On Wednesday this week, all nine justices agreed that the Dodd-Frank Act’s anti-retaliation provision does not extend to an individual who has not reported a violation of the securities laws to the Securities and Exchange Commission (“SEC”). In other words, making only internal complaints does not shroud an employee in whistleblower protection under the Dodd-Frank Act.
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:
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
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
It’s been over five years since the signing of the Dodd-Frank Wall Street Reform and Consumer Act (“Dodd-Frank”) and we are still waiting for the U.S. Securities and Exchange Commission to finalize rules on several provisions related to executive compensation. Below is a summary of the current landscape of Dodd-Frank as it relates to key executive compensation provisions. Over the coming months, we will be posting a series of blog posts addressing some of the nuances of these provisions. Stay tuned for more.
While the Dodd-Frank Act provides various protections to whistleblowers, federal courts have inconsistently interpreted who precisely qualifies as a whistleblower. In a much-anticipated opinion, the Second Circuit Court of Appeals held, in Berman v. Neo@Ogilvy LLC, that whistleblowers who report wrongdoing internally – but not to the Securities and Exchange Commission – are protected from retaliation under the law.
Our colleague, Pam Greene, wrote an excellent post on our sister blog, Securities Matters, on the SEC’s final rule requiring public companies to disclose the ratio of their CEO”s annual total compensation to that of the median annual total compensation of all company employees. You can read that post here.
The Securities and Exchange Commission instituted cease and desist proceedings against KBR, Inc. for the purpose of entering an agreed Cease and Desist Order which is likely to affect the drafting of all confidentiality agreements entered into between a company and its employees. Indeed, the Order serves as a reminder to employers to carefully review and consider the language used not only in employee confidentiality agreements but also separation agreements, employment agreements, personnel handbooks and other documents which impose confidentiality restrictions on employees.