Notable Developments as of 2018.30.18
2018.12.05 Asset Purchasers Beware - Constructive Notice of Union Pension Plan Liability. A recent 9th Circuit decision called out a common misconception -- in the form of "incorrect legal advice" that the buyer received prior to closing -- that "[a]bsent an express assumption of liability, the Buyer does not assume the [withdrawal] liability." The decision went on to hold a private equity fund liable for $480,000 of withdrawal liability, even though all parties conceded that the purchaser had no actual notice of the liability. Unfortunately for the buyer . . . continued atPension Liabilities.
2018.11.30 GM Layoffs and a Smart Two-step RIF Strategy. It is never easy to downsize a workforce. The best companies aim to combine a considerate exit for those who leave, with morale-building incentives for those who remain. What better way to start than GM just announced . . . continued at Two-step RIFs.
2018.11.17 Broad-based Equity Awards: Does Amazon Lead Again? In the equity
award world, there is a regular debate about whether employers should make equity awards below the key employee level. For rank-and-file employees, cash bonuses and other workplace benefits (such as flexible hours) motivate better than low-levels of equity awards. Amazon seems to have reached that conclusion based on recent reports that RSU awards would be eliminated for . . . continued at Stock Award Practices.
2018.11.12 M&A-related Executive Compensation Issues. For the ABA's joint committee on employee benefits (JCEB), my Nov. 9th presentation was titled "Hot M&A Topics in Executive Compensation:From Avoiding Disasters to Making Deals Work." For a copy of the PowerPoint or for questions relating to the impact of a merger or sale, feel welcome to send me an email.
2018.10.18 Eve of Vesting Termination - Equity Intervenes? Following a stock purchase, an executive of the target company indicated his desire to leave when his employment agreement was scheduled to expire. The purchaser responded by terminating his employment one month beforehand, thereby preventing the executive from vesting in $425,000 of LTI benefits. The last paragraph of the 5th Circuit's decision seems to indicate . . . . continued with case link at Stock Award and LTI Litigation.
2018.10.16 Tax Exempt Organizations: Governance Rules and Practical Advice. Feel welcome to listen to this Wagner Law Webinar focused on the governance, design, and tax considerations that are particular to tax exempt organizations with respect to their executive compensation determinations and structures. Just email Mark for a copy of our PowerPoint. For relevant rules, survey data, and helpful resources, see Executive Compensation - Tax Exempt Orgs.
2018.09.30 Earn-out + ESOP Fiduciary Duty= SROF. In Austin v. Commissioner, the Tax Court rejected arguments that two 47.5% shareholders were not taxable on their restricted stock awards at the time of grant because, quoting from the decision . . . continued atSubstantial Risk of Forfeiture (SROF).
2018.09.25 CalPERS, Executive Compensation . . . and Elizabeth Taylor! These three may seem like strange bedfellows, but the nexus comes from this truism about executive compensation: shareholder outrage erupts in down markets, and evaporates during booms. Witness for example the efforts of CalPERS to awaken some pay-for-performance alignment. For the years 2011 through 2017, CalPERS voted "no" for say-on-pay about 16% of the time. In 2018, that "no" vote percentage leapt to . . . continued at Say on Pay.
2018.09.24 Beware "Entire Fairness": It Sets a High Bar for Decisions about Director and Officer Compensation. In contrast to the fizzle that followed failed say on pay litigation, claims of excessive compensation not only have legs, but momentum. Within past weeks, one pharma company settled such litigation, and another was sued based on allegations that tend to give rise to these cases, namely . . . continued at Director Compensation Litigation.
2018.09.21 Executives Behaving Badly - Remedies under Virginia Law. The fact pattern in a recent Virginia case was not atypical: a senior executive allegedly misled his employer into paying him excessive bonuses. For a detailed discussion of the potential claims by which employers may seek recovery, see this link.
Notable Updates in 2018:
|Executive Compensation||Loyalty||Business Issues|
Restrictive Covenants (state-by-state guide)
Shareholder Litigation (vs corp directors)
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