The two most influential proxy advisory firms--Institutional Shareholder Services (ISS) and Glass, Lewis & Co.
Client Alert | November 22, 2016
In recent years, an increasing number of companies have opted to hold annual shareholder meetings exclusively online--i.e., a virtual meeting without a corresponding physical meeting--rather than a virtual meeting in tandem with a physical meeting (the so-called "hybrid" approach). While hybrid approaches are generally welcome or not opposed by investors and activist shareholders, some have criticized companies holding virtual-only annual meetings, asserting that virtual meetings limit the opportunity for shareholder participation in the meeting as well as engagement with management and the board. In spite of these criticisms, just as corporate use of the internet and social media to communicate with stakeholders is growing, virtual meetings are on the rise.In 2001, I
Client Alert | November 16, 2016
On October 27, 2016, the IRS released its cost-of-living adjustments applicable to tax-qualified retirement plans for 2017. For the second consecutive year, many of the key limitations, including the elective deferral and catch-up contribution limits for employees who participate in 401(k), 403(b) and 457 tax-qualified retirement plans, remain unchanged from current levels because increases in the cost-of-living index did not meet statutory thresholds that would trigger their adjustment. This is despite the fact that there will be an increase of almost $9,000 in the Social Security wage base for 2017.The key 2017 limits are as follows: Limitation2017 Limit402(g) Limit on Employee Elective Deferrals (Note: This is relevant for 401(k), 403(b) and 457 plans, and for certain
Client Alert | November 1, 2016
On August 1, 2016, the new rule on disclosure of third-party compensation for directors and nominees adopted by The NASDAQ Stock Market LLC ("NASDAQ") took effect. Disclosure will be required in connection with annual shareholder meetings after August 1. Accordingly, for NASDAQ companies with a calendar-year end, no action is immediately required, but they should have the rule on their radar screens as they begin preparations for the next annual meeting season. In addition, we anticipate that third-party compensation will continue to be a focal point for both NASDAQ and New York Stock Exchange (NYSE) companies due to current levels of shareholder activism and as public companies continue to adopt proxy access bylaws, which typically address these arrangements.
Client Alert | August 4, 2016
Today a group of 13 executives at leading companies and institutional investors released "Commonsense Principles of Corporate Governance" for public companies, their boards of directors and their shareholders. The Principles are described as being intended "to provide a basic framework for sound, long-term-oriented governance" and to "promote further conversation on corporate governance." An open letter accompanying the Principles describes them as "conducive to good corporate governance, healthy public companies and the continued strength of our public markets." Full-page ads summarizing key parts of the Principles were published in national and international newspapers.The Principles, which are the product of meetings that have be
Client Alert | July 21, 2016
On June 29, 2016, the United States Internal Revenue Service released Revenue Procedure 2016-37 (available here) providing additional guidance on when an individually designed tax-qualified retirement plan must be amended for changes in law and when such a plan may request a determination letter from the IRS as to its tax-qualified status. As we previously discussed in this publication, in July 2015 the IRS announced that beginning on January 1, 2017, it would be eliminating the staggered five-year remedial amendment cycle system for individually designed plans. The IRS noted at that time that additional details on the program changes would be forthcoming. Previously, plan sponsors were required to amend their plan each year for required legal updates and then make c
Client Alert | July 5, 2016
On June 21, 2016, the Internal Revenue Service ("IRS") issued proposed regulations clarifying or modifying a number of provisions of the final regulations under Internal Revenue Code ("Code") section 409A. The IRS also withdrew one provision from previous proposed regulations regarding the calculation of amounts includible in income under section 409A(a)(1) and replaced it with revised proposed regulations. The proposed regulations do not have any specific focus, but rather address various concerns raised by taxpayers over interpretive issues since the current regulations were finalized in 2007. BackgroundSection 409A was added to the Code in 2004 and addresses the taxation of amounts deferred under nonqualified deferred compensation plans (&
Client Alert | June 24, 2016
On May 16, 2016, the Equal Employment Opportunity Commission (EEOC) released final regulations applying the requirements of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) to employer "wellness" programs. The regulations, which largely mirror proposed regulations issued in 2015, are effective for plan years beginning on or after January 1, 2017. With open enrollment for 2017 only a few months away, employers need to ensure that their wellness programs comply with the new rules and that their employee communications are consistent with these rules.Background and ApplicationA wellness program generally includes any health promotion and disease prevention program offered to employees either as part of a group health
Client Alert | May 31, 2016
More than ten years have passed since the New York Stock Exchange (NYSE) began requiring annual evaluations for boards of directors and "key" committees (audit, compensation, nominating/governance), and many Nasdaq companies also conduct these evaluations annually as a matter of good governance.
