fiscal year. Although it may sometimes be appropriate to discuss prior year's compensation to give context to disclosures, the new rules do not require that companies restate their prior compensation disclosures under the new format.

4. What information must be included in the CD&A?

   The CD&A must discuss the compensation paid or awarded to the NEOs and explain all material elements of their compensation. To provide this information the SEC requires the CD&A to include a description of the following:

   • The objectives of the company's compensation programs;

   • What the compensation program is designed to reward;

   • Each element of compensation;

   • Why the company chose to pay each element of compensation;

   • How the registrant determined the amount and formula for each element of compensation; and

   • How each element of compensation and the company's decisions regarding that element fit into its overall compensation objectives and affect decisions regarding other elements.

5. Are there specific topics that must be discussed in the CD&A?

   Through the CD&A, the SEC is attempting to solicit information about the decision-making process that the company used in determined the compensation of its NEOs. Although each company's CD&A will differ, the SEC has identified the following non-exclusive list of topics that a company may wish to discuss in the CD&A:

   • Policies for allocating between long-term and current compensation;

   • Policies for allocating between cash and non-cash compensation, and among different forms of non-cash compensation;

   • The basis for allocating compensation among different forms of long-term compensation (such as the relationship of the award to the achievement of the company's long-term goals, management's exposure to downside equity performance risk, and the correlation between the cost of the award and the expected benefit);

   • How the company determines when awards, including equity awards and options, are made;

   • The specific items of corporate performance taken into account when setting compensation;

   • How company performance-based based compensation is structured and implemented, including a disclosure as to whether discretion has been or could be exercised (either to award compensation absent the attainment of performance goals or to increase or reduce the size of the award), identifying any particular act of discretion, and stating whether it applied to a specific NEO or to all company performance-based compensation;

   • How individual performance-based compensation is structured and implemented and describing the elements of performance taken into account;

   • Company policies regarding the adjustment or recovery of performance-based compensation;

   • Factors considered when deciding to materially increase or decrease compensation;

   • How prior compensation is used to determine current compensation (i.e., how gains from prior stock or option awards are considered when setting retirement benefits);

   • The basis for selecting a triggering event in any contract, agreement, plan or arrangement (written and unwritten) that provides for payments upon termination or change-in-control;

   • The impact of accounting and tax treatment of compensation;

   • The company's equity or security ownership requirements or guidelines (specifying applicable amounts and forms of ownership), and any company policies regarding hedging the economic risk of such ownership;

   • Whether the company benchmarked any element of compensation or total compensation, identifying the benchmark and, if applicable, its components (including component companies); and

   • The role of executive officers in determining executive compensation.

6. Is confidential compensation required to be disclosed in the CD&A?

   No. As with the prior rules, companies are not required to disclose target-levels with respect to specific quantitative or qualitative performance-related factors or other factors or criteria involving confidential trade secrets, commercial or financial information, the disclosure of which would result in competitive harm to the company.

   The determination of whether a disclosure would cause competitive harm is made under the same standard as when a company requests confidential treatment of trade secrets, commercial or financial information under Securities Act Rule 406 or Exchange Act Rule 24b-2.

   Although a company is not required to seek confidential treatment under these rules, if it does not, the CD&A must discuss the difficulty or likelihood that the NEO will achieve the undisclosed targets or factors.

7. What happens with the CD&A?

   Unlike prior compensation disclosures, the CD&A is filed with the SEC (rather than furnished). This means that the CD&A is subject to the liability provision of the Securities Exchange Act of 1934 and, if incorporated into a registration statement, the Securities Act of 1933.

   In addition, the CD&A is certified by the PEO and PFO, meaning that it is also subject to Sarbanes-Oxley.

Summary Compensation Table

8. What is the Summary Compensation Table?

   The Summary Compensation Table is a graphical representation of the compensation of NEOs for the company's last three fiscal year, accompanied by a narrative description.
   Summary Compensation Table

9. What information is required in the narrative description to the Summary Compensation Table?

   The Summary Compensation Table must be accompanied by a narrative description setting forth any material factors necessary to understand the information disclosed, such as the terms of employment agreements and the proportion of salary and bonus to total compensation.

