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Category Archives: Compensation

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Executive compensation disclosure is too great a burden for issuers

Posted in Compensation

Although you may have missed the fireworks and the parade, we celebrated the one year anniversary of the JOBS Act on April 5th.  Of course you wouldn’t have been alone if you missed the big celebration because, unfortunately, despite the initial hype surrounding the JOBS Act, not much has happened.  The media has chastised the… Continue Reading

Will director compensation be the next target?

Posted in Compensation

Since 2007, executive compensation practices of public companies have been at the forefront of activist shareholders’ and shareholder rights groups’ agendas. Mandatory say-on-pay proposals, enhanced executive compensation disclosure, compensation committee and compensation consultant independence rules are just a few of the recent significant changes to the laws and regulations applicable to public companies in the… Continue Reading

Securities Law 101 (Part IV): Paying employees with stock – Don’t get tripped up!

Posted in Compensation

This is the fourth part of our Securities Law 101 series.  Because capital raising is such a critical function for middle market companies, we designed this series to introduce their management teams to some of the fundamental concepts in securities law.  We hope that this series will prevent some of the most common mistakes management… Continue Reading

Say-on-pay litigation: Round 2

Posted in Compensation

Why doesn’t the plaintiffs’ bar believe Congress means what it says? The Dodd-Frank Act could not have been more clear that the outcome of the mandatory say-on-pay advisory vote for public companies does not create or imply any change to the fiduciary duties of board members. However, as we have discussed in previous blog posts,… Continue Reading

Are your compensation committee members independent?

Posted in Compensation

Compensation committees remain on the hot seat.  Stemming from the Dodd-Frank Act, the SEC has adopted rules directing each national securities exchange to require companies with listed equity securities to comply with new compensation committee and compensation advisor requirements. Among other things, these new rules require national securities exchanges to implement listing standards that require… Continue Reading

Binding say-on-pay: Is it coming to a public company near you?

Posted in Compensation

Following the recent financial crisis and government bailouts of major U.S. financial institutions, the federal government has gradually facilitated a power shift from companies and their officers and boards of directors to their shareholders. A prime example of this is the recently enacted “say-on-pay voting” requirements. Through provisions of the Dodd-Frank Act which was passed… Continue Reading

Has New Life Been Given to Derivative Suits Based on Failed Say-On-Pay Votes?

Posted in Compensation

Section 951 of the Dodd-Frank Act states that the results of a shareholder say-on-pay advisory vote will not trigger or imply a breach of fiduciary duty. Because Congress went out of its way to be explicitly clear on this point, most legal commentators felt that shareholder derivative suits based on failed say-on-pay votes, without more,… Continue Reading

Will Dodd-Frank Mandated Executive Compensation Disclosures and Related Items Apply to the 2012 Proxy Season?

Posted in Compensation

On August 2, 2011, the Securities and Exchange Commission (the “SEC”) released a revised Dodd-Frank rulemaking calendar. The new calendar indicates that rulemaking pertaining to the following sections of the Dodd-Frank Act will be delayed until the first half of 2012: §§953 and 955: Adopt rules regarding disclosure of pay-for-performance, CEO pay ratios, and hedging… Continue Reading

IRS Clarifies 162(m) Deduction Requirement

Posted in Compensation

The IRS recently issued proposed regulations under Internal Revenue Code Section 162(m) relating to the deduction limitation for certain employee remuneration in excess of $1,000,000, which if passed, will have a significant impact on the design of equity based compensation plans for existing public companies and privately-held companies that ultimately become publicly held. Under Code… Continue Reading

Are the Say-on-Pay Votes “Advisory” After All?

Posted in Compensation

When Congress passed the Say-on-Pay provision in Dodd-Frank, there was some concern whether the required vote, even though advisory, would increase the risk for Boards.  As it turns out, the risk is real.  Approximately 35 companies have received a vote of less than 50% in support of their executive compensation programs.  Of these 35 failed… Continue Reading

SEC Adopts New Rules Concerning Use of Compensation Consultants and Conflicts of Interest

Posted in Compensation

 Last week, the SEC proposed new rules required by Section 952 of Dodd-Frank Act.  Under the proposal, compensation committees may engage a compensation consultant or other advisor, including legal counsel, only after taking into consideration the following factors, and any other factors determined by the national securities exchanges: 1) provision of other services to the… Continue Reading

National Securities Exchanges to Adopt New Listing Standards to Ensure Independence of Compensation Committees

Posted in Compensation

Last Wednesday, the SEC proposed new rules required by Section 952 of Dodd-Frank Act.  Under the proposal, each national securities exchange will be required to adopt new listing standards to prohibit the listing of any issuer that is not in compliance with the exchange’s independence requirements for compensation committees.  While compensation committees will need to… Continue Reading