The actuarial present value of accumulated pension benefits and deferred compensation for each named executive officer must be disclosed in the new Pension Table prescribed by the SEC’s final regulation on executive compensation disclosure. [33-8732] See §229.402(h) and the associated discussion in Preamble Section II.C.5.a. Detailed disclosure is required separately for each qualified defined benefit plan and non-qualified deferred compensation plan (other than non-qualified defined contribution arrangements) under which a named executive officer benefits. [§229.402 Instructions to Item (h)(2) item 1]
Pension values should be determined as of the same pension plan measurement date used for the financial statements for the most recent fiscal year. Given FASB’s 7/29 decision (as previously discussed here) to delay until 2008 the effective date of the requirement to synchronize the pension measurement date with the financial statement date, employers that continue to use an early measurement date for their pensions under FAS 87 would be using that same early measurement date for the executive pension disclosures for several more years.
The measurement should assume that the executive will retire at the normal retirement age defined in the plan (or absent a normal retirement age under the plan, at the earliest time when a participant may retire under the plan without any benefit reduction due to age). Since the value of currently accumulated benefits based on current compensation is to be disclosed, no assumption of future compensation levels would be used, even for a pay-related benefit formula (although narrative text should sufficiently describe the benefit design). Otherwise, present values should be determined using the same actuarial assumptions used for financial reporting purposes, i.e., generally as under FAS 87 (except in the case of individual deferred compensation contracts). Narrative text should disclose the valuation method and all material assumptions used to quantify the present value. [§229.402 Instructions to Item (h)(2) item 2.] A “succinct narrative description” of any material factors necessary to understanding each plan covered within the Pension Table should describe material terms and conditions of benefits available under the plan, including amounts that could be paid immediately for any executive currently eligible for early retirement. [§229.402(h)(3)]
In addition to the present value of pension benefits, the pension table should also disclose the dollar amount of any pension payments actually made to each named executive during the most recent fiscal year [§229.402(h)(2)(v)], as well as the credited service for each executive under each plan [§229.402(h)(2)(iii)].