   This may be combined with the narrative description to the Supplemental Grants of Plan-Based Awards, described below.

10. Must prior compensation be restated?

    Although the Summary Compensation Table is intended to provide a summary of total compensation for the prior three fiscal years, in the first year of filing under the new regulations, only one year of information needs to be disclosed, and in the second year of filing, only two years of information need to be disclosed. In the third year of filing and for all succeeding years, information for three prior years must be disclosed.

11. How is salary and bonus compensation reported (columns (c) and (d))?

    Column (c) must include total current salary and bonus (cash and non-cash) of each NEO for the fiscal year.

    If the amount of salary and bonus is not calculable, the company must include a footnote disclosing that the amount of salary or bonus is not calculable through the last practicable date and providing the date that the salary or bonus is expected to be determined, and disclose this amount in a filing under Item 5.02(f) of Form 8-K.

    The amount of salary and bonus reported does not need to include any foregone salary or bonus under a program allowing a NEO to receive stock, equity-based or other non-cash compensation in lieu of cash or bonus compensation. However, such stock, equity-based or other non-cash compensation must be disclosed under the appropriate column, unless it is made under a non-equity incentive plan that is not reported in the Summary Compensation Table. In such a case, the company must add a footnote to the salary or bonus column referring to the Grants of Plan-Based Awards Table (discussed below).

12. How is stock and option compensation reported (columns (e) and (f))?

    The new rules require that stock and option awards must reported at their grant date fair value, determined in accordance with FAS 123R.

    The CD&A must contain a footnote disclosing all assumptions made in the valuation of stock and option awards by reference to the company's financial statements, footnotes to financial statements or discussion in the MD&A. If any previously awarded option is repriced (through amendment, cancellation, issuance of replacement grants or otherwise) or materially modified, the company must report the incremental fair value as of the repricing or modification date, determined in accordance with FAS 123R in column (f).

13. How is non-equity incentive compensation reported (column (g))?

    The non-equity incentive compensation disclosure was added to the new rules. In this column, companies must disclose the dollar amount of all awards earned (not granted) during the fiscal year under a non-equity incentive compensation plan. In addition, earnings on outstanding awards must be disclosed and a quantified in a footnote explaining whether the earnings were paid during the fiscal year, deferred by the NEO or payable at a later date.

    If the performance measure for an award of non-equity incentive compensation is satisfied during the fiscal year (including for a single year in a plan with a multi-year performance measure), the award must be disclosed, even if not payable or reportable until a later year.

14. How are changes in pension value and non-qualified deferred compensation earnings (column (h)) reported?

    The new rules also require separate disclosure of the sum of the aggregate annual change in the actuarial present value of accumulated pension benefits under qualified defined benefit plans during the last fiscal year and above-market or preferential earnings on non-qualified defined benefit deferred compensation plans (such as SERPs, executive retirement plans etc.). The amounts for each different plan must be separately stated in a footnote.

    Interest on deferred compensation is above-market if it exceeds 120% of the applicable federal long-term rate.

    If the annual change in actuarial present value of a NEOs pension benefit is negative, it should be disclosed in a footnote, but not included in column (h).

15. What must be reported in "all other compensation" (column (i))?

    All compensation that is not properly reportable in the other columns must be reported in column (i). Compensation that must specifically be reported includes:

    • Perquisites and other personal benefits whose aggregate value exceeds $10,000;

    • All tax gross-ups or reimbursements;

    • Company securities (including securities of a subsidiary) purchased at a discount not generally available to all securities holders or employees;

    • Amounts paid or accrued in connection with a termination of employment or change-in-control;

    • Company contributions and allocations to any defined contribution plan;

    • The dollar value of premiums paid for any life insurance for the benefit of the NEO; and

    • The dollar value of dividends or earnings on stock or options awards not factored into the grant date fair value reported in columns (e) or (f).

    Any item (other than perquisites) included in the "all other compensation" column whose value equal or exceeds $10,000 must be separately identified and quantified in a footnote. If a NEO is also a director and receives compensation as a director, this compensation must be included in column (i) and itemized in a footnote.

