Deferred Compensation News and Updates

Deferred Compensation News brings you the latest information and insights on 409A nonqualified deferred compensation; institutional COLI, BOLI, and ICOLI; tax-and cost-efficient non-COLI funding strategies; low-cost tax managed non-COLI asset/liability designs; executive benefits benchmarking; succession planning and timely issues of executive pay and benefits. Click here to read all recent articles related to the impact of the COVID-19 Pandemic.
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February 24, 2021

The Evolving Use of Clawback Provisions in Corporate America

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Clawback provision in corporate America may be changing. Here’s why (and how) #ReadMore
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January 06, 2021

Executive Compensation IRC Sec 162(m) Regulations Finalized

compensation clawback

The IRS & Treasury Dept. have published FINALIZED executive comp IRC Sec. 162(m) guidelines. Here’s what’s changing…
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July 16, 2020

Compensation Clawback Final Rules on SEC Agenda

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Attorney Mike Melbinger, author of the Executive Compensation Blog, says he is officially putting away his crystal ball when it comes to predicting (or second guessing) the timing of actions by the Securities and Exchange Commission. Nevertheless, he does point out that select issues are on the SEC’s radar, including specific executive compensation issues, such as the recovery of erroneously awarded compensation. 
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October 01, 2019

Compensation Clawback Attempts and Unanticipated Outcomes

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The following article, originally published on the Executive Compensation Blog by Attorney Michael S. Melbinger, is republished here with permission.    Compensation Clawback Attempts Lead to Unintended Consequences   Just back from another excellent CompensationStandards.com/NASPP* Annual Conference. Among the many new and interesting topics explored was an issue related to compensation clawbacks, which recently has been thrust into prominence.  The issue whether a company’s indemnification provisions would require it to reimburse a covered executive for (i) compensation amounts clawed back and/or (ii) the costs of defending against the company’s lawsuit against the executive attempting to clawback the compensation. In one ongoing case, after the company filed a lawsuit seeking a clawback, the former corporate officers responded by seeking advancement of legal fees and indemnification. The company’s bylaws provide that legal fees are advanced to former corporate officers when a claim related to actions taken in their official corporate capacity is brought. The company’s compensation clawback provision was silent on the matter of advancement of fees. Despite the company’s best efforts to raise policy objections in response to the advancement issue raised by the defendants, the court awarded legal fee advancement to the former executives. A court has yet to issue
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June 25, 2019

Two Compensation Clawback Battles Heating Up

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We are always pleased to share the insights of Attorney Michael Melbinger, Winston & Strawn LLP. The following commentary was published on June 20, 2019, on the Executive Compensation Blog and is highly informative but does not constitute legal advice. The executive benefits consulting professionals at Fulcrum Partners advise you to always consult your own tax, legal, and accounting advisers. Interesting Battles Over Compensation Clawback Shareholder Proposals Two large and well-known corporations with shareholder meetings coming up in the next week are facing contested stockholder proposals over compensation clawback policies. However, the circumstances and issues are very different. Note: Alphabet Inc. is an American multinational conglomerate headquartered in Mountain View, California. It was created through a corporate restructuring of Google on October 2, 2015 and became the parent company of Google and several former Google subsidiaries. Alphabet’s proxy statement includes Stockholder Proposal No. 15, Regarding a Clawback Policy. Apparently, Alphabet does not currently have a clawback policy in place, and a number of union pension funds are leading the charge to make them adopt a plain vanilla policy. RESOLVED, that shareholders of Alphabet Inc. (Alphabet) urge the Leadership Development and Compensation Committee of the Board of Directors (the Committee) to adopt a clawback policy, or amend any existing clawback policy, to provide that the
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February 11, 2016

SEC Approves Request for Vote Proposed by BoA Shareholder

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SEC Approves Request for Vote Proposed by BoA Shareholder At Fulcrum Partners LLC, we’ve long thought that the nonqualified deferred compensation platform is ideally suited for claw back arrangements.  See how Bank of America is taking it to a new level. An article written by Deon Roberts and published by The Charlotte Observer (February-10-2016) provides updates and insights on a request from a Bank of America shareholder to present a proposal for voting that would require top executives to defer a portion of their annual pay to cover future legal expenses. Although Bank of America has fought the proposed vote, claiming it to be a matter of ordinary business operations, the Securities and Exchange Commission has determined that BoA cannot prevent its investors from voting on the proposal. You can read the entire article in the Business section of The Charlotte Observer  www.charlotteobserver.com/ Bank of America (BoA) Shareholders To Vote on Deferring Executive Pay for Legal Fines The Charlotte Observer stated, “The Securities and Exchange Commission has cleared the way for Bank of America shareholders to vote on a proposed requirement that its top executives have a portion of their annual pay deferred to cover future legal fines.”
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January 19, 2016

Clawback of Excess Incentive-Based Compensation: Proposed SEC Rules Changes

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Fulcrum Partners and the AALU have issued the following update regarding proposed SEC rules requiring member companies to clawback excess incentive-based compensation. While accepted theory often has recommended aligning executive compensation to a company’s financial performance, in light of the rules proposed by the Security and Exchange Commission, as well as other current market trends, companies may wish to reduce executive officers’ exposure to clawback by reducing compensation that is tied to the realization of corporate financial goals. The announcement is posted below and can be downloaded as a PDF on the Resources webpage for Fulcrum Partners LLC.  SEC’s Proposed Rules Requiring Member Companies to “Clawback” Excess Incentive-Based Compensation Clawback of Excess Incentive-Based Compensation, Proposed SEC Rules Changes About Fulcrum Partners LLC: Fulcrum Partners LLC is one of the nation’s leading and largest executive benefits consultancy. Its consultants focus on an integrated approach to the design, financing and plan administration of executive benefit programs. Fulcrum Partners offers its clients a unique combination of industry experts with diverse skill sets, targeted experience, and in-depth expertise in executive compensation and benefits consulting. Fulcrum Partners is a wholly independent, member-owned firm dedicated to help clients enhance their Total Rewards Strategy. About AALU: The AALU’s mission
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July 16, 2015

Compensation Clawback Policies: SEC Proposes New Rules

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With Securities and Exchange Commission (SEC) proposed rule changes regarding compensation clawback policies potentially leading to Nasdaq, the NYSE, and other national securities exchanges and associations adopting listing standards applicable to listed companies, Fulcrum Partners recommends that listed companies plan for the review of existing incentive-based compensation arrangements and any other plans or agreements that are affected by incentive compensation, such as deferred compensation plans or supplemental executive retirement plans. The goals of such review would include determining whether there is an existing contractual right to recover compensation and to consider whether to modify the arrangements to permit recovery in the future. The following article released earlier this month by Foley and Lardner looks at these proposed rule changes. Below is an excerpt from “SEC Proposes Rules on Compensation Clawback Policies,” written by Joshua A. Agen and Leigh C. Riley. You can read the full article at Legal News: Employee Benefits & Executive Compensation SEC Proposes Rules on Compensation Clawback Policies On July 1, 2015, the Securities and Exchange Commission (SEC) proposed rules relating to compensation clawback policies. The rules, if adopted, would implement the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd Frank) by directing national securities exchanges and associations, such as the NYSE and Nasdaq, to adopt listing
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