Client Alert | May 25, 2016
On May 17, 2016, the Division of Corporation Finance of the Securities and Exchange Commission (the "Staff") issued new Compliance and Disclosure Interpretations (C&DIs) regarding the use of non-GAAP financial measures and revised existing C&DIs on the same topic.
Client Alert | May 19, 2016
The Public Company Accounting Oversight Board ("PCAOB") recently re-proposed an audit standard to amend the form and content requirements for the independent auditor's report on financial statements.
Client Alert | May 18, 2016
The Paris office of Gibson, Dunn & Crutcher LLP is pleased to provide this French legal briefing covering France for the first quarter of 2016.The French government elected in 2012 initially took a very adverse stand against financial and international businesses in general.
Client Alert | April 5, 2016
On March 28, 2016, in a much-anticipated ruling in the Sun Capital case, the U.S. District Court for the District of Massachusetts held on remand that two private equity funds had formed a "partnership-in-fact" and were engaged in a "trade or business" and, accordingly, were jointly and severally liable for multiemployer pension plan "withdrawal liability" obligations of one of their portfolio companies.
Client Alert | March 31, 2016
San Francisco partner Marc J. Fagel and Washington D.C. associate Courtney M. Brown are the authors of "SEC Picks Up The Pace On Financial Reporting Fraud Efforts" [PDF] published on October 26, 2015 by Law360.
Article | October 26, 2015
Earlier today, the IRS released its cost-of-living adjustments (COLAs) applicable to tax-qualified retirement plans for 2016. The vast majority of these limitations, including the elective deferral and catch-up contribution limits for employees who participate in 401(k), 403(b) and 457 tax qualified retirement plans, remain unchanged from 2015 levels because increases in the cost-of-living index did not meet statutory thresholds that would trigger their adjustment.
Client Alert | October 21, 2015
Being appointed to a company's board of directors comes with serious duties and responsibilities. In Singapore, the Companies Act, Chapter 50 of Singapore ("Act"), is the main source of directors' duties.
Client Alert | August 13, 2015
On August 5, 2015, the SEC voted, 3-2, to adopt final rules to implement the pay ratio disclosure provision of Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Consistent with their positions on the proposed rules, SEC Chair Mary Jo White and Commissioners Luis Aguilar and Kara Stein voted to adopt the rules and Commissioners Daniel Gallagher and Michael Piwowar dissented, making this Commissioner Gallagher's 16th dissent (which Gallagher indicated is a Commission record). As discussed in our September 18, 2013 blog post, Section 953(b) of the Dodd-Frank Act mandates that the SEC promulgate rules requiring companies to disclose in certain of their SEC filings (i) the median of annual total compensation
Client Alert | August 6, 2015
Today the Council of Institutional Investors ("CII"), a nonprofit association of corporate, public and union employee benefit funds and endowments that seeks to promote effective corporate governance practices for U.S.
