The values of equity awards as reported in proxy statements, based on so-called “date of grant” values, do not adequately take into account the risks associated with such awards at the time of grant.1 For example, if a named executive officer receives a dollar of salary and a “dollar’s worth” of restricted stock, these two “dollars” are treated as equivalent for purposes of the Summary Compensation Table. (The Summary Compensation Table is the table in the proxy statement that sets out total compensation, including amounts involved in different categories of pay making up total compensation, for each named executive officer.)

Risk factors noted below that are associated with equity awards are not generally taken into account in reporting equity awards in the Summary Compensation Table. (Footnote 2 provides a summary of how equity award values are reported in the Summary Compensation Table.)2 This means that the two “dollars” are treated as equivalent values in the computation of total compensation, as reported in the Summary Compensation Table, notwithstanding risk factors accompanying an equity award.

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