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All News > Executive comp

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Executive Compensation and Negotiation Essentials for Women Leaders
Foster Swift, via Lexology; free registration required Link to more items from this source
Aug. 3, 2022

"There are certain key questions that an employee should consider before determining what benefits are the most beneficial for her.... Is she looking for a long or short-term benefit? Second, what level of risk is she willing to accept? ... It is crucial to do the research on what programs and incentives are out there, to learn what other competitors are offering, to understand the goals of the business, and to gain insight on the employer's financial capabilities and goals."

Tags: Executive comp

What Does Bobby Bonilla Day Teach Us About Deferred Compensation Agreements?
Stephen Rosenberg, The Wagner Law Group Link to more items from this source
July 7, 2022

"Bonilla's deferred comp deal and its history highlight a dark side of deferred compensation programs. Despite changes in ownership and management at the Mets, the deferred comp agreement continues to live on and, at least to an outsider, it does not appear that new management has ever tried to get out from under the deal, even though the interest rate environment shifted in ways that made the original deal a poor one for ownership."

Tags: Executive comp  •  Nonqualified Plans

Hitting the Home Run in Deferred Compensation: How Small and Mid-Sized Companies Can Reward Key Employees
OneDigital Link to more items from this source
July 1, 2022

"Deferred compensation agreements can be creatively customized to the unique purposes of the company and the individual objectives of the plan participant. They can be complex and detailed or defined by only a few targeted provisions. Either way, they may help fortify an organization's employee retention strategy."

Tags: Executive comp  •  Nonqualified Plans

Your Equity Compensation Plan Is a Contract: Follow It, or Else
Foley & Lardner LLP Link to more items from this source
June 27, 2022

"A recent Delaware Chancery court opinion serves as a reminder to companies and their boards that shareholder-approved equity compensation plans are contracts, and failing to follow the terms of such contract could result in costly shareholder litigation." [Garfield v. Allen, No 2021-0420-JTL (Del. Ch. May 24, 2022)]

Tags: Executive comp  •  Nonqualified Plans

SEC Again Reopens Comment Period on Dodd-Frank Clawback Rules
Willis Towers Watson Link to more items from this source
June 23, 2022

"On the same day as the announcement, the SEC also released an internal memo from the Division of Economic and Risk Analysis (DERA) that provides a summary of what issues might be included in an economic analysis under any final regulations, if and when they are adopted. Beyond that, however, the SEC provided no explicit indications of what additional information they are seeking in this announcement."

Tags: Executive comp

IRS Regulatory Agenda, Spring 2022, Including Employee Benefit Items
Internal Revenue Service [IRS], U.S. Department of the Treasury Link to more items from this source
[Official Guidance]
June 22, 2022

Partial list of benefit-related provisions (changes from the Fall 2021 IRS Regulatory Agenda are noted):

Proposed Rules

  • Reporting and Notice Requirements for Deferred Vested Benefits Under Section 6057
  • Nondiscrimination Relief for Closed Defined Benefit Plans (moved from Final to Proposed)
  • SECURE Act Modifications to Certain Rules Governing 401(k) Plans
  • Provider Nondiscrimination Requirements for Group Health Plans and Health Insurance Issuers in the Group and Individual Markets
  • Mental Health Parity and Addiction Equity Act and the Consolidated Appropriations Act, 2021
  • Requirements in Connection With Coverage of Certain Preventive Services (New)
  • Requirements Related to Advanced Explanation of Benefits and Other Provisions Under the Consolidated Appropriations Act, 2021 (New)

