Skadden Discusses Section 16 Settlements

The so-called “short-swing profit rule” under Securities Exchange Act Section 16(b) generally prohibits officers and directors as well as 10 percent shareholders of a U.S. public company from profiting from any purchase or sale (or sale and purchase) of the company’s equity securities within a period of less than six months. However, Rule 16b-3 permits a company’s board of directors and qualifying board committees to take actions that exempt from the short-swing profit rule most transactions under the company’s equity-based compensation programs.

For example, many companies take steps so that the common practice often referred to as “net settlement,” in … Read more

Skadden discusses the SEC’s Proposed CEO Pay Ratio Disclosure Rules

The SEC has proposed rules to implement the “CEO pay ratio” disclosure requirements under Section 953(b) of the Dodd-Frank Act.

The proposed rules would require many SEC reporting companies to publicly disclose the following information:

  • the median annual total compensation of all employees of the company (excluding the CEO);
  • the annual total compensation of the CEO; and
  • the ratio of the median annual total compensation of all employees (excluding the CEO) to the annual total compensation of the CEO.

In an effort to address the concerns raised by comments received in advance of the proposed rules over significant compliance costs … Read more