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More Evidence that Executive Pay Practice Change is Starting

by Gary Larkin Now that two other major news organizations have confirmed it, I guess it can be proclaimed that indeed CEOs of American public companies received sizable compensation raises in 2010. In the past week, both the Associated Press and Wall Street Journal reported that U.S. CEOs made...

Cadwalader Clients & Friends Memo: Joint Agencies’ Proposed Rules Governing Incentive-Based Compensation at Covered Financial Institutions

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") requires seven Federal agencies (the "Agencies") to jointly prescribe regulations or guidelines with respect to incentive-based compensation practices at covered financial institutions. On April 14, 2011, the...

Investors May be More Equipped with Exec. Comp., Pension Data for Proxy Season 2012

by Gary Larkin With the first year of mandatory advisory votes on executive compensation just about complete, one of the most influential proxy advisory firms announced a new tool for investors and a proxy research firm has communicated that it is concerned about CEO pensions as it relates to...

When a Nonbinding Vote Binds: The Perils of Ignoring a “No” Vote on Executive Compensation

Among its myriad provisions, the Dodd-Frank Wall Street Reform and Consumer Protection Act created Section 14A of the Securities Exchange Act of 1934. This new section requires most public companies to conduct a shareholder advisory vote on executive compensation not less frequently than every three...

Dialogue with Shareholders: Say on Pay Executive Compensation Agreements

In a very pragmatic and business-oriented analysis of say-on-pay, author Gary Larkin outlines how it does not necessarily matter how well the first year of mandatory executive compensation plan advisory votes went for US companies. Directors and officers need to understand that was merely the first step...

"Say on Pay" Lawsuit Survives Dismissal Motion

Only small a small number of companies experienced a negative "say on pay" vote this past proxy season, but many of the companies that did found themselves hit with a shareholder lawsuit in the wake of the negative vote. Cincinnati Bell is one of the companies that with both a negative...

Reports: Say on Pay Votes Bridging Shareholder-Director Communication Gap

by Gary Larkin Even though shareholders approved most of the executive compensation plans put up for vote in the 2011 proxy season, the tiny minority of failed say on pay votes are getting an inordinate amount of attention for a myriad of reasons. Those reasons, which reflect an overarching...

Say on Pay Report From the 2011 Proxy Season

When the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) became law in 2010, it included a requirement that most publicly traded companies include in their annual shareholder meeting agendas an advisory vote to approve the compensation paid to named executive officers in the most...

Sheppard Mullin-Spotlight on Pay For Performance Intensifies as ISS Releases New Evaluation Methodology for 2012 Proxy Season

The arrival of a new year means that another proxy season is not that far off. A highlight of the 2011 proxy season was that it marked the first year in which shareholder advisory votes on executive compensation ("Say on Pay") were conducted in accordance with the Dodd-Frank Act . While it...

Boards Beware of Growing Executive Compensation Packages

by Anthony Galban Some 25 years ago I attended a crowded and agitated shareholders meeting for a Fortune 500 company. During the meeting, a shareholder held up a large and colorful chart for the meeting attendees to see. The chart showed the change in the CEO's compensation compared to shareholder...

Second Time Around on Say-on-Pay

The advisory shareholder vote required under the Dodd Frank Act went through its first cycle in 2011, and by and large most companies' shareholders approved the companies' executive compensation plans. Only about 45 companies (less than 2%) received negative "say on pay" votes from...

Focus on Your CD&A in 2012: Being Responsive to Stockholders and Avoiding Say-On-Pay Lawsuits

In 2012, companies should focus on the disclosure requirements of the Compensation Discussion and Analysis (CD&A) contained in their proxy statements, particularly with a view toward being responsive to stockholders and minimizing the risk of say-on-pay lawsuits. Excerpt: During 2011, stockholders...

Is Shareholder Spring a Myth?

We've heard a lot about " Shareholder Spring " this year - the idea that this proxy season shareholders were actively standing up and forcing changes in the boardroom. Some of this is attributed to Dodd-Frank and a mandatory say-on-pay vote (one that is nonbinding, but more about that...

