compensation

How Non-Compete Agreements Affect CEO Mobility, Job Security, and Compensation

By Omesh Kini, Ryan Williams and Sirui Yin June 19, 2018 by renholding

Firms generate profits through investments in physical and human capital.  In legal regimes that recognize property rights, the firm generally has full ownership over its physical capital, as well as the right to future cash flows generated by these assets.  …

SEC’s Jackson Calls for Curbing Executives’ Ability to Cash Out on Buybacks

By Robert J. Jackson, Jr. June 12, 2018 by renholding

Thank you so much, Neera [Tanden], for that very kind introduction. I’ve long admired all that you and everyone here at the Center for American Progress do to promote a progressive economic agenda. And I share your commitment to making

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How Dual-Class Share Structures Create Agency Costs

By Kirby Smith January 5, 2018 by renholding

A number of companies have recently gone public with dual-class share structures, allowing founders to retain control. Most of these companies’ articles of incorporation contain a provision that requires any merger consideration to be distributed pro rata among all shareholders. …

CamberView Discusses ISS Changes to Compensation-Related Methodologies

By Abe M. Friedman, Danielle Geier and David Martin January 4, 2018 by renholding

On December 14,  ISS released its Frequently Asked Questions (FAQ) documents on U.S. Compensation Policies and U.S. Equity Compensation Plans as well as a whitepaper on Pay-for-Performance Mechanics designed to help stakeholders understand upcoming changes to its compensation-related methodologies. These …

Delaware Supreme Court Limits Ratification Defense for Director Compensation Awards

By S. Michael Sirkin and Nick Mozal January 3, 2018 by renholding

On December 13, the Delaware Supreme Court[1] reversed the Court of Chancery’s decision in In re Investors Bancorp, Inc. Stockholder Litigation,[2] and held that entire fairness will apply to any board’s decision to award director compensation unless …

King & Spalding Discusses ISS Voting Policies for 2018

By Zachary L. Cochran, Alana L. Griffin, Jeffrey M. Stein, Keith M. Townsend and James C. Woolery December 20, 2017 by renholding

On November 16, 2017, Institutional Shareholder Services (“ISS”) issued its updated proxy voting guidelines for the upcoming 2018 proxy season.  Notable updates applicable to U.S. companies include new or revised policies:

• to respond to recurring patterns of excessive non-employee director

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Are CEOs a Dime a Dozen or Worth Their Weight in Gold?

By Nicholas Donatiello, David F. Larcker and Brian Tayan December 13, 2017 by renholding

In recent years, there has been considerable criticism of the amount of money that CEOs earn to run the largest U.S. companies. Governance researchers have expended considerable resources examining executive compensation in an effort to determine whether pay levels are …

How Executive Compensation Affects Firms’ Choice of Financing

By Steven Freund, Saira Latif and Hieu V. Phan November 10, 2017 by renholding

The separation of corporate ownership from control leads to an agency problem caused by the divergent interests of shareholders (the principals) and management (the agent).  One area of contention is the level of risk-taking by the firm.  Managers’ investment in …

Why Small Firms Peg Executive Compensation to Rivals’ Higher Pay

By Thomas Ian Schneider November 3, 2017 by renholding

In recent years, executive compensation in the U.S. has become a hotly debated issue. A central point of contention is peer benchmarking, an integral part of the pay-setting process in which firms compare their executives’ compensation with that of rivals …

Arnold & Porter Discusses SEC’s Pay Ratio Guidance

By Joel I. Greenberg and Sara Adler October 31, 2017 by charlesbluesky

Item 402(u) of Regulation S-K was adopted in 2015 to implement the pay ratio disclosure provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and will require pay ratio disclosure with respect to the first fiscal year beginning …

Is It Time to Retire Securities Act Form S-8?

By Keith F. Higgins October 13, 2017 by renholding

Every securities lawyer knows that offers and sales of securities must either be registered under the Securities Act of 1933 (Securities Act) or made pursuant to an applicable exemption.  This rule is so fundamental that we often neglect to think …

Arnold & Porter Discusses Risks for Compensation Committee Members

By David F. Freeman, Jr., Robert C. Azarow, Kathleen Wechter, Michael A. Mancusi, Eleni Zanias and Kevin M. Toomey October 11, 2017 by charlesbluesky

The Office of the Comptroller of the Currency (OCC) recently took an enforcement action in the form of a consent order against a bank director that serves as a cautionary tale for the banking industry. The consent order, agreed to …

How to Cure Too Big To Fail

By Sanjai Bhagat September 20, 2017 by renholding

The Dodd-Frank Act’s worthy objectives were to improve the safety, resilience, efficiency, and transparency of our financial system. Yet the law has drastically diminished the credit available to low-income Americans – the very people it was supposed to help. Equally …

How Irrational Actors in the CEO Suite Affect Corporate Governance

By Renee Jones August 3, 2017 by renholding

Recent news of sexual harassment and other legal controversies at Uber and throughout Silicon Valley serves as a vivid reminder that irresponsible and unethical conduct continues across the corporate landscape. Revelations of serious transgressions by senior corporate leaders belies a …

Tax Gross-Ups May Gross Out Investors

By Jeffrey L. Hoopes, Xiaoli (Shaolee) Tian and Ryan J. Wilson February 8, 2017 by renholding

Much of the public has long believed that executives are overcompensated, a sentiment that has occasionally crept into legislation.  In one case, Congress voted to impose punitive excise taxes on managers who received excessive golden parachute payments. Unlike most taxes …

Does CEO Succession Planning Matter?

By Dragana Cvijanović, Nickolay Gantchev and Sunwoo Hwang December 7, 2016 by renholding

In September 2009, Bank of America CEO Ken Lewis suddenly announced his intention to retire by the end of the year. The company’s board was taken by surprise as it scrambled to find a successor and was further embarrassed as …

A Plea for a Better Response to a Failed Say on Pay Vote

By Christoph Van der Elst August 26, 2016 by renholding

The 2010 Dodd-Frank Act provided shareholders of U.S. public corporations the right to vote on chief executive officers’ compensation, at least every three years. The so–called say on pay vote is advisory but was designed to curb overly generous executive …

Latham explains Proposed Rules on Dodd-Frank Incentive Compensation Requirements for Financial Institutions

By Stephen P. Wink, Alan W. Avery, Lori D. Goodman, Brett M. Ackerman, Pia Naib and Jordan S. Salzman May 20, 2016 by John Knight

On April 21, 2016, the National Credit Union Administration (the NCUA) issued a proposed rule regarding incentive-based compensation paid by certain financial institutions (the Proposed Rule) to implement Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act …

A Proposal to End Executive Manipulations of Incentive Compensation

By Sureyya Burcu Avci, Cindy A. Schipani and H. Nejat Seyhun April 1, 2016 by ilyabeylin

Options backdating? Who would be so arrogant to be still backdating their options? It has been exactly ten years since the Wall Street Journal’s exposé on “lucky CEOs.”[1] The intriguing question though is whether the executives could resist temptation …

Latham & Watkins discusses How to Navigate the SEC’s Proposed Mandate on Clawbacks

By William Baker III, Jim Barrall, Joel Trotter, Alice Chung, Jonathan Drory and Hayley Gladstone August 7, 2015 by ilyabeylin

Under the long-awaited proposed rules adopted by the Securities and Exchange Commission on July 1, 2015, generally, all US publicly listed companies would be required to adopt broad clawback policies and make new clawback-related disclosures. Although these requirements likely will …