On September 21, the Division of Corporation Finance of the Securities and Exchange Commission issued a new Compliance and Disclosure Interpretation (C&DI) regarding the treatment of benefits provided to executive officers in light of the COVID-19 pandemic and whether such benefits constitute perquisites or personal benefits that must be disclosed in a registrant’s summary compensation table and included when determining the registrant’s three most highly compensated officers (other than the registrant’s principal executive officer and principal financial officer) for identifying the “named executive officers.”

The C&DI reaffirms the SEC’s existing two-step analysis for determining whether an item constitutes a perquisite or personal benefits, noting:

• “An item is not a perquisite or personal benefit if it is integrally and directly related to the performance of the executive’s duties.
• Otherwise, an item that confers a direct or indirect benefit and that has a personal aspect, without regard to whether it may be provided for some business reason or for the convenience of the company, is a perquisite or personal benefit unless it is generally available on a non-discriminatory basis to all employees.”

The C&DI notes that, in some cases, an item considered a perquisite or personal benefit in the past may not be considered as such when provided due to COVID-19. For example, enhanced technology needed to make an officer’s home his or her primary workplace as a result of local stay-at-home orders would generally not be considered a perquisite or personal benefit because of the “integral and direct” relationship to the performance of the officer’s duties. Conversely, the C&DI notes that items such as new health-related or personal transportation benefits provided because of new risks arising from COVID-19 are not integrally and directly related to the performance of the officer’s duties and may be perquisites or personal benefits, even if they are only provided because of COVID-19, unless such benefits are generally available to all employees.

The C&DI, Question 219.05, is available here.