The New York State Workers’ Compensation Board is out with proposed regulations providing guidance to employers, insurance carriers and employees regarding their rights and responsibilities under New York’s new Paid Family Leave law, which is scheduled to go into effect January 1, 2018. Comments on the proposed rules will be accepted for 45 days – until April 8th (although we note that’s a Saturday). For our earlier post on the enactment of the Paid Family Leave Act, see here.
Alexander Song is an Associate in the firm’s Employment, Labor & Benefits Practice and is located in the New York office. Alex’s practice focuses on all aspects of executive compensation for both public and private companies, including drafting of equity and incentive compensation plans and award agreements as well as employment, change-in-control, and severance arrangements for executive officers. He also prepares compensation discussion, analysis, and proxy statement compensation tables for public companies.
Over the next two weeks we will release our Year in Review segment, which will look at the key labor & employment law developments from 2016 in New York, the DC Metro Area, Massachusetts, and California while offering our thoughts about 2017. Today we kick off this segment with New York. In addition, please join us in NYC on April 6, 2017 for Mintz Levin’s Third Annual Employment Law Summit as we address some of the key labor & employment issues impacting employers in 2017. Register here.
2016 brought big changes for New York State and City employers, including expansive new discrimination protections and substantial increases in the minimum wage and exempt salary thresholds. While New York employers who successfully navigated 2016’s rush of legislative, regulatory and judicial obstacles might feel they’ve earned the right to shift their focus back from compliance issues to running their businesses, they should not lose sight of the additional challenges expected in 2017.
SEC Acting Chairman Michael S. Piwowar issued a public statement on February 6, 2017 requesting input on any unexpected challenges that companies have experienced as they prepare for compliance with the CEO pay ratio rule, which will become required disclosure in public company 2018 proxy statements. Piwowar also directed SEC staff to “reconsider the implementation of the rule” based on comments submitted.
This public statement and request for comments is a first step in considering changes to the rule, as part of the Republican Party’s effort to modify or roll back certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank). Any SEC modifications to the CEO pay ratio rule would take time to implement and may be challenged. The easiest route to prevent its implementation would be for Congress to repeal this provision of Dodd Frank.
Institutional Shareholder Services (“ISS”) has issued updated proxy voting guidelines, including an update to guidelines related to director compensation and the equity plan scorecard.
The updated guidelines are effective for meetings on or after February 1, 2017. Additional information will be made available in a FAQ to be released by ISS later this month.
Last month, the Securities and Exchange Commission released new Compliance & Disclosure Interpretations (“C&DIs”) which provide guidance on the CEO pay-ratio rules. As a reminder, the CEO pay-ratio rules were enacted in August of 2015 and generally require public companies to disclose the ratio of their CEO’s annual total compensation to that of the median annual total compensation of all other company employees.
The new C&DIs provide guidance on several aspects of these pay-ratio rules, including the determination of individuals to be included in the employee population and identification of the median employee.
For an overview of the pay-ratio rules, see this helpful post on the Securities Matters blog here.
The following provides an overview of the C&DIs:
Institutional Shareholder Services Inc. (“ISS”), the influential proxy advisory firm, recently released their 2016-2017 Global Policy Survey results. These results show some interesting findings related to executive compensation and may signal the future of ISS policies concerning pay for performance and say-on-pay frequency.
The Ninth Circuit recently held that Section 304 of the Sarbanes-Oxley Act (SOX 304) allows for a clawback of certain CEO and CFO compensation regardless of whether the clawback was triggered by the personal misconduct of such officers. District courts have reached this conclusion before, but the Ninth Circuit appears to be the first circuit to adopt such a view. The Ninth Circuit also held that Rule 13a-14 of the Securities Exchange Act (Rule 13a-14) provides the SEC with a cause of action against a CEO and CFO who certify false or misleading statements. Continue Reading Ninth Circuit Holds that SOX 304 Clawback Applies to Executives that are Not at Fault
On July 25, 2016, the IRS finalized regulations under Section 83 of the tax code that removes a procedural step in the process of filing an 83(b) election.
From: Ned Help
To: Carrie Counselor
Date: June 16, 2016
Subject: Benefit and Compensation Considerations
Thank you again for all your help over the past few weeks as we address our concerns with employees going abroad. We previously talked about offer letters and employment agreements. I know you covered some of the basic considerations regarding benefits and compensation, but I was hoping we could go into this topic in a little more depth, as we look to implement revised standards internally.
We will be sending some high level employees abroad for assignments in key geographic regions for the business and I expect to get plenty of push back on compensation packages. I was hoping you could provide a quick overview of some key compensation considerations we should be aware of before we begin negotiations with these individuals.
Last month, consistent with their obligation under the Dodd-Frank Act, several federal agencies released for comment a joint proposed rule that would prohibit any incentive compensation that encourages inappropriate risk taking by a covered financial institution: (a) by providing an executive officer, employee, director or principal shareholder with excessive compensation; or (b) that could lead to material financial loss to the institution. Companies that are not covered by this proposed rule should also be aware of the proposed rule because it could signal the future of incentive compensation rules for other industries. While the full text and commentary of the proposed rule (all 700 pages of them) can be found here, this blog post is intended to highlight its contours and some of its key points. Continue Reading Federal Agencies Release Joint Proposed Rule on Financial Institution Incentive-Based Compensation