Disclosure Bill May Put Retirees At Risk

Recently, I wrote about a bill, SB 1208 (Leno), that would require disclosure of total compensation information with respect to each of a corporation’s five most highly compensated retirees.  This requirement would be imposed on publicly traded corporations that are either incorporated under the General Corporation Law or qualified to transact intrastate business here.  These corporations are already required to file information statements with the Secretary of State’s office pursuant to the California Disclosure Act.

Fired, Disabled, Fired or Quit?

The bill does not define “retirees” and this could become a problem for corporations.  Ernest Hemingway thought “retirement” to be the ugliest word in the language.  In common parlance, “retirement” occurs when one’s employment ends upon reaching retirement age.  A broader definition would termination of employment as a result of a disability.  A still broader definition would include termination of employment for any reason at any age.

Naming Names

The bill also requires that corporations disclose the names of the retirees.   These people won’t necessarily be former executive officers.  It may be that they have never set foot in California.  Moreover, they may have retired before their former employer became a publicly traded corporation.  Simply working for a publicly traded company doesn’t make one a public figure.  These former employees are likely to be surprised and distressed to learn that their identities and retirement benefits are being made available on the Internet.  Since these individuals are not current employees, there is no legitimate reason to require corporations to name names.   In fact, public disclosure may place retirees at risk for fraudulent schemes targeting seniors or harassment.  Mandating disclosure is at odds with the California Constitution’s explicit guaranty of the right to pursue and obtain privacy (Art. I, § 1).

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JOBS Act Program in San Diego

On May 22, 2012, I’ll be participating in a program in San Diego about new ways to raise capital under the JOBS Act.  The other presenters will be Tim Holl, a partner at Ernst & Young, and Byron Roth, Chairman and CEO of Roth Capital Partners, LLC.  The program is being presented by CONNECT, a program that catalyzes the creation of innovative technology and life sciences products in San Diego County.  More information about the program is available here.

 

Published In: Administrative Agency Updates, Business Organization Updates, Constitutional Law Updates, Privacy Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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