Proxy advisory firms Institutional Shareholder Services (“ISS”) and Glass Lewis (“GL”) each published their annual policy updates for 2023, which updates made certain changes relating to executive compensation.[1] As a general matter, the changes are incremental to the existing policies and do not significantly change the rubric by which ISS and GL review compensation
Final SEC Clawback Rules: Key Dates that Issuers Need to Know
On November 28, 2022, the Securities and Exchange Commission (the “SEC”) published the final clawback rules (the “Final Rules”) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in the Federal Register.
Now that the Final Rules have been published in the Federal Register, issuers should be aware of the following key
Long Time Coming: SEC Adopts Final Dodd-Frank Clawback Rules
Twelve years after the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and many years after the Securities and Exchange Commission started considering regulations implementing the clawback provisions of Dodd-Frank, the SEC published the Final “Clawback” Rules (the “Final Rules”) on October 26, 2022. The Final Rules task national securities exchanges (“exchanges”)
Practical Considerations for New Pay vs. Performance Disclosure Requirement
The SEC’s final rule on Pay Versus Performance becomes effective on October 8, 2022, and will require new executive compensation disclosures for the upcoming proxy season (for annual proxy statements that include executive compensation disclosure for fiscal years ending on or after December 16, 2022). The new rule implements a requirement of the 2010 Dodd-Frank Act that public companies disclose “a clear description” of compensation paid to their top executives, including information “showing the relationship between executive compensation actually paid and the financial performance of the issuer.”
Stranger in a Strange Land: Surprising Applications of U.S. Golden Parachute Rules in Cross-Border Transactions
Background
The “golden parachute” excise tax regime under Internal Revenue Code Sections 280G and 4999 (“Section 280G” and “Section 4999”, respectively) is at the core of both public and private U.S.-based transactions. While often overlooked, it is crucial to remember that the issues raised by Sections 280G and 4999 can – and do – apply
California Independent Contractor Classification Becomes Even More Thorny, as California Supreme Court Holds Strict ABC Test Applies Retroactively
On January 14, 2021, the California Supreme Court decided, at the request of the Ninth Circuit, that its decision in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) applies retroactively. See our California Employment Law Update for more on this significant decision.
Applying the strict “ABC test” for determining whether
Executive Compensation Considerations for COVID-19 (Salary/Wage Reductions)
COVID-19 has had significant impacts on all aspects of business. While employers are assessing how to handle immediate employee needs related to sick leave, family leave and benefits claims, employers should also consider the impact that changes in their workforce or economic conditions will have on their compensation plans and programs.
Click here to read
Executive Compensation Considerations for COVID-19 (Leave)
COVID-19 has had significant impacts on all aspects of business. While employers are assessing how to handle immediate employee needs related to sick leave, family leave and benefits claims, employers should also consider the impact that changes in their workforce or economic conditions will have on their compensation plans and programs.
Click here to read
Looking Ahead to the 2018 Proxy Season: Preparing for CEO Pay Ratio Rules Disclosure Requirements
Pay ratio disclosure rules requiring public companies to disclose the ratio between the annual total compensation of the median employee and the company’s principal executive officer are effective for fiscal years beginning on or after January 1, 2017. Accordingly, most public companies will need to comply with the rules beginning with the 2018 proxy season.
Sun Capital Court Finds Co-Investing Funds Part of Controlled Group and Liable for Portfolio Company’s Pension Liabilities
As we previously reported, in Sun Capital, the U.S. Court of Appeals for the First Circuit held in 2013 that a private investment fund, pursuant to the so-called “investment plus” test first articulated by the Pension Benefit Guaranty Corporation (the PBGC), was engaged in a “trade or business” under the Employee Retirement Income Security Act of 1974, as amended (ERISA) and could therefore be part of a “controlled group” with one of its portfolio companies and potentially liable for the portfolio company’s underfunded pension liabilities. The Sun Capital case was remanded to the U.S. District Court of Massachusetts for further proceedings on whether a related private investment fund that invested in the portfolio company was also engaged in a “trade or business” and whether the two funds were under “common control” with the portfolio company. On March 28, 2016, the District Court determined that the second private investment fund was engaged in a “trade or business” and that the two funds’ co-investment in the portfolio company constituted a “partnership-in-fact” (resulting in the aggregation of their ownership interests in the portfolio company) that was also engaged in a “trade or business.” This determination resulted in both funds being treated as part of the portfolio company’s “controlled group.”