Final Rules

  • Update to Minimum Present Value Requirements for Defined Benefit Plan Distributions
  • Application of Normal Retirement Age Regulations to Governmental Plans
  • Additional Rules Regarding Information Reporting of Minimum Essential Coverage (New)
  • Withholding on Certain Retirement Plan Distributions Under Section 3405(a) and (b)
  • MEPs and the Unified Plan Rule (moved from Proposed to Final)
  • Application of the Employer Shared Responsibility & Certain Nondiscrimination Rules to HRAs and Other Account-Based Group Health Plans Integrated With Individual Health Insurance Coverage or Medicare (New)
  • Guidance on 401(a)(9) Required Minimum Distributions (moved from Proposed to Final)
  • Requirements Related to Surprise Billing, Part 1
  • Requirements Related to Surprise Billing, Part 2 (moved from Proposed to Final)
  • Requirements Related to Surprise Billing, Part 3 (Temporary Regulations)
  • Requirements Related to Surprise Billing, Part 4 (Temporary Regulations)
  • Information Reporting of Health Insurance Coverage and Other Issues Under Sections 6055 and 6056 (moved from Proposed to Final)

 

Tags: 409A Plans  •  Executive comp  •  Health Plan Administration  •  Health Plan Design  •  Retirement Plan Administration  •  Retirement Plan Design

SEC Reminds Public Company Executives That Clawbacks Are a Priority
Debevoise & Plimpton LLP Link to more items from this source
[Guidance Overview]
June 20, 2022

"The [SEC] reopened the comment period for the proposed clawback rules initially proposed in July 2015, signaling that final rules will follow the end of this third comment period on the proposal.... After the SEC's final rules are issued, any issuer that has already adopted compensation recovery policies should examine its existing policies against the final rules to identify areas of likely change, including the applicable events that trigger clawback, the number of executives to whom the policy applies, the length of the applicable lookback window and any fault/misconduct requirements."

Tags: Executive comp

CEO Compensation Jumped 15.7% in 2021
Willis Towers Watson Link to more items from this source
June 10, 2022

"CEO salaries increased 2.0% in 2021, compared with a 1.1% increase in 2020. Annual bonuses soared 39.3% last year, compared with a 6.1% decline in 2020. More than eight in 10 companies (82%) paid annual bonuses that were at or above target levels compared with just 45% in 2020.... The value of target long-term incentives jumped 9.1% in 2021, compared with a 5.5% increase at the median in 2020."

Tags: Executive comp

SEC Reopens Comment Period for Proposed Rule on Recovery of Erroneously Awarded Compensation
U.S. Securities and Exchange Commission [SEC] Link to more items from this source
[Guidance Overview]
June 9, 2022

"The [SEC on June 8] reopened the comment period on proposed rules for listing standards for recovery of erroneously awarded compensation, and the staff of the Commission released a memo [and fact sheet] that contains additional analyses and data that has the potential to be informative for evaluating the proposals."

Tags: Executive comp

Delaware Chancery Court Refuses to Dismiss Shareholder Claims Related to Equity Grants
Thomson Reuters Practical Law Link to more items from this source
May 31, 2022

"A company's shareholder asserted claims against the company, its chief executive officer (CEO), and its board of directors alleging breach of contract, breach of fiduciary duty, and unjust enrichment based on the company's equity awards to its CEO, which the shareholder alleged violated the company's equity compensation plan. The Delaware Chancery Court rejected the defendants' motion to dismiss." [Garfield v. Allen, No. 2021-0420 (Del. Ch. May 24, 2022)]

Tags: Executive comp  •  Stock Plans

Change in Control Provisions and Treatment of Outstanding Equity Compensation
Morgan Lewis Link to more items from this source
May 25, 2022

"[This article] is aimed at getting the human resources, benefits, and executive compensation functions of your organization ready for a potential sale or similar corporate transaction.... [K]ey considerations in the process that often arise early: [1] identifying, assembling, and analyzing documents that will be automatically triggered or impacted by the potential sale, and [2] determining the expected impact of the transaction on any outstanding equity compensation."

Tags: Executive comp  •  Stock Options

Large Majority of Investors Expect Senior Management Pay to Be Linked to ESG
Corporate Secretary Link to more items from this source
May 23, 2022

"Three in four investors expect senior management pay to be linked to ESG ... [J]ust 46 percent of boards linking executive pay to ESG metrics. Linking pay to ESG is least common in North America, where just over a quarter of companies do so ... And although comparatively fewer investors in North America expect this link, it is still the expectation of 62 percent of investors in the region."

