Key Considerations When Preparing Your 2024 Form 10-K

This Sidley Update outlines important disclosure considerations for U.S. public companies preparing 2024 Form 10-Ks. It highlights recent amendments to SEC disclosure rules and other developments affecting 2024 Form 10-K filings, such as disclosure trends and current SEC focus areas.

1. Include disclosures about your insider trading policies and procedures and file them as a new exhibit. New for 2025, under new Regulation S-K Item 408(b), a company must disclose whether it has adopted insider trading policies and procedures or, if not, explain why not. This disclosure can be made either in Part III, Item 10 of Form 10-K or in the company’s proxy statement (if the company chooses to incorporate Part III information by reference from its proxy statement). Additionally, companies must file these policies and procedures as a new Exhibit 19 to Form 10-K. Before publicly filing this exhibit, companies should verify that personal information, such as names and contact details of administrators, has been redacted. They should also review their insider trading policies and procedures for alignment with recent SEC commentary, enforcement actions, and Rule 10b5-1 plan requirements (discussed in the Sidley Update here).
2. Be careful when forward incorporating Form 10-K Part III information by reference to the proxy statement. If a company decides to include the insider trading policy information required by Item 408(b) information in its proxy statement, it must identify in the Form 10-K the heading of the proxy statement section where that information will appear. To take advantage of forward incorporation by reference, the company must also make sure to file its proxy statement within 120 days of the end of the year covered by the Form 10-K.
3. Remember to include new disclosures about the timing of option grants. Regulation S-K Item 402(x) requires companies to include disclosure in their 2024 Form 10-Ks or 2025 proxy statements regarding policies and practices on the timing of option grants in relation to the release of material non-public information (MNPI) and include tabular disclosure regarding any options granted to named executive officers in the period beginning four business days before and ending one business day after the disclosure of MNPI. Companies planning to include this information in their proxy statements must identify in the Form 10-K where the information can be found in the proxy statement. See the Sidley resource here for an overview of 2025 SEC filing deadlines.
   
