We assist clients with negotiating, drafting and implementing deferred compensation and equity compensation arrangements. Our clients span a broad spectrum, from start-up companies to small and mid-size privately held companies to large publicly traded companies.
Our practice includes negotiating omnibus equity plans and agreements; supplemental executive retirement plans; employee stock purchase plans; profits interest plans and agreements; and employment severance and change in control agreements on behalf of client companies, private equity managers and senior management. We work with companies and executives to implement appropriate restrictive covenants and confidentiality provisions. We also assist clients in ensuring that any arrangements are optimized from a tax standpoint with respect to income and employment taxes, ERISA, corporate laws and labor laws.
We monitor all developments in the executive compensation area and help companies navigate through the tax rules of Section 409A, the public company deduction limitation of Section 162(m) and the Section 280G rules applicable to “golden parachute” payments.
We have significant experience in the following areas:
We advise our clients on the securities law aspects of equity compensation and executive compensation, including proxy disclosure, registration requirements and insider trading/short-swing profits restrictions. We draft prospectuses for equity plans, review proxy disclosures and prepare certain proxy tables, and help clients comply with the executive compensation disclosures mandated by the Securities and Exchange Commission and the incentive compensation rules of the Dodd-Frank Act.
Our team has carved out a niche in dealing with issues that arise in the private equity context, such as addressing the impact of extraordinary dividends paid by a portfolio company to private equity managers and option repricing and crafting performance goals with the private equity manager in mind. We also have extensive experience in the area of Section 457A of the Internal Revenue Code, which is targeted toward deferral of compensation payable to managers of offshore hedge funds.
We have a long history of working closely with our tax-exempt clients in the area of executive compensation. This experience includes helping those involved in the process, including the Board, Compensation Committee, HR, legal and others in administration in:
- Discussing, drafting and approving a compensation philosophy
- Developing a regular Compensation Committee meeting schedule with an annual calendar of important events and required decision dates
- Understanding and staying current with the obligations that are imposed on tax-exempt organizations by the IRS, state attorneys general, the media, unions, Congress and others
- Understanding and staying current with the obligations that are imposed on licensed tax-exempt hospitals that participate in Medicare and Medicaid, including the Stark Laws and Anti-Kickback Laws with respect to physician compensation
- Receiving training on the numerous responsibilities and liabilities that your organization faces as a result of the executive compensation process
- Reviewing existing and proposed compensation and benefits arrangements for executives and other key employees to determine how to minimize the risk of scrutiny (by the state attorney general, for example) and how to lessen the “media sanction” that can occur when arrangements are publicized
- Reviewing proposed compensation and benefits arrangements and advising clients on reasonableness issues, including how to qualify for the “rebuttable presumption of reasonableness” with respect to all forms of compensation and benefits provided to individuals who are likely to be considered “disqualified persons” under the intermediate sanctions rules
- Reviewing existing incentive compensation arrangements and advising clients on how to modify and administer these arrangements in a manner that benefits the organization, rewards the executives fairly and stays within legal compliance boundaries (i.e., to answer the question, “Our incentive program does not seem to be working the way we intended—how do we fix it?”)
- Analyzing, designing and keeping in legal compliance every type of deferred compensation arrangement, including 457(b) “eligible” plans, 457(f) ineligible plans, split-dollar and other insurance arrangements and after-tax plans
- Designing and preparing executive employment agreements, severance pay agreements and retention agreements for executives
- Reviewing “reasonableness opinion” letters prepared by independent compensation consultants