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<< Older News  |  December 4, 2020

News

All News > Executive comp

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Divorce and the Nonqualified Deferred Compensation Plan
Fulcrum Partners LLC Link to more items from this source
Dec. 3, 2020

"In the same way a NQDC plan is exempt from most requirements of ERISA, requirements are also different regarding the QDRO and an NQDC plan compared to a qualified plan. Although a plan sponsor must comply with a QDRO regarding a qualified plan, in the case of most NQDC plans, the plan sponsor may actually be prohibited from complying with the court order."

Tags: Executive comp  •  Nonqualified Plans

2020 Year-End Key Executive Compensation and Employee Benefits Considerations
Akin Gump Link to more items from this source
Dec. 1, 2020

"COVID-19 has ... had an impact on executive compensation and employee benefits, and given rise to a number of new issues and considerations. These compensation issues present challenges for companies seeking to incentivize and retain key employees in the midst of the current economic conditions while balancing competing responsibilities to various stakeholders.... [1] Performance goals and metrics ... [2] Equity plan share reserves/annual equity grants ... [3] Compensation/benefits reductions/restructuring ... [4] Nonqualified deferred compensation ... [5] Variable hour employee benefits eligibility."

Tags: Executive comp

Managing Compensation Complexity
Meridian Compensation Partners, LLC Link to more items from this source
Nov. 30, 2020

"The confluence of enhanced market uncertainty in an election year with the global economic chaos wrought by the COVID-19 pandemic is forcing corporate boards to confront challenging questions about the treatment of outstanding incentive compensation arrangements. Perhaps more importantly, it might also encourage boards to rethink the structure of their long-term incentive programs going forward."

Tags: Executive comp

San Francisco to Impose Tax on Companies with 'Disproportionate' Executive Pay
Morgan Lewis Link to more items from this source
[Guidance Overview]
Nov. 23, 2020

"San Francisco voters on November 3 approved Proposition L, which imposes an additional tax on businesses whose highest paid executive makes 100 times or more than the median salary of the business's employees based in San Francisco.... [T]he tax applies to any company doing business in San Francisco, not just businesses headquartered in San Francisco.... Proposition L is effective for tax years beginning on or after January 1, 2022."

Tags: Executive comp  •  Local Regulation

Editor's Pick 2020 End of Year Plan Sponsor 'To Do' List: Executive Compensation
Snell & Wilmer Link to more items from this source
Nov. 20, 2020

"[1] Last chance to correct certain Section 409A document failures discovered in 2020 ... [2] Nonqualified deferred compensation deferral elections should be made on or before December 31, 2020 ... [3] Take certain action to address impact of Tax Cuts and Jobs Act on Section 162(m) ... [4] Certain nonqualified deferred compensation plans must be amended before December 31, 2020 ... [5] Code Section 6039 information statements due by January 31, 2021 ... [6] Restore COVID-19 related salary reductions before March 15, 2021 ... [7] Revisit other COVID-19 related compensation decisions."

Tags: Coronavirus (COVID-19)  •  Executive comp

Key Executive Compensation Trends and Issues for 2021
Ogletree Deakins Link to more items from this source
Nov. 12, 2020

"[1] Revisiting clawbacks and 'cause' definitions ... [2] Change in control and severance agreements ... [3] Temporary salary reductions ... [4] 2020 performance awards ... [5] 2021 incentive compensation."

Tags: Executive comp

IRS Compliance Strategy: Excess Executive Compensation Paid by Tax-Exempt Organizations
Faegre Drinker Link to more items from this source
Nov. 11, 2020

"According to [IRS's Tax Exempt & Government Entities Division (TE/GE)], ongoing review of filing data shows that a high volume of tax-exempt organizations paid compensation in excess of $1 million to at least one covered employee, but the organization did not report the section 4960 excise tax on the designated IRS Form 4720. TE/GE's fiscal year 2021 strategy for compliance with section 4960 will include compliance checks and examinations of Forms 4720."

Tags: Executive comp

San Francisco Passes Tax on Highly Paid Executives
Society for Human Resource Management [SHRM]; membership may be required to view article Link to more items from this source
Nov. 10, 2020

"San Francisco voters approved a tax on businesses that pay their chief executive officer (CEO) or 'highest-paid managerial employee' well above the median salary for the rest of their employees.... If a company's top earner makes 100 times more than the company's average worker, the business will have to pay a 0.1% surcharge on its annual business tax payment. If a CEO makes 200 times more, the company will pay 0.2%. If a CEO makes 300 times more, the company will pay 0.3%. The tax will be capped at 0.6%."