Client Alert | August 5, 2015
On July 21, 2015, the Internal Revenue Service announced that, beginning January 1, 2017, it will no longer accept determination letter applications requesting a determination with respect to the tax-qualified status of retirement plans except in connection with the initial adoption of the plan, the termination of the plan, and in certain other circumstances to be identified. The IRS is limiting the determination letter program in order to more "efficiently direct its limited resources." This change will increase the risk of maintaining an individually designed tax-qualified plan and will push more employers to adopt preapproved plans made available by service providers (the opinion letter program for those plans is not changing).BackgroundAn IRS determination le
Client Alert | July 21, 2015
This client alert provides an overview of shareholder proposals submitted to public companies for 2015 shareholder meetings, including statistics, notable decisions from the staff (the "Staff") of the Securities and Exchange Commission (the "SEC") on no-action requests, and information about litigation regarding shareholder proposals. I. Shareholder Proposal Statistics and Voting Results A. Shareholder Proposals SubmittedAccording to data from Institutional Shareholder Services ("ISS"), shareholders have submitted approximately 943 proposals for 2015 shareholder meetings, which surpasses the total of 901 proposals submitted
Client Alert | July 15, 2015
Earlier today, the Internal Revenue Service ("IRS") released Notice 2015-49, announcing that defined benefit pension plans will no longer be permitted to offer lump sum cash out windows to retirees who are already receiving benefits in the form of an annuity. The IRS had previously issued a number of private letter rulings stating that such lump sum window programs were permissible under Treasury Regulations issued under Internal Revenue Code ("Code") section 401(a)(9). Code section 401(a)(9) generally requires distribution of an employees' interest in a tax qualified retirement plan to commence by no later than April 1st of the calendar year following the later of (a) the year in which the employee attains age 70 ½ or (b) the
Client Alert | July 9, 2015
New York partner Jennifer Rearden and associates Jefferson Bell and Michael Marron are authors of “Stockholder Ratification of Compensation for Non-employee Directors” [PDF] published by the Delaware Business Court Insider on May 20, 2015.
Article | May 20, 2015
On May 18, 2015, the United States Supreme Court unanimously ruled in Tibble v. Edison International, 575 U.S.
Client Alert | May 19, 2015
On April 30, 2015, Chancellor Bouchard of the Delaware Court of Chancery issued an important decision regarding the fiduciary duties of board compensation committees in awarding compensation to non-employee directors. In Calma v. Templeton, the Court, drawing on its prior opinion in Seinfeld v. Slager, denied the defendants' motion to dismiss, under Rule 12(b)(6), a claim that the members of Citrix Systems, Inc.'s ("Citrix" or the "Company") board of directors breached their fiduciary duties in awarding compensation to non-employee directors under Citrix's equity incentive plan. In reaching this decision, the Court applied the entire fairness standard of review to the compensation committee of the board of directors' (the "Compensation Commit
Client Alert | May 11, 2015
On April 29, 2015, the Securities and Exchange Commission ("SEC" or "Commission") voted, 3-2, to issue proposed rules implementing the pay-versus-performance disclosure requirement in Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). In summary, the proposed rules would require proxy statements or information statements setting forth executive compensation disclosure to include (1) a new compensation table setting forth for each of the five most recently completed fiscal years, the "executive compensation actually paid" (as defined in the proposed rules), total compensation as disclosed in the Summary Compensation Table, total shareholder return (TSR), and peer group TSR, and (2) based
Client Alert | May 1, 2015
For many troubled companies, defined benefit pension plan liabilities are unaffordable. The single-employer plan fund of the Pension Benefit Guaranty Corporation (PBGC), which provides guaranteed benefits to participants in terminated plans, has a deficit in excess of $27 billion, and U.S.
Webcasts | April 30, 2015
Earlier today, the Internal Revenue Service published in the Federal Register final regulations under Section 162(m) of the Internal Revenue Code (the "Code"). Code Section 162(m) limits the ability of public corporations to deduct compensation paid to any covered employee to the extent that such compensation exceeds $1,000,000 in any taxable year. For purposes of this rule, a public company's "covered employees" generally include the company's named executive officers (other than the company's chief financial officer) as reported to the company's shareholders under the Securities Exchange Act of 1934.Code Section 162(m)(4)(C) provides an exception from the $1,000,000 deduction limit for "performance-based" compensation that meets the requirem
Client Alert | March 31, 2015
With preparations for the 2015 proxy season in full swing at U.S.
