How to read a CFO departure filing, line by line

A CFO departure filing is usually a Form 8-K of one or two pages. It reports that the company's principal financial officer is leaving, and it is built from a fixed set of parts. Read in order, each part answers a specific question, and it helps to know which questions the filing is required to answer and which it answers only by choice.

This guide takes the parts in the order they appear. It quotes the SEC's Form 8-K for what is required. It does not interpret any company's reasons, and neither does CFO Tribune: every departure on the moves page quotes the filing's own words.

The cover page

The cover page gives the company's exact name "as specified in its charter," its state of incorporation, its Commission file number and the "Date of Report (Date of earliest event reported)." That last date is the date of the event, not the date the filing was made.

Two dates matter from the start:

• The date of the event, from the cover page and the Item 5.02 text.
• The filing date, which EDGAR shows in the filing index. Under Rule 13 of Regulation S-T, a filing received by direct transmission after the evening cutoff counts as filed on the next business day.

The gap between the two is how you check the deadline in General Instruction B.1: "within four business days after occurrence of the event." The guide on the four business days shows how to count them.

The cover also lists the company's registered securities and trading symbols. CFO Tribune records the company name as the filing prints it and links each record to the company's page under companies.

The item heading

A departure appears under the heading "Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers." The heading is the full title of the item, so it does not tell you which of the paragraphs the company is reporting under. The text below it does.

A filing may carry other items too: Item 7.01 for a press release furnished under Regulation FD, Item 8.01 for other events, and Item 9.01 for exhibits.

The departure sentence

Paragraph (b) of Item 5.02 requires one thing when the principal financial officer "retires, resigns or is terminated from that position": the company must "disclose the fact that the event has occurred and the date of the event."

So the core of every departure filing is a sentence with a name, a position and a date. Read three things in it:

• The verb. The company chooses it. Wordings such as "resigned," "will retire" or "notified the Company of her decision to step down" say different things, and the company decided which to use. CFO Tribune quotes the verb as written and does not restate it.
• The position. The filing says which positions the person is leaving. Sometimes the person gives up the CFO title but stays at the company; sometimes only a separate designation, like principal accounting officer, moves. Only a change in who holds the principal financial officer role is a CFO move.
• The date. Look for whether the departure has happened or will happen. A filing can report on one day a departure effective weeks later. Dates written as "on or about" or tied to another event ("upon the appointment of a successor") are not fixed days, and the record shows them at month precision or as not established.

The sentences that are not required

Most departure filings say more than paragraph (b) asks for. Each extra sentence is the company's choice, and each establishes only what it says.

• "Not the result of any disagreement." Many filings say the departure was not the result of a disagreement with the company on matters of operations, policies or practices. The phrase echoes the director paragraph, Item 5.02(a), which requires more disclosure when a director leaves "because of a disagreement with the registrant." For officers there is no such requirement, so the sentence is a voluntary statement. Its absence does not establish that there was a disagreement.
• Personal reasons, retirement or a new role. A filing may give a reason. CFO Tribune quotes it and adds none.
• Continuing service. A filing may say the CFO will stay through a date, or serve as an adviser. That is a plan stated on the filing date.

The successor

A departure filing may name who takes over, or it may not. Item 5.02 does not require a successor to be named in the same filing. When one is named, Item 5.02(c) applies to that person, and the filing must give the new officer's name, position and appointment date, background under Items 401(b), (d) and (e) of Regulation S-K, related-person transactions under Item 404(a), and any material arrangement made in connection with the appointment.

On the record, 168 filings named a successor and 82 did not, so a successor was named in 67% of those departures. A further 94 moves name an interim officer; see interim CFOs.

The agreements

Item 5.02(e) covers any "material compensatory plan, contract or arrangement" for the principal financial officer that is entered into, adopted or materially amended. For a departure, that can be a separation or transition agreement. The filing must give "a brief description of the terms and conditions" and "the amounts payable." A filing may describe the agreement in the text and file it as an exhibit then or later.

When the terms are not final, look for a statement that they will be reported later. Instruction 2 to Item 5.02 sets the rule for a successor's arrangements: an amendment "within four business days after the information is determined or becomes available."

The exhibits

Item 9.01 lists the exhibits. Two are common in departure filings:

• Exhibit 99.1, a press release. It often carries more wording than the 8-K text, and its quotes are the company's.
• Exhibit 10, an agreement, when one is filed with the report.

The release and the 8-K text should agree. If they differ, the 8-K text is the filing; CFO Tribune quotes the 8-K first.

The signature

The form ends with the signature block: the company "has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized." Any authorized officer may sign it, so the signer of a departure filing tells you nothing about the departure.

Amendments

A later filing marked 8-K/A amends the original. Rule 12b-15 requires amendments to be marked with the letter A and to "set forth the complete text of each item as amended." An amendment to a departure filing can add an agreement or a successor's terms. It does not change the date of the original event unless it says so.

Putting it together

When you finish, you should be able to state, from the filing alone: who left which position, when, whether a successor or interim officer was named, and which terms were disclosed. Anything else is not in the filing, and the record does not supply it. If a record on CFO Tribune states more than its filing does, tell the editors through the corrections page.