Executive Compensation Archives - Page 13 of 26

View From McDermott: SEC Proposes New Pay Versus Performance Disclosure Rules

by Andrew Liazos | Jun 23, 2015 | Executive Compensation

On April 29, 2015, the Securities and Exchange Commission (SEC), by a three-to-two vote, proposed new rules that would prescribe new mandatory pay-versus-performance disclosure. The proposed rule would include specific information showing the relationship between executive compensation “actually paid” and financial performance of the registrant. The proposed rule, issue under Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), would add a new Item 402(v) to Regulation S-K.

The key take-away is that covered insurers would not be allowed to use their existing pay for performance disclosure approaches to meet the requirements under the proposed rule. Instead, if the proposed rule is finalized in its current form, covered insurers would be required to include a new “Pay Versus Performance” table. Covered insurers would also be required to provide a “clear description” of the relationship between certain data elements included in the new table.

The proposed rule is “designed, in part, to enhance comparability across registrants. . .” perhaps in connection with shareholders’ “Say on Pay” votes. However, commissioners differed on the usefulness of the information that would be provided by the proposed rule, and the final vote was divided along political lines–similar to how the commissioners voted on the CEO Pay Ratio proposal.

Read the full article.

McDermott’s Todd Solomon Discusses Same-Sex Employee Benefits with the Wall Street Journal

by Diane Morgenthaler and McDermott Will & Emery | May 14, 2015 | Benefit Controversies, Employee Benefits, Employment, Executive Compensation, Fiduciary and Investment Issues, Health and Welfare Plans, Retirement Plans

As the U.S. Supreme Court weighs whether gay couples are constitutionally entitled to marry, more companies in states with marriage equality have begun to mandate that gay employees marry in order to maintain benefits, including health care coverage. In a recent interview with the Wall Street Journal, McDermott partner Todd Solomon discusses the shifting terrain of coverage and benefits that companies offer unmarried gay partners. McDermott lawyers have been monitoring domestic partnership benefits for almost two decades, and, as Mr. Solomon notes, the landscape is definitely changing.

Read the full article, “Firms Tell Gay Couples: Wed or Lose Your Benefits,” in the Wall Street Journal.

SEC Proposes New Pay versus Performance Disclosure Rules

by Andrew Liazos | Apr 30, 2015 | Executive Compensation

On April 29, 2015, the U.S. Securities and Exchange Commission (SEC) voted three-to-two to propose new rules that would prescribe a mandatory pay versus performance disclosure.

Read the full article.

Section 162(m) Final Regulations Clarify Requirements for Exemptions to $1 Million Deduction Limitation

by Andrew Liazos, Ruth Wimer and William R. Pomierski | Apr 14, 2015 | Executive Compensation

On March 31, 2015, IRS issued final regulations clarifying that stock options and SARs will only qualify as performance-based compensation if granted under a stockholder-approved plan that includes an individual limit on the number of such awards that may be granted during a specified period. In addition, only certain types of stock-based compensation are eligible to be treated as “paid” when granted for purposes of qualifying for an exemption under the IPO transition rule.

Read the full article.

For more information about structuring individual limits for equity grants, please see this article in The Corporate Executive.

Council of Institutional Investors Adopts Policy against Automatic Acceleration of Unvested Equity Awards on a Change in Control

by Andrew Liazos and Joseph K. Urwitz | Apr 10, 2015 | Executive Compensation

On April 1, 2015, the Council of Institutional Investors (CII), a shareholder rights advocacy group, adopted a policy opposing the automatic vesting of unvested equity awards on a change in control at public companies. Companies have often provided for such “single-trigger” vesting to encourage executives and employees to work towards the completion of a sale without being concerned about the treatment of their equity awards when the deal is consummated. The CII policy provides that a company’s board should have discretion to permit full, partial or no accelerated vesting of awards on a change in control and, if it decides to accelerate vesting in full, should disclose in public filings a detailed rationale of the decision and how it relates to shareholder value. CII follows Institutional Shareholder Services (ISS), a shareholder advisory firm, which treats single trigger vesting as a factor weighing against its positive recommendation of an equity award plan subject to shareholder approval. ISS’s policy is discussed in more detail here.

