Executive Pay and Loyalty

New: see ERISAcloud.com for retirement and welfare plan updates, 
        from a compliance, litigation, and risk management perspective
.

New Developments >>> revised 2015.March.05

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2015.Feb.26  Being Smart about CD&A Presentations 
Over the past several years, public companies have seen their proxy statement disclosure of executive compensation evolve from an exercise in thoroughness to a challenge about how best to convince shareholders that sound decisions effectuate a pay-for-performance regimen. The highest premiums attach to (1) starting with effective summaries, (2) including visual support, and (3) being proactive to defuse red flag items within the summary compensation table.  For some thought provoking ideas, see "Innovations in CD&A Design: A Proxy Disclosure Analysis" - a joint report from Equilar and RR Donnelley.

2015.Feb.11  2015 ISS Policy FAQs re Executive Compensation and Stock Plan Proposals
The ISS FAQs for 2015 shareholder meetings are organized as follows 
. . . continued at Proxy Advisors.
      >>> See also ISS re Shareholder Approval of Stock Plans.

2015.Feb.10  SEC No-Fault Clawback Succeeds in Settlement (vs. Saba Executives).  This SEC announcement of clawbacks totaling about $500,000 from two executives, who were not charged with wrongdoing, warns that . . .  continued at Clawback Enforcement (SOX 304).

2015.Feb.09  SEC Proposes Hedging Disclosure Rules
See SEC Hedging Disclosure Rules.

2015.Feb.08  New Clawback Survey and 2015 Accounting Twist
For detailed information about the design of clawbacks, see this PwC survey drawn from proxy statement disclosures by 100 large public companies. Of more immediate concern than the survey results is the discussion under "Accounting Considerations" that appears on page 5, because  . . . continued at Clawback Surveys. See generally Clawbacks - Homepage.

2015.Jan.19  $400+ Million Settlement in “Non-Poaching” Case Highlights Antitrust Risks to Employers
Media outlets reported last week that Google, Apple and two other defendants have agreed to settle the case which alleges that they agreed not to “poach” employees from one another.  Initial reports suggested that the settlement is in excess of $400 million with the exact amount to be publicly disclosed in a court filing shortly. The settlement demonstrates the risk of antitrust class action cases in which successful plaintiffs can not only obtain treble damages, but each defendant can be held individually liable for the damages caused by the entire conspiracy.  News of this settlement is a reminder for employers to . . . continued at Recruiting of Executives.

2015.Jan.13  Director Compensation 2015 . . . Mercer and FW Cook Surveys
"Longstanding trends continued in 2013" according to a Mercer survey reporting that director compensation increased by 5% in 2013, driven by increased retainers and equity awards (and balanced by reduced committee meeting fees).  Continued at . . . Director Compensation Surveys. See also: Director Compensation Litigation because this remains a high-risk area.

2015.Jan.06  Non-qualified Plans and Late FICA Withholding – Retirees Win Round 1 of Class Action.  On January 6th, a Michigan district court granted summary judgment to retirees who paid increased FICA taxes on their deferred compensation and SERP benefits because of Henkel Corp.’s failure to withhold FICA when the payments were earned (rather than later when they were paid). Employers should take note because the court granted class action status -- and found for the retiree class – for three main reasons that are worth self-inspection.  Continued at . . . Non-qualified Plan Litigation.

2014.Dec.29  Rescission of Stock Award to End Litigation (Annual Limit Exceeded) 
Another company has had the misfortune of being subject to a "gotcha" claim arising from inadvertently making stock awards in excess of the annual per person limit set forth in the underlying stock plan. In rescinding the excess awards, the company stood by its decision, stating in its Form 8-K that . . . continued at Litigation alleging Excessive Compensation.

2014.Dec.11  Noncompetes and Employee Agreements: Throw in a Peppercorn
Due to state and local law vagaries regarding what establishes adequate consideration for contractual commitments, employers should be wary of relying exclusively on continued employment and other non-cash benefits. Cash is generally king -- and better than a peppercorn -- when courts face these issues. This advice came to mind from Law360's report that Pennsylvania's Supreme Court will hear an appeal as to whether continued employment is sufficient to support a noncompete. Oh to have paid . . . continued at Noncompete Litigation - Penn. 

2014.Nov.13  Another Stock Award Scandal?
About a decade ago, a stock option scandal arose from academic studies showing that the grants had to have been backdated because the exercise prices were timed to market lows (in order to maximize upside gain for the recipients).  A new academic study concludes “that CEOs strategically time corporate news releases to coincide with months in which their equity vests.”  Titled “Strategic News Releases in Equity Vesting Months,” professors from the London Business School, the London School of Economics, and the National University of Singapore’s Business School cite the following evidence . . . continued at Litigation alleging Stock Award Abuses.

Other pages updated within the past 60 days:
>>> See Past Alerts.

2015 Speaking and Business Travel (feel welcome to contact Mark if an ancillary meeting is desired)

  • 2015 May (week of May 18th) -- In Brussels moderating IPEBLA Panel re Global Pension Governance.
  • 2015 June 11/12 -- In NYC for PLI presenting re Private Company M&A and Employee Benefit Issues (more info).


Topical Index

Loyalty Duties:

Generally

     
By Contract (e.g. non-competes)

By Geographic Area

By Law

Enforcement of Loyalty:




  Executive Compensation:
Disclosure

Governance

Litigation


Say on Pay

Georgetown Law Class Spring 2014
  
"Executive Compensation - Governance, Securities, and Tax"

DISCLAIMER: This site provides general information for educational purposes, is not intended either to provide legal advice or to be relied upon in any way.  There is no substitute for personal legal counsel about your particular situation. This site is not affiliated with any law firm, and merely provides the views of Mark Poerio in his individual capacity. See Disclaimer for all rules of usage for this site.

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Mark Poerio