ExecutiveLoyalty.org
2019 Alerts
2019.12.22 Tax-exempt Orgs: Watch your 457(f) Plan!!! If you have ever heard of golden parachutes, you likely think of change-in-control payments made by for-profit companies. Tax-exempt organizations had better pay attention to that term because they could trigger a 21% excise tax if . . . continued at 457(f) plans and Code Section 4960.
2019.12.12 Executive Plan Liability for Who Participates. Employers generally have broad discretion when selecting who participates, and how much they receive, in stock award plans, supplemental retirement plans (aka SERPs), and other non-qualified plans. There are limits, however, as illustrated by this New York decision holding a nonprofit organization liable to its CFO for denying ... continued at Executive Plan Litigation.
2019.11.27 "Two Opinions Demonstrate Importance of Prudent Administrative Procedures and Substantive Decisions in Responding to ERISA Benefit Claims" is an excellent Wagner Law Alert by Jordan Mamorsky. More info at ERISA Litigation Precautions.
2019.11.22 Executive Employment Agreement Insights: From High Stakes to Competing Interests. This comprehensive article (featured in Law360) practically serves as a terms sheet in that it examines the material terms of executive-level employment agreements - with insights that contrast the perspectives of employers and executives. Part 1 covers compensation, benefits and noncompetes / Part 2 covers severance scenarios, changes in control, taxes (409A and golden parachute) and dispute resolution.
2019.10.13 SERP Basics and P4P (pay-for-performance). This U.S. News article provides a good intro into supplemental executive retirement plans (aka SERPs), and aptly notes that they often work well for private companies that do not offer stock awards. The real art for SERPs comes, in my experience, from correlating executive benefits to corporate and other performance goals. That combo can provide a long term win-win for employers and executives.
2019.09.09 Executive Retention and Change in Control Planning. Before merger or sale negotiations begin, potential sellers (or targets!) should get their severance house in order. From survey data about change-in-control benefits, to springing rabbi trusts, to ERISA-fied plans, to post-closing administrative protections, see this M&A Precaution Checklist.
2019.09.05 Severance Litigation: Precautions to Consider. A recent 5th Circuit decision demonstrates why the precise drafting of severance-related agreements and plans is the surest step by which employers may avoid costly severance litigation. Two other employer precautions will also knockout gadfly claims for enhanced severance benefits. Read more here.
2019.09.03 Executive Compensation and Societal Good. If you blinked during your summer vacation, you may have missed a corporate governance disruption coming from the Business Roundtable. For its announcement and the implications for executive compensation, see newly-created Societal Good and Executive Compensation.
2019.08.26 Disclaimers of Coverage - Another Object Lesson. Playing loose with insurance companies has an awful back-end risk, because premiums may be paid for years, and then coverage may be disclaimed if there were prior inaccuracies. The 8th Circuit just made such a ruling in ... continued at ERISA Litigation.
2019.08.14 Director Compensation Study - and Implications. Tucked within superb survey data about board service and pay practices, this Pearl Meyer's report makes an observation that should be a clarion call . . . continued at Director Compensation Survey Data.
2019.07.07 #MeTOO, CLAWBACKS AND EXECUTIVE COMPENSATION IN 2019. This 161-page PDF presents a substantively rich survey covering . . . continued at Clawbacks.
2019.05.23 Golf - Honorable Even in Severance. The USGA recently announced the need to downsize its workforce. Not surprisingly, the USGA's approach has class. Its offer of sweetened severance to those who volunteer to retire builds on a smart employer strategy . . . continued at Two-Step RIFs.
2019.05.22 An Ounce of Litigation Prevention for Executive Benefits … and Severance: Lessons from an Employer’s Quagmire in New Jersey. There are three instructive takeaways from a recent case in which an employer failed in its effort to end the case before significant discovery and expense would result. Worse for the employer: the litigation arose after the executive had terminated employment, collected severance, and signed a general release of claims. So what went wrong? See Severance Litigation.
2019.05.06 Director Compensation - ISS Data and Commentary. This Harvard Governance Blog shares excellent analytics published by Institutional Shareholder Services. Corporate boards would be smart to pay attention because their own compensation continues to present the #1 risk of shareholder derivative litigation. See Director Comp. Litigation and Survey Data.
2019.04.26 New Jersey Non-compete Law Examined . . . in 3rd Circuit decision. ADP was held to have embedded overly-broad non-competition restrictions within its stock option grants to key employees. The Third Circuit nevertheless remanded the case because, under NJ law, . . . continued with case link at Restrictive Covenants - New Jersey
2019.04.16 ISS Report: Executive Compensation Trends 2019. In its recent report, ISS presents significant survey data based on 2019 proxy statements by more than two-thirds of S&P 500 companies and approximately half of Russell 3000 companies. For instance, ISS reports that ... continued at Executive Compensation Surveys.
2019.03.22 Private Equity Firm Sued for Portfolio Co.'s Withdrawal Liability. The Sun Capital case and its progeny should remain red flags for private equity firms. Case in point: the Teamsters just filed a complaint seeking $1.4 million in withdrawal liability from a PE firm due to ... continued at ERISA Controlled Group Liability.
2019.02.06 Say on Pay Reminder: Excise the Irritants. There is a subtlety within a recent empirical study about how companies react to negative say on pay. While the problem comes from pay-for-performance (P4P) disconnects, the solution does not seem to involve reducing the compensation, but instead . . . continued at Say on Pay.
2019.01.28 Unfortunate yet Timely Reminder: "All Means All" for Executive Pay Disclosures. In the wake of reports that its CEO underreported over $79 million of compensation, Law360 not surprisingly reports that "Nissan Faces SEC Inquiry." From the company perspective, Nissan's prior press release gives a sense of the risk, in that . . . continued at Securities Disclosure - Violations.
2019.01.02 Tax Exempt Orgs - IRS Notice re Executive Compensation. The IRS just released Notice 2019-09, with further info here.
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