SEC Proposes Disclosure Rule for Hedging Transactions by Directors, Officers and Employees

by Andrew Liazos and William R. Pomierski | Mar 10, 2015 | Executive Compensation

The U.S. Securities and Exchange Commission recently issued a proposed rule that would require public companies to disclose in annual proxy statements whether their employees and board members may hedge or otherwise offset any decrease in the market value of such companies’ equity securities. The proposed rule implements Section 955 of the Dodd-Frank Act and covers a broader range of transactions than typical hedging policies.

Read the full article.

Recent U.S. Cases Highlight Liability Risks to Executives in Mining, Heavy Industrial Transactions

by Bethany Hatef, Daphne W. Trotter and Thomas Sauermilch | Feb 17, 2015 | Executive Compensation

Historically, corporate executives rarely faced personal or criminal liability resulting from mining or environmental accidents in the United States. Several criminal cases stemming from two recent disasters, however, indicate that the tide may be turning. These disasters, the repercussions of which have been playing out recently in the U.S. criminal courts, should put private equity and strategic investors in the mining and heavy industrials space on alert. Thorough due diligence into a target’s past operations and compliance record is more important than ever before.

Read the full article.

ISS and Glass Lewis Update Proxy Voting Guidelines for 2015

by Andrew Liazos and Thomas P. Conaghan | Dec 16, 2014 | Executive Compensation

Institutional Shareholder Services Inc. (ISS) and Glass Lewis have released their annual updates to their proxy voting guidelines for the 2015 proxy season.

Read the full article.

Cracking the Code: Taxing Developments in Benefit Compliance

by McDermott Will & Emery | Sep 19, 2014 | Executive Compensation

When a nonqualified deferred compensation plan qualifies as a “top-hat” plan under the regulations of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the benefits of that particular classification to an employer are that the plan is exempt from various reporting, disclosure and funding rules. These exemptions can significantly ease an employer’s administration and maintenance of a nonqualified deferred compensation plan. Because of this simplicity, employers are more willing to offer these types of nonqualified deferred compensation arrangements and thereby offer an additional tax deferral opportunity to the select group of employees participating in the plan. However, not appropriately qualifying for the top-hat exemption means that a non-qualified deferred compensation plan can be recharacterized as a tax-qualified plan and therefore, unintentionally being required to legally expand eligibility for the deferred compensation plan to a much larger, unanticipated group of employees. Therefore, getting the top-hat qualification right is critical for the plan sponsor’s protection.

Read the full article.

Camp Tax Reform Proposal Targets Executive Compensation

by Andrew Liazos | Aug 5, 2014 | Executive Compensation

On February 26, 2014, U.S. House of Representatives Committee on Ways and Means Chairman Dave Camp (R-Mich.) released the proposed Tax Reform Act of 2014 (the Camp Proposal). In addition to simplifying the Internal Revenue Code (IRC) and reducing corporate and individual tax rates, the Camp Proposal would fundamentally change the income tax rules that apply to nonqualified deferred compensation arrangements and would further restrict tax deductions available to publicly held corporation when paying named executive officers. It would also impose a new excise tax on employees of certain tax-exempt organizations who receive excessive compensation and certain payments that are contingent upon a change in control. Although unlikely to be enacted this year, the Camp Proposal provides a blueprint for other legislators to propose tax law changes that would significantly impact current executive compensation practices. Given the current political environment and the way tax revenue is estimated by Congress when preparing budgets, it is likely that we have not seen the last of the executive compensation changes included in the Camp Proposal, which makes it important to understand how they work and what they would mean for current executive compensation programs.

Read the full article.

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