16. What special rules apply to the disclosure of perquisites?

    The new rules significantly change the disclosure of perquisites.

    First, perquisites must be disclosed unless their aggregate value does not exceed $10,000 (the threshold in the prior rules was $50,000).

    Second, if the aggregate value of perquisites is $10,000 or more, then each perquisite must be included in column (i) and identified by item in a footnote, regardless of value.

    Third, if the value of any perquisite exceeds $25,000 or 10% of the total amount of perquisites provided to a NEO, the company must quantify and disclose the value of each such perquisite in a footnote.

    Fourth, perquisites are valued based on the aggregate incremental cost of providing the perquisite to the company, not their tax value.

    Fifth, for any perquisite whose value is quantified in a footnote, the methodology for computing incremental cost must also be disclosed.

    Finally, the SEC indicates that perquisites must be described to identify the particular benefit received.

17. What is a perquisite?

    The SEC generally defines a "perquisite" to be any item provided by a company that is not integrally or directly related to the performance by a NEO of his or her duties, even if provided for the convenience of the company or the security of the NEO and excludible from income.

    A non-exhaustive list of perquisites includes such items as:

    • Personal use of company vehicles;

    • Personal use of other company property (planes, boats etc.);

    • Personal travel, including commuting expenses, provided by the company;

    • Financial and tax advice provided by the company;

    • Personal security provided by the company;

    • Housing and living expenses, including relocation assistance, provided by the company;

    • Club memberships provided by the company and not used exclusively for business entertainment; and

    • Discounts on services not generally available.

Supplemental Grants of Plan-Based Awards

18. What is the Supplemental Grants of Plan-Based Awards Table?

    The Supplemental Grants of Plan-Based Awards Table is used to provide supplemental information about each award granted to a NEO during the fiscal year under any company plan, accompanied by a narrative description.
    Supplemental Grants of Plan-Based Awards Table

19. What is required to be reported in the Supplemental Grants of Plan-Based Awards Table?

    The table is supposed to report:

    • The grant date of equity-based awards (and, if this grant-date is different than the date on which the board of compensation committee takes action, an additional column with this date must be included);

    • An estimated range of future payouts;

    • The per-share exercise or base price of options granted in the fiscal year (and, if the exercise of base price is less than closing market price, an additional column showing the closing market price on the date of the grant).

    A separate table must be prepared for each plan.

20. What is required to be contained in the narrative disclosure?

    The narrative disclosure should identify such things as:

    • A description of any repricing or material modification that occurred with respect to any outstanding option or equity-based award (other than periodic or automatic repricing under a formula or mechanism in the plan); and

    • The material terms of any plan-based award, such as performance criteria and vesting schedules.

    As indicated above, the narrative disclosure prepared for the Grants of Plan-Based Awards may be incorporated with the discussion prepared for the Summary Compensation Table.

21. How are estimated payouts under equity and non-equity incentive plan awards calculated?

    Columns (c) through (h) are used to disclose the value of the estimated range of future payouts under equity and non-equity incentive plans.

    For purposes of this table, companies must disclose the:

    • "Threshold", referring to the minimum amount payable for performance under the plan;

    • "Target", referring to the amount payable if performance targets are reached; and

    • "Maximum", referring to the maximum payout possible under the plan.

    If the plan provides for only one estimated payout, then the amount must be reported as the target. If the target is not determinable, the company must provide a representative amount based on the its prior fiscal year performance.

22. How do you determine if the exercise or base price of an option is less than closing market value?

    To determine whether the exercise or base price of an option is less than closing market price of the underlying security on the date of grant, the company may use either the market price or, if not market exists, any other formula.

    If the exercise or base price is not the closing market price, the report must contain a description or footnote explaining the methodology used to determine the exercise base price.

23. How are tandem grants disclosed?

    A tandem grant of two instruments, only one of which is granted under an incentive plan, is reported in either column (i) or (j), as applicable. Thus, an option granted in tandem with a performance share is reported as an option in column (i), and the tandem feature must be described or footnoted.

24. How is consideration paid by a NEO for an award disclosed?

    If a NEO provides consideration for any plan-based award, the amount of consideration must be disclosed in a footnote to the appropriate column.

