Question 25: If a company otherwise
maintains a dividend reinvestment plan that satisfies the exemptive
conditions of Rule 16a-11, are automatic dividend reinvestments under a
non-qualified deferred compensation plan also eligible for the Rule
16a-11 exemption, so that those reinvestment transactions would not be
required to be reported, thus reducing the number of Forms 4 due?
Answer: Non-qualified deferred compensation
plans are not Excess Benefit Plans, as defined by Rule 16b-3(b)(2) under
the Exchange Act, in which transactions are exempted by Rule 16b-3(c).
See Interpretive Letter to American Bar Association (Feb. 10, 1999, Q.
2(c)). Under Rule 16a-3(g)(1), as amended in Release 34-46421 (Aug. 27,
2002), each transaction in a non-qualified deferred compensation plan
must be reported on a Form 4 not later than the end of the second
business day following the day on which the transaction was executed.
However, if a company maintains a dividend reinvestment plan that
satisfies the exemptive conditions of Rule 16a-11, automatic dividend
reinvestments under a non-qualified deferred compensation plan are also
eligible for the Rule 16a-11 exemption. See Interpretive letter to
American Home Products (Dec. 15, 1992).
Question 26: In order to reduce the number
of Forms 4 due annually, an insider makes the following choices: In
connection with the annual year-end election to defer some of the
following year's salary into a non-qualified deferred compensation plan,
the insider elects to have payroll deductions invested in the plan's
interest-only account. The insider also elects for the deferred salary
so invested to be "swept" on a quarterly basis into the plan's stock
fund account. How should these "sweep" transactions be reported?
Answer: Each "sweep" transaction would be
reportable separately on Form 4. If the "sweep" election satisfies the
Rule 16b-3(f ) exemptive conditions for Discretionary Transactions (as
defined in Rule 16b-3(b)(1)), the "sweep" transactions would be reported
using Code I. Further, if the reporting person does not select the date
of execution for a "sweep" that is a Discretionary Transaction, Rules
16a-3(g)(3) and (4) would apply to determine the deemed execution date.
Question 27: For purposes of satisfying the
affirmative defense conditions of Rule 10b5-1(c), an insider adopts a
written plan for the purchase or sale of issuer equity securities. In
the plan, which was drafted by a broker-dealer, the broker-dealer
specified the dates on which plan transactions will be executed. Can the
insider rely on Rule 16a-3(g)(2) to compute the Form 4 due date for plan
transactions based on a deemed execution date?
Answer: No. By adopting a written plan that
specifies the dates on which plan transactions will be executed, the
insider will have selected the date of execution for plan transactions.
Consequently, the insider will not be able to rely on Rule 16a-3(g)(2)
to compute the Form 4 due date for plan transactions based on a deemed
Question 28: When reporting more than one
transaction on the same Form 4, what date should be stated in Box 4?
Answer: The transaction date (not the deemed
execution date) of the earliest transaction reported should be stated in