Performance Based Equity Compensation
Corcoran: Infighting on Compensation Costs BigLaw Time and Money
The Delaware Chancery Court invalidated a substantial equity award to Elon Musk – the largest in history. It applied the entire fairness test instead of the more deferential business judgment rule, finding that Musk...more
On January 30, 2024, the Chancellor of the Delaware Court of Chancery struck down the $55.8 billion compensation plan that Tesla, Inc.’s board of directors had granted to Tesla’s well-known CEO, Elon Musk, finding that the...more
Today's post continues the discussion of the SEC's recent adoption of rules requiring the securities exchanges to adopt listing standards requiring listed companies to develop and implement policies providing for the recovery...more
[co-authors: Timothy Cotter and Kathryn Hastings, SullivanCotter; David Jarrard, Jarrard Inc.; Ken Kaufman and Andrew Majka, KaufmanHall; Zachary Morfin, PhD., and David Nygren, PhD., Nygren Consulting; Scott Steffens, Grant...more
Perhaps during the shutdown, when you’re watching more TV than you might like to admit, you’ve seen some new commercials a bit like this: a happy face-masked employee on the line or in a lab displaying all the sanitizing and...more
The COVID-19 pandemic has created significant disruption in the financial performance of businesses across the globe, creating real challenges for compensation programs maintained by both public and private U.S. companies....more
The new priorities for tax-exempt organization compensation committees in 2020 primarily fall into four key areas: remaining market competitive for key leaders, succession planning, evolution of the compensation committee to...more
The Delaware Chancery Court rejected an attempt by Tesla’s Board of Directors to dismiss a challenge to CEO Elon Musk’s “extraordinary” 2018 compensation package. Because Musk is also Tesla’s controlling stockholder, the...more
On March 20, 2019, the SEC voted to adopt amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies. The amended rules, which are based on amendments...more
On December 14, 2018, Institutional Shareholder Services (ISS) issued updated Frequently Asked Questions (FAQ) related to its U.S. Compensation Policies effective for shareholder meetings occurring on or after February 1,...more
Compensation-related litigation and threats of litigation continued to significantly impact public companies in 2017. These companies should be mindful of issues that were raised in recent litigation: proxy disclosure,...more
The "Tax Cuts and Jobs Act" is giving compensation committees and their advisors much to consider. Readers may recall that the limitation on a public company's ability to deduct compensation of specified officers did not...more
Human nature being what it is, the law, in its wisdom, does not presume that directors will be competent judges of the fair treatment of their company where fairness must be at their own personal expense. According to the...more
In response to recent lawsuits by the plaintiffs’ bar, I have previously posted about why public company employers may wish to consider adding a separate annual limit on non-employee director equity awards. Just last month...more
In a prior post, I compared the differing limitations on committee authority under California and Delaware law. Today’s post focuses on differences in committee composition among California, Delaware and Nevada. These are...more
Both California and Delaware allow the formations of committees of the Board of Directors. Both states also allow these committees to exercise the authority of the board, but with certain exceptions. California, however,...more
If adopted, the Proposed Rule would have a significant impact on compensation practices at covered institutions. On April 21, 2016, the National Credit Union Administration (the NCUA) issued a proposed rule regarding...more
As we previously reported here, on January 28, 2016, the NASDAQ Stock Market LLC proposed a change to its listing rules that, if implemented, would have required NASDAQ-listed companies to publicly disclose so-called “golden...more
With calendar year companies currently in the midst of drafting their proxy statements, it is time to consider the often overlooked director compensation disclosures. Changes in director compensation arrangements. ...more
The Executive Compensation and Benefits Group at Skadden, Arps, Slate, Meagher & Flom LLP is pleased to provide you with this second edition of its Compensation Committee Handbook. This edition reflects developments in...more
With executive compensation under fire from seemingly all directions these days, it’s nice to get some good news occasionally. In this case, that news comes via the Delaware Chancery Court’s recent decision in Friedman v....more
As accounting restatements occur relatively infrequently, and the severity is often modest, the proposed “clawback” rules represent more of a "check the box" compliance activity than a real enforcement threat....more
Corporate directors routinely make decisions regarding their own compensation. If challenged by stockholders, such decisions are generally reviewed by Delaware courts under the onerous "entire fairness" standard, which...more
In Valma v. Templeton et al, the Delaware Court of Chancery held that grants of restricted stock units, or RSUs, to directors of Citrix Systems, Inc. were subject to an entire fairness standard of review. The court found...more
In this video clip, Pam Greene discusses the reasons behind the shift to performance-based equity compensation, how it differs from fixed equity compensation, and what executive boards need to consider when structuring...more