Client Alert | February 6, 2015
The IRS recently released the inflation-adjusted limitations applicable to tax-qualified retirement plans for 2015. As in 2014, several of these limits are again increasing, including the elective deferral and catch-up contribution limits for employees who participate in 401(k), 403(b) and 457 tax qualified retirement plans. In addition to the impact of these limitations on tax-qualified retirement plans, the compensation limit under Section 401(a)(17) of the Internal Revenue Code also affects the amount of severance pay that may be excludable from coverage under Section 409A of the Code in certain circumstances. The key 2015 limits are as follows: Limitation2015 Limit402(g) Limit on Employee Elective Deferrals (Note: This is relevant for "401(k)
Client Alert | November 5, 2014
Los Angeles partner Michael Farhang and associate Patrick Doust are the authors of “Demand Futility Standards in the Executive Compensation Context” [PDF] published in the September 24, 2014 issue of Delaware Business Court Insider.
Article | September 24, 2014
In this alert we review recent key developments in UK employment law and look forward to some significant changes that are on the horizon later in the year and in early 2015.
Client Alert | July 29, 2014
On June 30, 2014, the staff of the Securities and Exchange Commission's (the "Commission") Division of Investment Management and Division of Corporation Finance (the "Staff") issued much-anticipated guidance regarding proxy advisory firms, in the form of 13 Questions and Answers. Published in Staff Legal Bulletin No. 20 ("SLB 20"), available at http://www.sec.gov/interps/legal/cfslb20.htm, the Staff's guidance addresses both (1) investment advisers' responsibilities in voting client proxies and retaining proxy advisory firms (Questions 1-5), and (2) the availability and requirements of two exemptions to the proxy rules often relied upon by proxy advisory firms (Questions 6-13).SLB 20 includes an acknowledgement that investment advisers and proxy adv
Client Alert | July 1, 2014
This alert provides an overview of shareholder proposals submitted to public companies during the 2014 proxy season, including statistics, notable decisions from the staff (the "Staff") of the Securities and Exchange Commission (the "SEC") on no-action requests and information about litigation regarding shareholder proposals.
Client Alert | June 25, 2014
On January 27, 2014, Institutional Shareholder Services, Inc. ("ISS") released information about its new version of QuickScore ("QuickScore 2.0"), which it will launch on February 18, 2014. In addition, after Gibson Dunn submitted a series of questions to ISS about QuickScore, on January 31, 2014, ISS issued additional guidance clarifying certain information applicable to U.S.
Client Alert | February 3, 2014
In this update we review recent key developments in UK employment law and look forward to some significant changes that are on the horizon in 2014.
Client Alert | January 30, 2014
Gibson Dunn discusses several key shareholder proposal and corporate governance topics for public companies and their boards to consider in 2014.
Client Alert | January 16, 2014
As 2013 draws to a close, sponsors of tax qualified retirement plans and welfare benefit plans should be aware of the following plan amendments and other action items that may need to be made or taken in the next few weeks or months. Tax Qualified Retirement PlansDiscretionary AmendmentsTax qualified retirement plans generally must adopt any discretionary plan amendments no later than the end of the plan year in which the amendment became effective (except that amendments modifying eligibility or decreasing benefits generally must be adopted before they become effective). Thus, for a calendar year plan, all discretionary amendments implemented in 2013 (e.g., the addition of an automatic contribution arrangement, the addition of an in-plan Roth conversion feature, changes in pla
Client Alert | November 19, 2013
The IRS recently released the inflation-adjusted limitations applicable to tax-qualified retirement plans for 2014. As in 2013, several of these limits are again increasing. In addition to the impact of these limitations on tax-qualified retirement plans, the compensation limit under section 401(a)(17) of the Internal Revenue Code also affects the amount of severance pay that may be excludable from coverage under section 409A of the Code in certain circumstances. The key 2014 limits are as follows: Limitation2014 Limit402(g) Limit on Employee Elective Deferrals (Note: This is relevant for "401(k)," "403(b)" and "457" plans, and for certain limited purposes under Code Section 409A.)$17,500 (unchanged)414(v) Limit on "
Client Alert | November 13, 2013
Gibson Dunn provides a brief summary of developments and trends in corporate governance and executive remuneration in the UK, as of summer 2013.