   
4. Comply with the compensation clawback disclosure requirements. Companies should review and check, if appropriate, either or both of the two check boxes contained on the Form 10-K cover page relating to compensation recovery under the clawback policies mandated pursuant to Dodd-Frank. Additionally, a company must file this clawback policy as Exhibit 97, which requirement took effect last year. Additional disclosures are required in the Form 10-K if a compensation clawback is triggered. See the Sidley Update here.
5. Refine cybersecurity risk management, strategy, and governance disclosures. Under Regulation S-K Item 106, for which disclosure was generally first required in 2023 Form 10-Ks, companies must describe their processes for managing cybersecurity risks, disclose any material impacts from such threats, and outline board and management oversight roles. Recent SEC staff comments have addressed the failure to include the required disclosures in Part I, Item 1C of Form 10-K altogether or requested greater detail about management expertise, board and management responsibilities, third-party roles, and the integration of cybersecurity into the company’s overall risk management systems. Beginning with the 2024 Form 10-K, these disclosures also need to be tagged in Inline XBRL. A more detailed discussion of the new cybersecurity disclosure requirements can be found in the Sidley Update here and The Sidley podcast here.
6. Refresh risk factors and ensure they are tailored to the company’s specific circumstances. Companies should review and update their risk factors to account for new and changing risks, such as inflation, interest rates, new or proposed tariffs, and geopolitical risks. This exercise may involve considering whether it is necessary or advisable to reflect any significant policy changes proposed or made by the new administration. For further insights, listen to the Sidley webinar “Post-Election Landscape: New Risks, New Opportunities” here, and see Sidley’s webpage here. The SEC expects disclosures to highlight the specific relationship of the risk to the company’s results and operations to avoid disclosure of general risks. Companies should also be sure not to characterize a risk as hypothetical if it has already materialized.
7. Consider disclosing material uses, impacts, and risks of AI. SEC guidance from the former Director of the Division of Corporation Finance highlighted AI as a disclosure priority. Companies should disclose material AI-related risks and capabilities, such as those affecting financial performance and growth, while avoiding the inclusion of immaterial risks. The SEC will look for (a) specific definitions of AI, (b) non-boilerplate disclosures about material AI risks and impacts, (c) a focus on current and future AI uses specific to the company, and (d) a reasonable basis for any AI claims. Companies should avoid exaggerating AI capabilities and usage in a manner that could arguably mislead investors (sometimes referred to as “AI washing”) and should provide clear disclosure regarding intellectual property rights, such as which data is collected and stored. If relevant to their business, companies should consider discussing recent AI regulatory developments, such as the European Union’s Artificial Intelligence and Data Act. See the Sidley resource here.
8. Review and disclose climate-related issues. Companies should examine climate-related disclosure requirements in all relevant jurisdictions to understand the extent of necessary disclosures. Companies should also assess the regulatory risks and compliance burdens associated with such requirements for purposes of potential risk factor disclosure. Special attention should be given to climate and sustainability directives and laws in California and the European Union. Companies should also carefully review sustainability-related disclosures, especially relating to targets and goals, before filing to ensure accuracy and reduce the likelihood of "greenwashing" claims. In addition, companies should ensure that their disclosures regarding climate and other environmental, social, and governance (ESG) matters are consistent across their public disclosures, particularly where companies are revisiting or modifying their approach to or messaging regarding ESG matters. For details on climate-related disclosure regulations across jurisdictions, refer to the Sidley Update here.
9. Review non-GAAP disclosures for compliance with SEC rules and guidance. The SEC continues to scrutinize non-GAAP reporting as illustrated by SEC staff guidance related to non-GAAP adjustments, identifying non-GAAP measures, equal prominence issues, disclosing the purpose for using non-GAAP measures, and the adjustments being made to GAAP measures to arrive at non-GAAP measures, as well as enforcement actions relating to certain of these issues. Companies that use non-GAAP measures in their Form 10-Ks (or fourth quarter earnings materials) should ensure that they have adequate disclosure controls and procedures designed to comply with applicable SEC rules and guidance, particularly the requirement to disclose the most directly comparable GAAP measure with equal or greater prominence (as construed by the SEC).
10. Review and update the exhibit index. Companies should thoroughly review the Form 10-K exhibit index and consider in particular whether any updates are required to reflect charter or bylaw amendments, entry into or amendment of material contracts, changes to the description of capital stock, or changes to the list of subsidiaries. Companies should remove expired or terminated material contracts with no continuing obligations and ensure that each exhibit is correctly hyperlinked. If any previous grants of confidential treatment related to an exhibit are due to expire in 2025, companies should seek extensions if appropriate.
11. Ensure that human capital management (HCM) disclosures accurately reflect the company's practices. Companies should review and update HCM disclosures pursuant to Regulation S-K Item 101(c)(2)(ii), ensuring these disclosures accurately reflect the company’s current policies, particularly in light of evolving corporate approaches to diversity, equity, and inclusion (DEI). They should also verify that HCM disclosures are consistent across all SEC filings, sustainability reports, and other public communications, particularly where companies are revisiting or modifying their approach to or messaging regarding DEI and other HCM matters. 
12. Learn from SEC sample comment letters. Companies may consider reviewing the following SEC sample comment letters for additional considerations related to current SEC focus areas:
    • Climate Change Disclosures
    • Disclosures Pertaining to Russia’s Invasion of Ukraine and Related Supply Chain Issues
    • Recent Developments in Crypto Asset Markets
    • China-Specific Disclosures
    • XBRL Disclosures
13. Remember to include the Equity Compensation Plan Information table in the Form 10-K (or incorporate it by reference to the proxy statement). The Equity Compensation Plan Information table required by Regulation S-K Item 201(d) must be included in either the Form 10-K or proxy statement, whether or not the company plans to submit a compensation plan for shareholder approval at its annual meeting.
14. Comply with new segment reporting disclosure requirements. Beginning with 2024 Form 10-Ks, calendar year-end companies must adopt the new segment reporting disclosure requirements in Financial Accounting Standards Board (FASB) Accounting Standards Update 2023-07 (ASU 2023-07) with respect to their 2024 year-end financial statements and also retrospectively unless impracticable. Companies should work with their accounting firms to assess whether they should modify their segment reporting disclosures in light of ASU 2023-07.