They say every cloud has a silver lining and so it seems with recent developments related to the CEO pay ratio rule. By releasing new guidance on the rule last week, the SEC has dashed hopes that it would delay the effectiveness of the rule. However, at the same time, it has taken important steps to reduce the compliance burden. The guidance, which consists of an Interpretive Release, revised pay ratio Compliance and Disclosure Interpretations,…
At the ABA Annual Meeting on Friday, September 15th, the Securities and Exchange Commission (SEC) Division of Corporation Finance Director Bill Hinman (speaking for himself and not the SEC) said that the SEC did not plan to delay the implementation of the CEO pay ratio disclosure rules. Mr. Hinman also mentioned that the SEC anticipates issuing guidance on the pay ratio rule in the near future. We note that although the Financial Choice Act that…
It’s hard to believe it’s been a little over two years since the Securities and Exchange Commission (SEC) adopted the final rule for the CEO pay ratio disclosure as part of its implementation of the Dodd-Frank Act. As most readers will know, the CEO pay ratio rule requires public companies (with certain exceptions) to disclose the ratio of the annual total compensation of their Chief Executive Officer (CEO) to the annual total compensation of their…
Although to date, the new administration has not been successful in moving forward its legislative agenda, it has aggressively pursued its goal of reducing the regulatory burden on American businesses. At the 2017 Global Equity Organization National Equity Compensation Forum, Baker McKenzie will be discussing the latest regulatory and legislative developments in executive compensation. Some of the hottest topics on every company’s mind we will be addressing include: The Department of Labor Fiduciary Rule -…
Companies preparing CEO pay ratio disclosure for the 2018 proxy season should not assume they will be able to rely on the Privacy Exemption with regard to gathering information about non-US employees. For a summary of the key provisions of the SEC’s final CEO pay ratio disclosure rule and the limited exemptions provided for non-US employees, see Baker McKenzie’s recent client alert. Invoking these exceptions will likely be difficult in practice. Companies should, however, generally be…
A recent Delaware Court of Chancery decision builds on prior case law and provides useful insight for companies seeking to establish an effective director compensation limit in order to avoid expensive stockholder litigation. In the case, In Re Investors Bancorp, Inc. Stockholder Litigation (2017 BL 111738, Del. Ch., No. 12327-VCS, 4/5/17), plaintiff stockholders claimed that directors breached their fiduciary duties by awarding themselves “grossly excessive compensation” under a plan that, though approved by stockholders, included…
In the world of comp lawyers, this is the time of year when every day’s to do list includes a review of one or more (sometimes, many more) equity award agreements in need of an annual update. In view of recent events in the world of plaintiff shareholders, one of the areas we’re homing in on this year is the award agreement’s tax withholding provision and its level of discretion around whether or not shares will be withheld for taxes.
We are seeing an accelerating trend among U.S. companies to add non-U.S. residents to their Board of Directors. This makes sense: as more and more companies “go global” and expand in ever more countries, their Boards should reflect the global nature of the company.
What takes many companies by surprise, however, is that the tax treatment of cash compensation paid and equity awards granted to the non-U.S. directors can be quite complex. In addition, for the equity awards, companies will need to consider regulatory restrictions such as securities law requirements and ensure that the grants can fall under an exemption.