ExecutiveLoyalty.org

New Developments  as of 2017.02.11


2017.02.07  Stock Award Web Process Works: Non-compete Enforced.   As a general matter, employers “win” when they seek to enforce stock plan terms that have been fairly disclosed -- and accepted -- by award recipients.  ADP recently had such a victory.  In a case decided under New Jersey Law, the 3rd Circuit upheld the granting of a preliminary injunction against two former employees who had joined a competitor in violation of restrictive covenants set forth in their stock awards.  The former employees argued that ADP’s web-based system for issuing stock awards did not adequately alert them to the consequences of the stock awards they accepted. They lost because . . . continued at New Jersey Law.


2017.01.21  Equity Awards - When No Good Deed . . . Employers often assume that they will avoid litigation when acting in what they believe will be the best interests of their employees. For instance, shortening a vesting schedule from 4 years to 6 months would seem favorable to stock option holders. Until they sue. That's what Uber faces from a complaint alleging . . .  continued at Stock Award Litigation


2017.01.10  Top Hat Forfeiture Enforced for Executive's Refusal to Sign Non-Compete (WD Penn).  As a general matter, employers win when they seek to enforce the unambiguous terms -- and forfeiture provisions - of their top hat and other executive-only ERISA plans.  Good faith administration by the employer is ordinarily sufficient.  Case in point: a Penn. district court upheld forfeiture of top hat benefits where an executive refused to sign a non-competition agreement that the underlying plan required as a condition for benefits.  The court's decisions are worth review because they dig into . . . continued at Vesting and Forfeiture

  

2016.10.30  Equilar Data Suggests "Meaningful Limit" Risk for Director Compensation.  There is a huge gap growing between the dollar limits that shareholder-approved plans are imposing and . . . continued at Director Compensation Limits under the entry dated 2016.10.30.


2016.10.22  Monitoring Incentive Compensation: Either Create a Tail, or Chase Yours. Last week, the president of the New York Federal Reserve understandably warned banks to continually assess their incentive compensation structures. He said, “If the incentives are wrong and accountability is weak, we will get bad behavior and cultures.”  Use this link for discussion of why the best answer to providing the “right” incentives likely comes from greater use of performance-based deferred compensation.  


2016.09.12  Roadmap for Avoiding Director Compensation Litigation.  Law360 reports today that a Delaware Chancery Judge has approved the settlement of shareholder derivative litigation alleging Citrix paid excessive director compensation. Those who want to defuse the risk of similar litigation would be wise to consider the settlement requirements for survey data covering cash and equity compensation, an independent consultant, enhanced proxy statement disclosure, and shareholder-approved limits on director compensation.  Further info at Director Compensation Litigation​​

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