Setting up a non-cash incentive program requires compliance with which regulatory aspect?

Setting up a non-cash incentive program necessitates adherence to SEC regulations because these regulations govern the issuance of incentives, particularly in publicly traded companies. The Securities and Exchange Commission (SEC) has established guidelines to ensure transparency and fairness in the way companies compensate their employees, including non-cash incentives like stock options or performance shares. These rules are critical to prevent conflicts of interest and ensure that the information is disclosed appropriately to investors, maintaining the integrity of the financial markets.

Internal firm compliance and state laws are important considerations, but they do not encompass the broader regulatory framework that the SEC provides. Similarly, while industry best practices can inform how a program is structured, they are not regulatory requirements per se. Therefore, compliance with SEC regulations is essential to operate within the legal framework when implementing a non-cash incentive program.