Tags: Executive comp

Ready for a Sale? Prepare Executive Compensation Arrangements and Employee Benefit Plans
Morgan Lewis Link to more items from this source
May 16, 2022

"For many private companies, spring can be a time with fewer calendar year-driven HR projects.... Accordingly, this may be the perfect time to take stock of your executive compensation arrangements and employee benefit plans so that you are ahead of any issues that may arise in the context of an ultimate sale or liquidity event.... This post provides general guidelines, suggestions, and considerations for getting started on the deal process and getting organized."

Tags: Executive comp  •  Health Plan Design  •  Retirement Plan Design

IRS Reverses Course on Treatment of Deferred Compensation Expense
Miller & Chevalier Link to more items from this source
[Guidance Overview]
May 12, 2022

"In a recently issued Chief Counsel Advice Memorandum, Generic Legal Advice Memorandum (GLAM) 2022-001, the IRS concluded that deferred compensation expense that is deductible in years subsequent to the enactment of the section 250 deduction for foreign-derived intangible income (FDII) but which relates to services provided in pre-FDII years should be allocated to FDII, even though FDII did not exist in the prior years to which the compensation relates. This position stands opposite to previous informal guidance issued by the IRS in the context of prior section 199, with the new GLAM stating that it 'reflects the reconsidered advice' of the IRS and that prior guidance from 2009 is obsolete."

Tags: Executive comp  •  Stock Options

Beware of 'Affiliated Group' for Excess Parachute Payments Under Section 280G
Holland & Hart LLP Link to more items from this source
[Guidance Overview]
May 5, 2022

"Because partnerships are excluded from coverage under Section 280G, there is a tendency to stop the analysis there.... However ... all members of the same affiliated group as defined in Code Section 1504 ... are treated as a single corporation for several purposes under Section 280G.... [T]his means that one corporate taxed entity in the selling affiliated group can result in making Section 280G applicable to entities and their service providers that would have otherwise been exempt from the Section 280G rules had there been no corporate taxed entity."

Tags: Executive comp

Editor's Pick 2022 Compensation Committee Handbook (PDF)
Skadden Link to more items from this source
May 3, 2022

"This year's Handbook reflects updates in applicable law and practices, including the SEC's proposed clawback rule in connection with the Dodd-Frank Act; compensation design considerations in the continuing era of COVID-19 and other uncertainties; the now-widespread focus on gender pay gap and environmental, social and governance considerations; and the evolving role of compensation committees in light of these and other developments.... [T]he Handbook is intended to help compensation committee members understand and comply with the duties imposed upon them and to serve as a useful resource for those who advise compensation committees."

Tags: Executive comp

Sixth Circuit Invalidates Longstanding IRS Administrative Practice
The Wagner Law Group Link to more items from this source
Apr. 21, 2022

"The challenged agency action ... was Notice 2007-83, entitled 'Abusive Trust Arrangements Utilizing Cash Value Life Insurance Policies.' ... The plaintiffs ... were penalized for failure to file Form 8886 to report this listed transaction on their tax return.... [T]he issue on which the Sixth Circuit decided the case was the failure of the IRS, in issuing Notice 2007-83, to comply with the notice and comment period requirements of the Administrative Procedure Act." [Mann Construction Inc. v. U.S., No. 21-1500 (6th Cir. Mar. 3, 2022)]

Tags: Death Benefits & Life Insurance  •  Executive comp

Restricted Stock: A Key Element in Incentive Compensation for Bank Executives
Jones Walker Link to more items from this source
Mar. 29, 2022

"For banks seeking to attract and retain the best talent, restricted stock has become a popular alternative for providing incentive compensation to bank executives. Restricted stock may take the form of either a restricted stock award (RSA) or a restricted stock unit (RSU). Both have significant retentive value, but they have important differences that affect the interest of the executive."

