Alerts 2017

ExecutiveLoyalty.org

2017 Alerts

2017.12.30 "Hitting Workplace Harassers Where It Hurts" (National Law Journal). The inspiration for this article traces back to the following statement in a 2016 EEOC study focused on preventing sexual harassment in the workplace: "Much of the training done over the last 30 years has not worked as a prevention tool." There are many tools by which employers may discourage bad employee behavior. Financial devastation for the wrongdoer is one that employers should consider emphasizing, but only after carefully considering . . . continued at "Dismissals for Cause".

2017.12.19  Director Compensation: Boards Beware of New DE Decision. The Supreme Court of Delaware has departed from past precedent in a year-end decision that increases the risk of shareholder derivative litigation alleging that director compensation is excessive. See this Litigation Update.

2017.12.28  Tax Reform Act of 2017 - Executive Compensation Provisions.  For final text of the three sections of TRA 2017 that primarily focus on executive compensation, see Sections 13601 re 162(m), 13602 re tax exempt orgs, and 1363 re qualified equity grants.

2017.11.24  Circuit Split Widens over "Select Group" for Top Hat Purposes. Is an executive's ability to negotiate plan terms required as an ERISA top hat plan? The 3rd Circuit has disagreed with the 2nd, 6th, and 9th Circuits - and agreed with the 1st Circuit in finding that . . . continued at Nonqualified Plans.

2017.10.17  "Dean Foods Gets TRO Blocking Ex-Exec From Rival Dairy" - That title comes from a Law360 article about a Texas state court decision that enforced restrictive covenants set forth in restricted stock awards. This is yet another reminder that employers may achieve significant business protections through minor, though smartly-crafted, refinements to their annual stock or cash bonus awards. Information about the case is available here.

2017.07.05  Substantial Compliance Suffices for ERISA Claims Procedures.  The 8th Circuit has joined others in holding . . . continued at ERISA Claims Procedures.

2017.04.07 Voluntary Severance Plans: Case on Point. For employers wanting to thin their workforces, voluntary severance plans (VSPs) have an often under-appreciated potential to create a win-win dynamic. They can also spur litigation if employees feel they were misled or would have made different decisions with better information. A March 29th decision from Delaware’s federal district court is discussed here because it involves a typical VSP structure, and a litigation risk for employers to avoid.

2017.04.04 Claims Releases and Government Enforcement Risks. The SEC and the EEOC have been slapping significant penalties (up to $1.4 million so far) on employers whose separation agreements with former employees - or employment agreements with active employees -- discourage whistle-blowing actions. See this Release Checklist for provisions to consider updating.

2017.03.23 SEC Pay Ratio Comment Letter – Paul Hastings Assists American Benefits Council. In its comment letter to the SEC, the American Benefits Council not only reiterated the opposition of its members to the Dodd-Frank pay ratio disclosure rule, but also suggested . . . continued at Pay Ratio.

2017.03.31 Shareholder Action Avoids Dismissal due to Alleged Procedural Defects. Law360 reports that Delaware's Chancery Court refused in Casey v Moffett to dismiss claims that directors breached their fiduciary duty by committing corporate waste through paying $18 million of severance to its former CEO under the following alleged circumstances . . . see Excessive Severance Litigation.

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.

2017.04.10 Forum Selection Clause Upheld for ERISA Plan. The 7th Circuit has joined the 6th Cir. in holding that ERISA's venue provision, § 1132(e)(2), is permissive, and does not invalidate a forum-selection clause contained in plan documents. Employers should consider including such provisions and others that discourage litigation - not only in their ERISA plans but also in equity and other non-ERISA plans, as well as employment-related agreements. See Forum Selection Clauses.

2017.04.10 Director Pay Litigation - Dismissed due to Plan Limit. In a comprehensively reasoned decision, Delaware's Chancery Court has endorsed a plan provision setting a limit on director compensation, and has signaled a few precautions for corporate boards to take. See Director Compensation Litigation and Plan Limits.

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.