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Rationalizing the Dodd-Frank Clawback

69 pages. "[T]he SEC's proposed Dodd-Frank clawback, while reducing executives' incentives to misreport, is overbroad. The economy and investors would be better served by a more narrowly targeted 'smart' excess-pay clawback that focuses on fewer issuers, executives, and compensation arrangements."

DOL Releases Final Amendment to the QPAM Exemption

"The amendment includes a number of new requirements for entities seeking to rely on the QPAM Exemption, as well as additional categories of crimes and misconduct that could result in the loss of the exemption."

Chancery Finds Tesla Board Breached Fiduciary Duties in Approving

"The court viewed Tesla's Compensation Committee as having simply given Musk whatever he wanted.... The decision offers cautionary lessons for boards negotiating executive compensation plans -- but presents a unique fact situation.... The case highlights the drawbacks of a compensation committee not being comprised of at least one clearly independent director." [Tornetta v. Musk, No. 2018-0408 (Del. Chanc. Jan. 30, 2024)]

DOL Releases New Proposed Definition of Investment Advice

"[T]he proposal does appear to alter the existing framework in some very meaningful ways.... These changes have the collective effect of significantly lowering the bar for what would be considered fiduciary investment advice. And, in what could be a troubling development, the new proposal does not seem to have a carveout for advice rendered to sophisticated plan fiduciaries in the 'sales' context as under the 2017/2018 Rule."

Preparing for Clawback Standards Compliance Deadline of December 1

"[S]teps that issuers should consider: [1] Inform company leadership.... [2] Review existing policies.... [3] Review incentive plans, award agreements and employment arrangements.... [4] Review indemnification obligations and related insurance policies.... [5] Prepare for public disclosures."

Imagining a World Without QPAM

"There are some clues sprinkled throughout the preamble that shed some light on the underlying biases that seem to be driving the DOL's efforts. An examination of these clues reveals, however, that the DOL's 'solutions' are likely unwarranted; there is nothing so broken as to require such a radical fix."

IRS Finalizes Regs Under Section 162(m) (PDF)

"The application of Section 162(m) to a corporation's distributive share of a subsidiary partnership's deduction for compensation expenses ... is effective with respect to any compensation paid after December 18, 2020, unless such compensation is paid pursuant to a written, binding contract in effect on (and not materially modified after) December 20, 2019. The definition of 'covered employee' applies to all taxable years ending on or after September 10, 2018, unless the publicly held corporation's fiscal year and tax year do not end on the same date, in which case it applies to all tax years ending on or after December 20, 2019."

Fifth Circuit Issues Mandate Vacating the DOL Fiduciary Rule (PDF)

"Asset managers who revised subscription documents, placement agent agreements, marketing materials and other documents to take advantage of the Fiduciary Rule's 'Independent Fiduciary Exception' may begin removing that language from those documents ... Asset managers who suspended investment by IRAs and other ERISA clients that were unable to meet the requirements of the Independent Fiduciary Exception may now admit those investors to applicable products, to the extent any such investors would have been admitted prior to June 9, 2017."

Pay Ratio: The Time Has Come

"The latest guidance emphasizes the fact that many aspects of the rules are designed to provide flexibility in how issuers approach compliance with the pay ratio calculation and disclosure requirements and that there is the ability to use methods that are tailored to fit an issuer's facts and circumstances."

Pay Ratio: The Time Has Come (PDF)

"The new guidance makes clear that issuers have a variety of options on how to approach the required determinations and calculations, but, even with the level of flexibility allowed, there is a substantial process that must be undertaken, which needs to start sooner rather than later to ensure that there is enough time to make appropriate decisions and complete the implementation of the chosen methodology."