In the analysis of costs and benefits, the proposing release notes that employees and directors of EGCs potentially face greater downside price risk than those of non-EGCs, thereby making disclosures relating to hedging activities by employees and directors more valuable to shareholders and potential investors.  The analysis also estimates that the compliance costs for EGCs than for seasoned issuers (already preparing Compensation Disclosure & Analysis sections and complying with more rigorous executive compensation disclosure requirements) will be higher.  For example, the release notes that EGCs may incur costs associated with formulating hedging policies for the first time and preparing required related disclosures.

The proposed rule is subject to a 60-day comment period.  The final rule will detail the fiscal year in which issuers must begin to comply with the requirements of Section 14(j) of the Exchange Act.