Tags: Executive comp

December 31 Is Deadline to Amend Deferred Compensation Plans for Section 162(m) Changes
Husch Blackwell Link to more items from this source
[Guidance Overview]
Nov. 5, 2020

"Every publicly held corporation should confirm that none of its plans or arrangements that are subject to Section 409A ... require that payment be delayed until the Section 162(m) limit no longer applies. Arrangements that are subject to 409A can include employment agreements and severance agreements, as well as SERPs, RSUs, and other arrangements that are traditionally considered to be deferred compensation. Any plan or agreement that includes a mandatory Section 162(m) deferral should be amended by December 31, 2020[.]"

Tags: Executive comp

2020 Use of Environmental, Social, and Governance Measures in Incentive Plans (PDF)
FW Cook Link to more items from this source
Nov. 5, 2020

13 pages. "56% of large companies disclose ESG measures in incentive plans, but the vast majority consider such ESG items as part of non-weighted scorecard or individual performance components of annual incentive plans rather than independent metrics that are formulaically tied to the payout. ESG use in incentive plans ... is most prevalent among Energy, Utilities, and Financials companies (>70% prevalence) and least prevalent among Information Technology and Consumer Discretionary companies (<40% prevalence)."

Tags: Executive comp

NQDC Participants Affected by 2021 Limits for Qualified Retirement Plans
myStockOptions.com Link to more items from this source
Oct. 29, 2020

"The contribution limits of qualified plans are the major reason for the existence of nonqualified plans ... The changes in limits from 2020 to 2021 are slight. If you've already maxed out your qualified plan contributions for 2020, you will probably do the same in 2021, so you will need NQDC plans to defer any salary and bonus increases you expect in 2021."

Tags: Executive comp  •  Nonqualified Plans

Compensation Clawbacks: Trends and Lessons Learned
Foley & Lardner LLP Link to more items from this source
Oct. 21, 2020

"This article summarizes trends in clawback policies and some lessons that can be learned from the growing body of experience with them. For companies that are considering adopting or updating clawback policies, these trends and experiences may help to guide their design decisions."

Tags: Executive comp

Deferred Comp Trap for Publicly Traded Companies: Action Required by December 31, 2020
Warner Norcross & Judd LLP Link to more items from this source
[Guidance Overview]
Oct. 21, 2020

"The TCJA expanded the definition of 'publically traded' to include companies not traditionally considered publically traded, so it's important for an employer to reassess whether it's now subject to Section 162(m).... If a plan includes [a mandatory delay] provision, then the plan should be amended no later than December 31, 2020."

Tags: Executive comp

Determining Annual Incentive Pay for Bank Executives in a Pandemic
Meridian Compensation Partners, LLC Link to more items from this source
Oct. 16, 2020

"Here are several questions that committees should ask to inform their decision making. [1] How did the bank perform relative to budget and/or goals set at the beginning of the year, and how were those results impacted by COVID-19? ... [2] How did the current expected credit loss (CECL) accounting standard impact our performance? ... [3] How have we performed relative to our peers? ... [4] What can we afford? ... [5] How have non-executive employees been impacted? ... [6] How will the communities we serve react to these payouts?"

Tags: Coronavirus (COVID-19)  •  Executive comp

Pay Ratio Disclosures: Annual Proxy Statements Filed in 2021 May Need a New Median Employee Determination
Thompson Coburn Link to more items from this source
[Guidance Overview]
Oct. 12, 2020

"The final rule [requires] each company to make a new determination of the company's median employee at least once every three years.... The disclosures in the annual proxy statement must describe the methodology used to identify the median employee and any material assumptions, adjustments or estimates used.... [W]hen calculating the median employee's annual total compensation, companies must use the same rules they apply to determining the CEO's annual total compensation[.]"

Tags: Executive comp

ESG Slowly Finding Its Way Into Incentive Compensation Plans
Shearman & Sterling LLP Link to more items from this source
Oct. 8, 2020

4-page article, beginning at page 23 of 85-page document. "[This article examines] the forces have led to the increased use of ESG metrics in incentive compensation plans and action items for companies looking to consider incorporating ESG metrics into their incentive compensation programs."

Tags: Executive comp

2020 Meridian Corporate Governance and Incentive Design Survey
Meridian Compensation Partners, LLC Link to more items from this source
Oct. 5, 2020

"The most prevalent performance metrics [for annual incentive plans] continue to be Operating Income, Revenue, Cash Flow and Earnings per Share (EPS).... 17% of the Meridian 200 include ESG metrics as a weighted corporate performance metric in their annual incentive plans ... 97% of Meridian 200 companies grant performance-based vehicles as part of their long-term incentive plans[.]"