25. How are non-equity incentive plans denominated other than in shares disclosed?

    If a non-equity incentive plan is denominated in other than shares (such as in units or other rights), an additional column quantifying the award should be added to the table.

Outstanding Equity Awards at Fiscal Year-End

26. What is the Outstanding Equity Awards at Fiscal Year-End Table?

    The Outstanding Equity Awards at Fiscal Year-End Table is intended to be a graphical representation of the unexercised options of unvested stock and equity incentive plan awards. accompanied by a narrative description.
    Outstanding Equity Awards at Fiscal Year-End Table

27. What information required to be disclosed in the Outstanding Equity Awards at Fiscal Year-End Table?

    The Outstanding Equity Awards at Fiscal Year-End Table is required to include (on an award-by-award basis)

    • The number of securities underlying unexercised options that are exercisable, including those transferred for other than value;

    • The number of securities underlying unexercised options that are not exercisable, including those transferred for other than value;

    • The number of securities underlying unexercised options that have not been earned;

    • The exercise or base price and expiration date of each such option; and

    • The total number of shares and aggregate market value of stock that have not vested and the total number of shares of stock that have not vested and have not been earned;

    Awards transferred for other than value must be disclosed in a footnote.

    The vesting dates of options, shares of stock and equity incentive plan awards must be disclosed by footnote.

28. How is market value of stock and equity incentive plans calculated?

    To compute the market value of stock and equity incentive plan awards, the company must multiply the closing market price of its stock as of the last day of the fiscal year by the number of shares of amount of equity incentive plan awards.

29. Can multiple awards be aggregated?

    Multiple awards may be aggregated if the expiration date and exercise/base of the instruments is identical.

Options Exercised & Stock Vested

30. What is the Options Exercised and Stock Vested Table?

    The Options Exercised and Stock Vested Table is intended to be a graphic representation of the exercise of stock options, SARs and similar instruments, and the vesting of stock, such as restricted stock, restricted stock units and similar instruments in the last fiscal year.
    Options Exercised and Stock Vested Table

31. What information is required in the Options Exercised and Stock Vested Table?

    The Options Exercised and Stock Vested Table must include information about the:

    • Number of securities for which options were exercised and the aggregate dollar value realized upon exercise, or upon the transfer of an award for value;

    • Number of shares of stock that have vested and the aggregate dollar value realized upon vesting or upon the transfer of an award for value.

32. Is any other consideration or payment provided on exercise or vesting disclosed?

    No. Any related payment or other consideration provided by a company to a NEO (such as the payment of exercise price or the payment of taxes) should be disclosed in accordance with Item 402(c)(2)(ix).

Pension Benefits

33. What is the Pension Benefits Table?

    The Pension Benefit Table is intended to provide a graphical representation of the pension benefits payable to NEOs, accompanied by a narrative description.
    Pension Benefit Table

34. What information must be disclosed in the Pension Benefits Table?

    A separate Pension Benefits Table must be prepared for each plan providing for pension benefits to a NEO. Among other information, the Pension Benefits Table must include a calculation of the actuarial present value of the NEOs accumulated benefit under the plan suing the same pension plan measurement date for financial reporting purposes.

35. What plans are subject to disclosure?

    Disclosure under the Pension Benefits Table is limited to:

    • Qualified defined benefit plans; and

    • Non-qualified defined benefit plans (such as SERPs)

    Disclosure of retirement benefits under defined contribution plans (both qualified and non-qualified) is made separately.

36. What must be contained in the narrative description?

    The company must provide a short description of the material factors necessary to understand the plan, such as:

    • Terms and conditions of payment, including normal retirement payment and benefit formula;

    • If any NEO is eligible for early retirement, the eligibility standards for early retirement, the early retirement payment and early retirement benefit formula;

    • The specific elements of compensation used in the benefit formula and for payment;

    • If multiple plans exist, the reason for establishing multiple plans; and

    • Policies regarding awarding extra years of service.

    If a NEO's years of credited service differ from actual years of service, the difference and resulting benefit augmentation must be footnoted.

