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Is Simplification in the Works for SEC's Executive Compensation Rules?

"The SEC announced [May 16] that it will host a roundtable on June 26, 2025, to discuss executive compensation disclosure requirements.... The nine questions posed by Chairman Atkins pretty much cover the waterfront on the patchwork of disclosure requirements implemented by the SEC over the years."

2024 ISS Policy Update: Severance Arrangements

"ISS will vote on a case-by-case basis on shareholder proposals requiring that executive severance (including change-in-control related) arrangements or payments be submitted for shareholder ratification."

SEC Proposes ESG Disclosures for Investment Advisers and Investment Companies

"The proposal would require funds that consider ESG factors in their investment process to disclose additional information regarding their strategy. The amount of required disclosure depends on how central ESG factors are to a fund's strategy and follows a 'layered' framework[.]"

SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures

"The SEC has proposed rules that would require registrants to provide certain climate-related information in their registration statements and annual reports. The proposed rules would require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition."

Delaware Reaffirms Entire Fairness Standard for Review of Director Compensation

"[T]he Delaware Court of Chancery ... reaffirmed that in most circumstances decisions of directors awarding director compensation are subject to review under the entire fairness standard. The Court also addressed the possibility of stockholder waiver of application of that standard to future director actions ... The litigation addressed compensation of Goldman Sachs' directors -- primarily the stock incentive plans ... approved by Goldman Sachs stockholders in 2013 and 2015." Stein v. Blankfein, No.  2017-0354 (Del. Chanc. May 31, 2019)]

Does a Requirement to Pay 'Target Variable Compensation' Include Equity Awards?

"The Court noted the defendants' interpretation of [the severance agreement] was reasonable, but that it was not the only reasonable interpretation. Just as conceivable, according to the Court, was that the term 'Incentive Compensation' could mean certain items that may be paid in cash or equity ('compensation, variable compensation, bonus, benefit') as well as one item that is only paid or payable in cash ('award'). According to the Court, under this interpretation, regardless of whether the equity awards are 'paid or payable in cash,' they would be included in Batty's accrued Incentive Compensation." [Batty v. UCAR International Inc., No. 2018-0376 (Del. Ch. Apr. 3, 2019)]

Examples of 2019 Pay Ratio Disclosures

"[This article provides] examples of pay ratio disclosures from recently filed proxies where registrants chose to rely on the median employee identified in the prior year. [1] Sabre Corporation ... [2] Seaboard Corporation ... [3] Superior Industries International, Inc.... [4] The Goodyear Tire & Rubber Company."

Revising 162(m) Disclosures in Proxy Statements

"The Section 162(m) deduction limit for performance-based compensation was repealed by the Tax Cuts and Jobs Act, effective for taxable years beginning after December 31, 2017, subject to transition relief. Public companies should consider revising disclosures in their upcoming proxy statements. Recently filed proxy statements may provide some ideas, a sample of which is noted [in this article]. The disclosures seem to range from 'compensation in excess of $1,000,000 will no longer be tax deductible, get used to it' to 'it may not be deductible, but we still intend to tie pay to performance.' "

SEC Targets Perqs in Another Enforcement Action

"[T]he SEC stated [that The Dow Chemical Company] incorrectly applied a standard whereby a business purpose related to the executive's job was sufficient to determine that a benefit would not be a perquisite that required disclosure. As a result, the issuer did not disclose personal use of corporate aircraft and other expenses."

SEC Issues FAQs on Compensation Plan Proposals Included in Proxy Statements

"The SEC has issued a series of frequently asked questions, ... referred to as Compliance and Disclosures Interpretations ... on proxy statements and proxy solicitations. In general the C&DIs replace previously issued telephone interpretations ... [S]ome of the more interesting C&DIs address Item 10 of Schedule 14A which sets forth disclosure requirements when compensation plans are submitted for shareholder approval."