Client Alert | August 27, 2013
On July 24, 2013, the First Circuit held in Sun Capital Partners III LP v. New England Teamsters & Trucking Indus. Pension Fund that a private equity fund can be jointly and severally liable in certain circumstances for pension liabilities incurred by its portfolio companies.
Client Alert | August 2, 2013
In this update we review recent key developments in UK employment law and look forward to some significant changes that are on the horizon.The Employment Law Review A systematic review of UK employment law by the current Coalition Government began in 2010 and since then a package of reforms aimed at easing the perceived burden of employment regulation on employers (particularly small employers) have been proposed and consulted upon, many over the course of the last year. Some of the more controversial measures have been dropped following consultation, whereas others have been, and will continue to be, implemented this year through the Enterprise and Regulatory Reform Act 2013 ("ERRA"). The UK Employment Tribunals system has also come under scrutiny. Whilst origi
Client Alert | July 31, 2013
On June 26, 2013, the Supreme Court ruled section 3 of the Defense of Marriage Act unconstitutional in United States v. Windsor. This has a number of important implications for employee benefit plans that cover participants who have same-sex spouses.
Client Alert | July 12, 2013
Shareholder proposals continued to attract significant attention during the 2013 proxy season. This client alert provides an overview of shareholder proposals submitted to public companies during the 2013 proxy season, including statistics, notable decisions from the staff (the "Staff") of the Securities and Exchange Commission (the "SEC") on no-action requests and other Staff guidance, majority votes on shareholder proposals and litigation seeking to exclude shareholder proposals. 1. Shareholder Proposal Statistics and Voting ResultsAccording to data from Institutional Shareholder Services ("ISS"), shareholders submitted approximately 820 proposals to date for 2013 shareholder meetings, up from ap
Client Alert | July 9, 2013
Gibson Dunn outlines the trend of shareholder lawsuits related to executive compensation disclosures and suggests strategies for addressing this new proxy litigation.
Client Alert | February 26, 2013
Institutional Shareholder Services ("ISS") and Glass, Lewis & Co., Inc. ("Glass Lewis"), the two major proxy advisory firms, recently released updates to their proxy voting policies for the 2013 proxy season. The ISS U.S.
Client Alert | January 29, 2013
A series of recent articles in the Wall Street Journal have focused on corporate executives who traded in their companies' stock. According to the Journal, some corporate executives who traded in their companies' stock realized gains or avoided losses during the week prior to significant corporate news.
Client Alert | January 22, 2013
Client Alert | January 16, 2013
The start of a new year frequently serves as a time for sales organizations to take stock of past sales performance and develop commission plans for the coming year. But this year, companies with sales or other commission-based employees who provide services in California are faced with a new legal hurdle: Effective January 1, 2013, all commission-based employment contracts must be in writing and set forth the method by which such commissions are computed and paid. While this law--which amends and revives California Labor Code Section 2751--was purportedly enacted to ensure greater certainty and protection, it raises a number of unanswered questions employers may soon face, including questions about: (1) the geographic reach of the law; (2) what terms should be incl
Client Alert | December 27, 2012
Effective on January 1, 2013, the tax cuts enacted by the Bush Administration and extended in December 2010 will automatically end, and tax rates will revert to their pre-2001 levels.
Client Alert | November 19, 2012
With the arrival of fall, calendar-year companies are gearing up for what promises to be another busy proxy season, preparing for new rules that will impact their disclosures and governance practices, and planning their 2013 board and committee calendars.
Client Alert | November 2, 2012