Non-Qualified Deferred Compensation

37. What is the Non-Qualified Deferred Compensation Table?

    The Non-qualified Deferred Compensation Table is intended to be a graphical representation of the non-pension benefits provided to NEOs, accompanied by a narrative description.
    Non-Qualified Deferred Compensation Table

38. What is required to be disclosed?

    The table must disclose the total amount of contributions (both NEO and company), interest or earnings and distributions.

    The narrative description must provide information about:

    • The types of compensation that may be deferred and any limitations on deferral;

    • How earnings or interest are calculated and quantifying the interest rates or earning measures (including a description of who selects the measures and whether they may be changed);

    • A description of payouts, withdrawals and distributions; and

    • A footnote disclosing whether (and if so, how much) contributions and earnings were previously reported as compensation.

    Unlike the Pension Benefits table, it does not appear that a separate table must be prepared for each plan in which a NEO participates.

Change-In-Control/Termination Payments

39. What information must be disclosed about Change-in-Control and Termination Payments?

    The company must disclose the following information about each contract, agreement, plan or arrangement provided for payments to a NEO following, or in connection with, a change-in-control or termination:

    • A description of the plan and the circumstances triggering payments;

    • A description of benefits payable under the plan, including perquisites and health care;

    • An estimated value of the payments provided in each circumstances, the method and duration of payment, and a disclosure of who provides benefits; and

    • A description of any conditions or obligations on the receipt of benefits (such as non-competition, non-solicitation etc. agreements), the duration of these agreements and the provisions regarding waiver of breach.

40. What events constitute a "change-in-control" or "termination"?

    A "change-in-control" includes a change-in-control of the company or a change in the NEOs responsibilities.

    A "termination" includes such events as resignation, severance, retirement or constructive termination.

41. How are payments calculated?

    For purposes of calculating change-in-control/termination benefits, the company must assume that the triggering event took place on the last business day of the fiscal year using a price-per share equal to the closing market price on that date.

    If uncertainties exist as to the provision of benefits or the amount of benefits, the company must make a reasonable estimate and describe the assumptions underlying the estimate.

42. How are perquisites and healthcare benefits disclosed?

    All perquisites must be disclosed, unless their aggregate value is less than $10,000. Individual perquisites and benefits must be disclosed as required by Item 402(c)(2)(ix), described more fully, above.

    Healthcare benefits must be disclosed using the same assumptions as used for financial reporting benefits.

Director Compensation

43. What is the Director Compensation Table?

    The Director Compensation Table is intended to provide a graphic representation of director compensation, supplemented by a narrative description.
    Director Compensation Table

44. What information must be disclosed?

    The disclosures provided in the Director Compensation Table are essentially the same as required for the Summary Compensation Table, except that "all other compensation" of directors must include the annual cost of payments pursuant to director legacy and similar programs.

45. What is a "director legacy" or similar program?

    A director legacy program or similar charitable program is a program, pursuant to which, a company agrees to make donations to one or more charitable institutions in the name of a director. The terms of the program, and the total amount payable, must be separately identified in a footnote.

46. Can directors with identical compensation be aggregated?

    Yes. Directors may be grouped in a single row if all elements of their compensation are identical.

    The names of directors who are disclosed on a group basis must be made clear.

Compensation Committee Report

The new rules require the company to furnish a separate CCR that requires the compensation committee to state:

• Whether it has reviewed and discussed the CD&A with management; and

• Whether, based on this review and discussion, it recommended that the CD&A be included in the Annual Report, Form 10-K or proxy statement.

The CCR is furnished to the SEC and, as a result, is not certified by either the PEO or PFO.

Filing Deadlines

Disclosures in accordance with the new rules must be made by companies:

• In Form 10-K for fiscal years ending after December 15, 2006;

• In proxy and information statements filed on or after December 15, 2006 that are required to include disclosures under Items 402 and 404 of Regulation S-K for fiscal years ending on or after December 15, 2006;

• In registration statements filed on or after December 15, 2006 that are required to include disclosures under Items 402 and 404 of Regulation S-K for fiscal years ending on or after December 15, 2006; or

• In Form 8-K filings relating to triggering events occurring on or after November 7, 2006.