Tags: Executive comp  •  Stock Options  •  Stock Plans

Executive's Change of Control Severance Benefits Were Not Subject to ERISA
Thomson Reuters Practical Law Link to more items from this source
Mar. 21, 2022

"The executive asserted that the disputed amendment applied: For a short period of time (only 15 months) and to a small group of employees. Only contingently (that is, if there was a change in control and if an employee was terminated without cause or terminated her employment for good reason). The district court rejected the employer's argument that its amendment required the kind of discretionary decisionmaking that characterizes ERISA plans." [Grey v. Forescout Technologies, Inc., No. 21-4555 (N.D. Cal., Mar. 16, 2022)]

Tags: ERISA Preemption  •  Executive comp  •  Severance Pay

Appropriately Factoring Risk Into Executive Compensation
Willis Towers Watson Link to more items from this source
Mar. 17, 2022

"There are a few possible ways for companies to incorporate risk, including risk adaptation, risk scoring and risk measurement.... In today's high-risk environment, conscious, thorough, informed management and oversight of risk is imperative. Including a measure in incentive plans also ensures it receives proper board oversight as well as a high and consistent level of attention."

Tags: Executive comp

Tax Season 2022: Key Guidance to Help Prevent Costly Mistakes
myStockOptions.com Link to more items from this source
Mar. 11, 2022

"The fully updated myStockOptions Tax Center provides expert yet easily readable guidance on the filing and reporting of tax returns that involve stock options, restricted stock, restricted stock units (RSUs), performance shares, stock appreciation rights, and employee stock purchase plans (ESPPs)."

Tags: Executive comp  •  Nonqualified Plans  •  Stock Options

Planning Opportunities for Golden Parachute Payments in Light of Section 280G
Holland & Hart LLP Link to more items from this source
Mar. 4, 2022

"[T]here is a presumption under the Section 280G rules that certain payments (including equity grants) made in the 12-month period prior to a change in control are considered parachute payments under Section 280G. If a future transaction seems to be in the cards, companies may want to consider planning around the 12-month rule and taking other measures to reduce potential parachute payments in the hopes of avoiding a cleansing vote."

Tags: Executive comp

What Happens When Proxy Advisors Say No to Executive Compensation?
Farient Advisors Link to more items from this source
Feb. 21, 2022

"ISS and GL, the two most influential proxy advisory firms, may significantly impact a company's [say-on-pay (SOP)] vote with their recommendations.... [W]ith Against recommendations from both ISS and GL increasing, Say on Pay approvals are decreasing.... Although SOP support typically decreases about 24 percent with an ISS Against recommendation, the range of voting outcomes can vary widely."

Tags: Executive comp

SEC Proposes Much More Extensive 'Pay for Performance' Disclosures
Willis Towers Watson Link to more items from this source
[Guidance Overview]
Feb. 10, 2022

"[The SEC] proposal last week to greatly expand what companies would include in their Dodd-Frank 'pay versus performance' disclosure also would require an extensive disclosure of the many performance measures that are most important to companies. Requiring a tabular disclosure of pay measures would prompt companies to reassess how they present the details of their pay programs in their CD&As, so that some companies may decide that a more extensive or different pay discussion is warranted."

Tags: Executive comp

Reopening of the Comment Period for Pay for Performance: Additional Disclosures May Be on the Way
Debevoise & Plimpton LLP Link to more items from this source
[Guidance Overview]
Feb. 10, 2022

"[T]he SEC is considering whether registrants should be required to disclose additional performance measures ... specifically [1] pre-tax net income, [2] net income and [3] a measure selected by the registrant that represents the most important performance measure used to link compensation actually paid during the fiscal year to company performance.... [T]he reopening release requests comment on the application to smaller reporting companies of the 2015 proposal and the additional disclosure requirements discussed in the reopening release."

Tags: Executive comp

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