SEC Adopts New Rules Calling for Greater Independence Standards for Compensation Committees And Their Advisers

by Gregory C. Schick On June 20, 2012, the SEC published final rules for compensation committee independence requirements. The Final Rules compels Exchanges to establish listing standards requiring each member of a listed issuer's compensation committee to be:(i) a board member and (ii) "independent...

New York Limits Executive Compensation and Administrative Expenses at State-Funded Service Providers

by Joseph G. Casion and Joshua E. Gewolb Excerpt: On May 29, 2013, thirteen New York State agencies, including the Department of Health ("DoH"), adopted final regulations limiting executive compensation and administrative expenses at State-funded service providers. The final regulations...

Enough Said Yet? Say on Pay Litigation May Have Had Its Day

As I have noted in prior posts (most recently here ), plaintiffs’ lawyers have rushed to filed “say on pay” lawsuits, either after a negative vote on the advisory shareholder vote on executive compensation, or more recently before the vote occurs based on alleged deficiencies in the...

GMI Ratings’ 2013 CEO Pay Survey Reveals CEO Pay is Still on the Rise

Each of the Top Ten Highest Paid CEOs Earned Over $100 Million New York, Oct 22, 2013 – GMI Ratings today released its 2013 CEO Pay Survey , one of the most comprehensive surveys of North American CEO compensation. The report findings are based on an analysis of 2,259 North American publicly...

Governance Insight Alert: Freeport McMoRan Copper & Gold

Governance Insight Alert Just before the holidays, Freeport McMoRan Copper & Gold (FCX) announced that it had torn up its employment agreement with its CEO, Richard Adkerson, who would henceforth be employed “at will.” FCX is no stranger to pay controversy, having lost two of its three...

Business Court Dismisses Derivative Action Against Duke Energy

You might remember the derivative action filed against the board of directors of Duke Energy Corporation stemming from its 2012 merger with Progress Energy. It received a lot of publicity . The merger was concluded long ago, but there's finally been a ruling from the Business Court dismissing the...

Executive Compensation: Do Clawbacks Lead to Certain Types of Earnings Manipulation?

When Congress enacted stiff executive compensation clawbacks as part of the Dodd-Frank Act, the assumption was that the adoption of these kinds of measures would reduce the number of corporate restatements and increase investor confidence in financial reports. However, a new study focused on companies...

SEC Proposes Disclosure on Executive Pay vs. Performance

The SEC released proposed rules required by the Dodd-Frank Act a few weeks ago. The proposal, if adopted, would require public companies to compare senior executives’ compensation with the actual performance of the company, measured by a shareholder return metric. “Emerging growth companies”...

Controversy Surrounds SEC’s New Proposed Dodd-Frank Executive Compensation Clawback Rules

On July 1, 2015, a divided SEC voted 3-2 to propose rules directing the securities exchanges to adopt standards requiring listed companies to adopt policies requiring the companies’ executive officers to pay back incentive-based compensation in the event the company restates its financials for...

Delaware Court of Chancery Dismisses Claim of Excessive Compensation

Friedman v. Dolan, C.A. No. 9425-VCN (Del. Ch. June 30, 2015), is a Delaware Court of Chancery decision that should be read by anyone who thinks they should be able to challenge allegedly excessive compensation packages granted to members of a family in a family-controlled company [subscribers can access...

SEC Passes CEO Pay-Ratio Rules on Partisan Lines

A sharply divided Securities and Exchange Commission approved rules mandated by the Dodd-Frank Act requiring most companies to disclose the ratio of their CEO’s pay to their average median employee salaries. The two Republican commissioners strongly opposed the rules on various grounds. A controversial...

SEC Adopts Final Pay Ratio Disclosure Rules

A registrant's initial pay ratio disclosure will be required for its first full fiscal year beginning on or after January 1, 2017. The U.S. Securities and Exchange Commission (SEC) has adopted final pay ratio disclosure rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act...