FR 2025-00665

The document under review is a notice from the Securities and Exchange Commission (SEC) soliciting public comments on the extension of Form 11-K, which is used by employee stock purchase and savings plans to comply with certain reporting obligations. Form 11-K is an integral part of the SEC's framework under the Securities and Exchange Act of 1934, aimed at providing employees with sufficient information to evaluate their investment vehicles or stock plans. The SEC invites comments on various aspects of Form 11-K, particularly on the necessity, utility, accuracy of burden estimates, and ways to minimize the reporting burden.

General Summary

Form 11-K plays a crucial role in ensuring transparency for employee stock purchase plans and similar arrangements. It requires a substantial commitment from entities in terms of both time and financial resources. Specifically, the SEC estimates that around 95.81 hours and a cost of approximately $7,525 are needed per submission. With an average of 941 annual filings, the total annual burden translates to 90,157 hours and costs upwards of $7 million. The SEC is opening the floor for public input until March 17, 2025, as part of its routine review under the Paperwork Reduction Act.

Significant Issues and Concerns

A critical issue highlighted by the request is the lack of a clear, practical explanation of why completing Form 11-K necessitates such significant time and monetary commitments. Stakeholders may question the estimated burden of nearly 96 hours per response, as it seems extensive without clear justification. Likewise, the cost per response of over $7,500 could be perceived as prohibitive or inflated unless backed by a detailed cost analysis.

The document also fails to discuss modern solutions, such as automated collection techniques, which could alleviate the burden on respondents. Furthermore, there is no indication of any effort by the SEC to streamline or simplify the existing form, which might make it more user-friendly and less taxing for filers.

Impact on the Public

For the general public, especially employees participating in stock purchase plans, the ongoing scrutiny and data collection mandated by Form 11-K ensure that they have access to critical financial information. This transparency can enhance their ability to make informed decisions regarding their investments. Nonetheless, these advantages come at a cost, which may ultimately be passed down to participants in indirect ways, such as through reduced plan benefits or higher fees.

Impact on Specific Stakeholders

For companies that administer or participate in employee stock purchase plans, Form 11-K represents a significant regulatory obligation. The high cost and time commitment required to comply with this form could deter smaller companies from offering such benefits, potentially impacting their competitiveness in attracting talent. Larger firms, while more equipped to shoulder these costs, might nevertheless seek further clarification and justification for the burdens imposed by the current requirements.

On a positive note, stakeholders have the opportunity to influence potential reforms to the reporting process through their comments. Constructive feedback from affected parties could prompt the SEC to explore more efficient methodologies, such as technology-driven data collection, that could reduce compliance burdens without sacrificing informational integrity.

In reviewing the Federal Register document concerning the extension and approval of Form 11-K by the Securities and Exchange Commission (SEC), several financial references are of key significance. This document outlines both the estimated burden and cost involved in preparing and submitting this form annually.

The SEC estimates that the preparation of Form 11-K involves approximately 95.81 burden hours per response. This represents the time and effort required by an issuer to gather, prepare, and file the necessary information. With an average of 941 Form 11-K filings each year, this results in a cumulative total of 90,157 burden hours annually. The substantial investment of time underscores the importance of these filings in fulfilling the SEC's regulatory functions.

Furthermore, the document highlights an estimated financial cost associated with preparing each Form 11-K. It is projected that each response incurs a cost of approximately $7,525, which contributes to an overall annual cost burden of $7,081,025 based on the average number of annual filings. This cost estimation may raise questions among stakeholders regarding the financial implications of these requirements for the entities involved, particularly if the perceived value or utility of the information collected is unclear.

These financial estimates relate directly to several identified issues within the document. One notable issue is the necessity for clearer justification of both the burden hours and monetary costs associated with Form 11-K. Stakeholders might find the time and cost requirements substantial, necessitating a breakdown or explanation of what constitutes these estimates. Understanding the nature of these costs could provide greater transparency and perhaps instill more confidence in the SEC's process.

Additionally, the document does not elaborate on potential technological solutions or automated collection techniques that might lessen the financial and time burdens. Exploring such possibilities could reduce the $7,525 cost per response by simplifying or streamlining the data collection and reporting processes. Engaging with modern technology might not only achieve cost savings but also increase the efficiency and accuracy of the information collected.

While the document fulfills its formal obligation to estimate costs and hours, it lacks a discussion on efforts to reduce these figures through innovations or updates to Form 11-K. Addressing these points could reassure stakeholders and demonstrate a commitment to evolving with technological advancements and economic considerations.