Guide

Form 8-K Item 5.02, departures and appointments of officers and directors

When a chief executive, chief financial officer or other top officer leaves a public company, the company reports it under Item 5.02(b) of Form 8-K, generally within four business days. The report states that the person left and the date. The same item also covers directors leaving, new officers and directors arriving, and material changes to top executives' pay.

The six paragraphs of Item 5.02

Item 5.02 is long because it bundles separate events under one number. Paragraph (a) covers a director who resigns or declines to stand for re-election because of a disagreement with the company, or who is removed for cause. Paragraph (b) covers any other departure of a director, and the retirement, resignation or termination of the president, the principal executive, financial, accounting or operating officer, anyone in a similar role, or a named executive officer.

Paragraph (c) covers the appointment of a new principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer or someone in a similar role. Paragraph (d) covers a new director elected by the board rather than by shareholders at a meeting called for that vote. Paragraph (e) covers new or materially changed compensation plans, contracts or awards for the principal executive officer, principal financial officer or a named executive officer, and paragraph (f) covers salary or bonus amounts that could not be calculated when the Summary Compensation Table was prepared.

What each paragraph makes the company say

For a departure under (b), the requirement is short, only the fact of the event and its date. The SEC's original proposal would also have required the reason an officer left. The 2004 final rule dropped it after commenters raised concerns about embarrassment to the departing officer and possible defamation claims. Reasons are required only in the disagreement case under (a), where the company describes the circumstances and lists the director's board committees. Everywhere else, words such as retire or resign are the company's own description of the event.

An appointment under (c) requires the new officer's name, position and appointment date, the background information called for by Items 401(b), (d) and (e) of Regulation S-K, any related party transactions under Item 404(a), and a short description of any material employment or pay arrangement made in connection with the appointment. A new director under (d) is reported with the election date, any arrangement under which the director was selected, the committees the director joins or is expected to join, any related party transactions under Item 404(a), and any material pay arrangement tied to the election.

Paragraph (e) applies whether or not anyone is joining or leaving. An award that follows the previously disclosed terms of an existing plan does not need its own Item 5.02(e) report, as long as it is disclosed when Item 402 of Regulation S-K requires.

Timing and its two exceptions

The general deadline in General Instruction B.1 applies, four business days after the event, counted from the next business day if the event falls on a weekend or a holiday when the SEC is closed. The instruction to paragraph (c) adds an exception. If the company plans to announce a new officer by some means other than an 8-K, it may hold the 8-K until the day of that announcement.

Some details may not exist yet when the 8-K is due, such as a new director's committee seats or the terms of a new officer's pay. Instruction 2 to Item 5.02 covers that gap. The first 8-K says the detail is not yet settled, and a Form 8-K/A follows once it is, with the same four business day clock starting from that point.

Reading the filing, and the director's own letter

General Instruction D asks for the item number and caption, not the paragraph letter, so a filing about a departing director may show only Item 5.02 as its heading. The text shows which paragraph applies, since only an (a) notice describes a disagreement or a removal for cause and lists the director's committees.

In an (a) case, the director's side can also reach the record. Any letter or email the director wrote to the company about leaving is attached as an exhibit. The director must also see the company's account by the day it goes to the SEC and get the chance to answer it, and if the director writes back to agree or disagree, that reply goes on file as an exhibit to a Form 8-K/A within two business days of reaching the company.

Successors and the alert label

Paragraph (b) does not require the company to name a successor. When a successor officer is appointed, that is reported separately under paragraph (c).

One label covers all six paragraphs, so a Filing Ahoy 8-K alert describes Item 5.02 as a departure or appointment of officers or directors, or officer pay arrangements.

Not financial or investment advice. Filing Ahoy reports what was filed; it does not tell you what to buy or sell. Filing Ahoy is not affiliated with the SEC.