The purpose of this post is to discuss whether incentive stock option (“ISO“) awards should be designed to destroy ISO treatment with respect to terminated employees, thereby preserving the compensatory deduction to the corporation and increasing shareholder value. Continue Reading Game of Inches: An Idea to Increase Shareholder Value by Destroying ISO Status for Terminated Employees
As a follow-on to last month’s webinar, please join us this Thursday (July 11, 2019) for our FREE webinar entitled “Multi-Disciplinary Facets to Net Withholding: It Ain’t Boring“. The purpose of this presentation is to discuss administrative and design considerations when effectuating net withholding with respect to equity awards, including whether to increase the net withholding rate from the minimum statutory rate (i.e., the supplemental rate) to the maximum individual rate. Sign up at the above link if interested!
Please join us tomorrow morning at 10:00 Central for our free monthly webinar series. Tomorrow’s topic, “Tips to Increase the Longevity of the Equity Plan’s Share Reserve,” will discuss ideas on how a publicly-traded company can lengthen the longevity of its equity plan’s share reserve, with the hopeful result of the company less frequently seeking shareholder approval to increase such share reserve. More information can be found at the above hyperlink!
Just a quick reminder that this Thursday (March 14, 2019) we are hosting our monthly webinar program and the discussion topic is “Golden Parachutes & 280G: Design Pointers on How to Win.” Our discussion will include: (i) an explanation of 280G and how the calculations are applied, (ii) how 280G issues are typically addressed in compensatory documents (discussed from both an employer and employee perspective), and (iii) a description of various mitigation techniques that an employer could implement to eliminate or greatly reduce the negative ramifications of 280G (i.e., eliminate or reduce the 20% excise tax to the employee and the disallowed deduction to the employer). And as always, FREE continuing education credits may apply.
The purpose of this post is to highlight compensatory action items that publicly-traded issuers should consider this proxy season. Such considerations include:
- Chase the Say-on-Pay Vote. The most common reason for a negative recommendation from ISS is a perceived pay-for-performance disconnect within the compensation structure. Robust disclosure on this point can help, especially disclosure that clarifies why certain performance criteria were used and explains the degree of difficulty associated with achieving target performance.
- Consider an Annual Equity Grant Policy. Some issuers grant equity awards to executive officers based upon an initial dollar amount that is then converted into shares. If such an issuer has a depressed stock price due to market volatility, then the conversion formula will result in the award having more shares (compared to the situation where the issuer’s stock price had not fallen). Is the issuer ripe for an allegation that the executives are timing the market because equity was granted at a low stock price for the sole purpose of receiving a larger number of shares? To help defend against such a question, issuers should consider having a documented annual equity grant policy. The policy could be formal or informal (with the latter being clearly presented in the CD&A of the issuer’s proxy statement). Continue Reading Compensatory Action Items to Consider this Proxy Season
Employment agreements between publicly-traded issuers and their executive officers often contain severance pay provisions that are heavily negotiated at the time of entering into the agreements. The purpose of this post is to consider whether the amount of contractually-provided severance pay could, over the employment term, be reduced proportionate to the increase in the executive’s wealth accumulation over the same time period (i.e., an inversely proportional relationship between the amount of severance pay and the amount of wealth accumulation by the executive over the employment term). Continue Reading Should Contractually-Provided Severance Pay Decrease as Wealth Accumulation Increases?
As we head into a new proxy season, we would like to invite you to attend our annual FREE webinar entitled “Upcoming Proxy Season: Compensatory Thoughts from ISS,” which will be held on Thursday, January 17, 2019 from 10:00 am to 11:00 am Central. As always, continuation education credits are available.
For your convenience, our remaining 2019 monthly webinar program is as follows: Continue Reading Upcoming Proxy Season: Compensatory Thoughts from ISS
The recent settlement by James Dolan, CEO of Madison Square Garden Co. (MSG) serves as a reminder that the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”) can apply to compensatory equity awards. To avoid violations, a publicly-traded issuer should monitor (at least annually) equity grants and outstanding equity awards for ongoing HSR Act compliance. To learn more, please see our Client Alert entitled “Not Just a Merger Issue – Compensatory Equity Awards Can Trigger HSR Filing Requirements.”
If you interested in learning (or refreshing your skills on) how to negotiate executive employment contracts, then please tune in to our FREE 1-hour webinar on December 13, 2018, from 10:00 a.m. to 11:00 a.m. Central. This webinar is entitled “How to Negotiate Executive Employment Agreements” and you can sign up here. Continue Reading How to Negotiate Executive Employment Contracts
Did you exercise (or are planning to exercise) an incentive stock option (“ISO”) during calendar year 2018? Do you intend to sell the underlying stock within the 12-month period from the date you exercised the ISO? If you answered yes to both of the foregoing questions, then as part of your tax planning, consider whether the underlying stock should be sold during calendar year 2018 in order to minimize your alternative minimum tax (“AMT”) exposure. Continue Reading ISOs: No Item of Adjustment for AMT Purposes if Exercise and Sell within Same Calendar Year