The recently proposed Tax Cuts and Jobs Act (the “Act”) includes executive compensation tax reforms that, if enacted, would have significant implications for the way in which companies structure their compensation programs.
The Act was introduced in the U.S. House of Representatives on November 2, 2017, and may undergo significant revisions as part of the legislative process in the House, and the U.S. Senate is expected to propose tax reform legislation shortly that may not be identical to the House’s bill, even though an identical bill could facilitate enactment without the need for a joint committee to reconcile differences.
At … Read more
President Trump has repeatedly used his Twitter account to single out companies for criticism of their business practices, raising the question for a broad range of public companies of how to prepare for and potentially respond to such criticism. Of course, rhetorical attempts by politicians to influence the conduct of private enterprise – commonly referred to as “jawboning” – are an old political tactic. The nature and frequency of jawboning in the current environment makes this a serious issue for boards and management at a wide variety of public companies, in a way that it has not been in … Read more
The Delaware Court of Chancery’s recently published opinion in Amalgamated Bank v. Yahoo!, Inc. (the “Opinion”) provides a reminder for directors about the importance of process in satisfying fiduciary duties when evaluating and approving executive compensation packages. In the Opinion, which deals with Amalgamated’s demand under Section 220 of the Delaware General Corporation Law to inspect certain books and records of Yahoo! in connection with the hiring and firing of its Chief Operating Officer, Vice Chancellor Laster discusses practices that should be routine in a board’s review of executive compensation proposals and highlights procedural pitfalls that have … Read more
The Second Circuit Court of Appeals’ 2014 ruling in Chechele v. Sperling, which addressed an issue of first impression among the Courts of Appeals regarding the application of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to prepaid variable forward contracts (“PVFCs”), is the most recent attempt by the courts to fill in gaps in the analytical framework governing the application of Section 16 to complex derivatives. The Sperling case, which has received scant attention from commentators, is an important decision that should mitigate concern over the risk of … Read more