Tags: Executive comp

2020 Aggregate Share-Based Compensation (PDF)
FW Cook Link to more items from this source
Sept. 21, 2020

31 pages. "This report covers ... 2017 to 2019, and includes the following: [1] Company-wide annual grant rates ... [2] Overhang, measured based on potential share dilution as well as the fair value of outstanding grants. [3] Frequency and prevalence of long-term incentive plan share requests. [4] Allocation of long-term incentive pools to the CEO and other proxy officers ('Top 5')."

Tags: Executive comp  •  Stock Plans

Discretionary Adjustments to Executive Compensation Call for Careful Disclosure
Corporate Secretary Link to more items from this source
Sept. 17, 2020

"In the wake of uncertainty about the coronavirus pandemic ... many compensation committees are evaluating how to follow through on incentive compensation for their executive teams.... When discretion is permitted, awards that seem excessive can be reduced, and meager awards can be increased. But investors will be wary of companies that exercise discretion -- especially when awards are increased -- so to mitigate ill-will and retain stakeholder trust, companies must prioritize careful disclosure."

Tags: Coronavirus (COVID-19)  •  Executive comp

Certain Deferred Compensation Plans Must Be Amended by December 31, 2020
Skadden Link to more items from this source
[Guidance Overview]
Sept. 11, 2020

"[T]he proposed [IRS] regulations provide that if a plan requires the employer to delay payment until it is deductible under Section 162(m), the plan may be amended to eliminate this requirement without the amendment resulting in an impermissible acceleration of payment under Section 409A. However, such an amendment must be made no later than December 31, 2020[.]"

Tags: Executive comp

Total CEO Pay in U.S. Companies Rose by 5.5% for 2019
Willis Towers Watson Link to more items from this source
Sept. 2, 2020

"[T]otal earned pay for S&P 1500 CEOs increased 5.5% at the median in 2019, a sharp drop from a 13.7% jump in the previous year. The increase marks the smallest rise since a 2.2% increase in 2016. The drop was primarily felt by small- and mid-cap companies. While S&P 500 CEOs saw a 13.1% increase at the median, total pay for S&P 600 and S&P 400 CEOs grew just 4.8% and 0.2%, respectively."

Tags: Executive comp

COVID-19 and Key Issues to Consider in Executive Compensation Programs
Hall Benefits Law Link to more items from this source
Aug. 31, 2020

"Equity award vesting and furloughs ... Performance-based compensation ... Compensation compliance obligations ... Pre-negotiated severance pay.... Deferred salary and pay reductions.... Trading cash for equity.... Severance plans or policies ... Option pricing and repricing."

Tags: Executive comp  •  Stock Options  •  Stock Plans

Should ESG Metrics Be Included in Executive Incentive Plans?
Meridian Compensation Partners, LLC Link to more items from this source
Aug. 31, 2020

"For some companies, it may make perfect sense to tie pay to ESG metrics. Certain industries have clearer ESG initiatives that are already measured, tracked, and disclosed, such as utilities and energy ... and consumer products companies ... [F]or other companies ... it may be too soon to consider including such metrics into pay programs. [In] either case, it is important to identify critical focus areas for your organization, understand your current state, and increase transparency, both internally and externally."

Tags: Executive comp  •  Retirement Plan Investments - ESG

New Rules for Excise Tax on Executive Compensation Paid by Tax-Exempt Organizations
EisnerAmper Link to more items from this source
[Guidance Overview]
Aug. 27, 2020

"[C]larifications in these proposed regulations [include]: [1] A foreign organization that, for its taxable year, receives substantially all of its support (other than gross investment income) from the date of its creation from sources outside of the United States is not an ATEO. [2] Amounts includible in gross income as compensation under IRC Sec. 7872 and related regulations are included in remuneration for purposes of computing the excess compensation."

Tags: Executive comp

Employee Benefits and Executive Compensation Attorney's Role in Corporate Transactions (PDF)
Epstein Becker Green, via Lexis Practice Advisor Link to more items from this source
Aug. 24, 2020

"The key is to identify all of the relevant plans, programs, and arrangements; assemble the appropriate parties to provide a thorough review and analysis of each one so that transaction agreements can be properly tailored; ensure that potential and existing liabilities are addressed; and that any related plans, documents, and agreements impacting the employees can be amended or prepared so that the transaction is a success."

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


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