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Executive Compensation Reform White Paper Issued by Pillsbury

Posted on: Thursday, 17 September 2009, 08:00 CDT

NEW YORK, Sept. 17 /PRNewswire/ -- National law firm Pillsbury today issued a White Paper, "Executive Pay Reform Poses Complex Risks for Compensation Committees," which explores issues facing compensation committees under the proposed Corporate and Financial Institutional Fairness Act of 2009 (the Act) and other reforms.

"Earlier this week, a judge rejected the settlement made between the SEC and Bank of America to pay Merrill Lynch executives $33 million in bonuses, ruling it was unfair to stockholders," said White Paper author Scott Landau, a New York executive compensation partner at Pillsbury and former head of Bristol-Myers Squibb's domestic and international Employee Benefits and Compensation Legal Group. "So even though the Senate hasn't yet voted to pass the Act, there is no doubt new federal regulations on how salaries, bonuses and perks paid to senior executives at public companies are determined and awarded are coming and coming soon. The onus for overseeing the compliance and implementation of these new rules will fall on Compensation Committees, which is why we wrote this White Paper specifically for that audience, so Committee members can start working now to improve their procedures and the tools they have at their disposal."

Executive Compensation practices, particularly among financial institutions and investment companies, have been widely criticized for contributing to the 2008 economic crisis and subsequent recession.

"The principles driving compensation reform primarily focus on three main ideas: that executive compensation should be tied to company performance; executive interests should be aligned with those of the corporation and its shareholders; and executives should not be incentivized for taking unreasonable and imprudent risks," Landau said. "In addition, the process of establishing executive compensation programs should be transparent, protect against bias and provide for enhanced accountability."

The Act would constitute the first broad-based federal legislative effort to promote these goals, as well as build on newly enacted rules for financial institutions receiving governmental assistance under the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009. But these new rules, should they pass, will be in force for all public companies and likely set the tone and base for private ones as well.

Pillsbury's White Paper, co-written with associates Bradley Benedict and Kathleen Bardunias, offers the most comprehensive look so far at the complex governance and compensation matters that Compensations Committees must begin to grapple with, including:

• Equity-Based Compensation Policies and Practices
  • Share ownership and retention guidelines
  • Selecting equity-based awards
  • Stock options issues
  • Incentive-based compensation
• Employment and Severance Agreements Issues
  • Clawbacks
  • Defining contract terms
  • Role of perquisites
  • Non-competition, non-disclosure, non-solicitation covenants
• Disclosure
  • SEC Regulations
  • Say-on-pay shareholder voting
• Corporate Governance
  • Compensation Committee charter
  • Committee structure
  • General business and decision-making
  • Delegations of authority
  • International issues
    

To download the White Paper, go to www.pillsburylaw.com/compensationreforminsights.

Pillsbury counsels corporations, partnerships, governmental entities, trustees, boards, investment managers and executives on a wide range of executive compensation and employee benefits matters. This includes the design, implementation and compliance of qualified pension and profit-sharing plans, health and welfare plans; funding of retiree health benefits, implementation of cafeteria plans, COBRA and dependent care issues; fiduciary matters and the tax and ERISA implications of proposed investments; and the tax and securities law implications of deferred compensation plans, including the implementation of stock-based compensation arrangements. We represent clients involved in ERISA litigation, relating to both benefits and fiduciary violations, and in administrative proceedings before the Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corporation. Pillsbury also acts on behalf of corporate clients and trade organizations in legislative affairs and advises legislative and regulatory staff on technical and policy issues.

About Pillsbury Winthrop Shaw Pittman LLP

Pillsbury is a full-service law firm with market-leading strengths in the energy, financial services, real estate and technology sectors. With a presence in the world's major financial and technology centers, Pillsbury counsels clients on all aspects of global business and litigation. We work in multidisciplinary teams that allow us to anticipate trends and bring a 360-degree perspective to complex business and legal issues -- helping clients to take greater advantage of new opportunities and better mitigate risk. This collaborative work style helps produce the results our clients seek.

SOURCE Pillsbury Winthrop Shaw Pittman LLP

Source: PR Newswire

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