– Broc Romanek

Here’s this Manifest blog:

Gender pay gap reporting will go ahead in the UK after the government published its final pay gap reporting regulations and its response to the consultation on the requirements. The government said it remains committed to achieving legislative approval by Parliament so that they can enter into force in April 2017.

The government said there were some arguments that the regulations – which will come into force under section 208 of the “Equality Act 2010” – should apply to smaller companies than proposed. However, the government has stuck to its decision that the regulations will apply to companies with 250 employees or over.

The government said it would require these companies to collect information on the hours and earnings of employees during the pay period in which a ‘snapshot date’ in April falls. This had been proposed as 3oth April but will now be 5th April to fall in line with tax years as respondents had indicated that collating the information would then be easier. The government said the regulations were one element of its strategy to meet the needs of women at every stage of their working lives. The government said it knew the causes of the gender pay gap were complex and its strategy must span education, business and the executive pipeline.

As announced in February, the government said it would provide a package of support to help employers calculate and address their gender pay gap. This would include a campaign of UK-wide events and multimedia guidance to help employers calculate their gender pay gap, gender bonus gap and the numbers of men and women at different pay quartiles and targeted support for smaller employers, and those in sectors that are least advanced on gender equality.

The regulations will require employers to publish the gender pay gap information on their own website in a manner that is accessible to employees and the public. In addition, employers must also publish the information to a government website. Some respondents, notably trade union bodies, indicated that companies that did not comply should face sanctions however the government said it did not propose any additional enforcement. However, the government noted, that non-compliance would constitute an ‘unlawful act’ and fall within the existing enforcement powers of the Equality and Human Rights Commission (EHRC) under the Equality Act 2006.

– Broc Romanek, CompensationStandards.com

Here’s a blog by Paul Hasting’s Mark Poerio:

Delaware’s Supreme Court awarded over $16 million to a private company’s optionees in Fox v. CDX Holdings. The court upheld trial court findings that Plan terms (and the associated contractual rights of optionees) were violated both because (1) management, rather than the Board as plan administrator, determined “fair market value” in the step one spin-off, and (2) option proceeds were improperly held-back as part of the post-closing escrow arrangement that was built into the second-step merger agreement.

– Broc Romanek

Here’s the intro from this note by Manifest:

The Pensions and Lifetime Savings Association (PLSA), the membership body for UK’s pension funds, has published its “AGM Season Report 2016,” focusing on executive pay using data provided by Manifest. A survey of PLSA members for the report found that 87% of respondents believe executive pay is too high.

A majority – two-thirds (63%) – of the 87% believe executive pay is generally too high, while 37% say it’s too high in cases of poor performance. Pension funds also have serious concerns about the pay gap between executives and their workforce with 85% of respondents highlighting it as a problem.

– Broc Romanek

Yesterday, ISS Corporate Solutions issued this primer that provides the basics of ISS Research’s Equity Plan Scorecard methodology that will affect meetings occurring on – or after – February 1st (see Appendix D for the ISS 2017 burn rates).

– Broc Romanek

On Monday, the SEC announced that Neustar had settled whistleblower charges for routinely entering into severance agreements that contained a broad non-disparagement clause forbidding former employees from engaging with the SEC and other regulators “in any communication that disparages, denigrates, maligns or impugns” the company. Former employees could be compelled to forfeit all but $100 of their severance pay for breaching the clause. And yesterday, the SEC settled with SandRidge Energy over separation agreements & retaliation. This WSJ article says more of these cases to come…

Just one more enforcement case as the SEC continues to hammer home the need to modify agreements that contain anti-retaliation leanings. Tune in next year to this TheCorporateCounsel.net webcast – “Whistleblowers: What Companies Should Be Doing Now“…

– Broc Romanek

Recently, ISS updated the FAQs for Equity Plan Compensation, Executive Compensation Policies and Peer Groups – along with an updated pay-for-performance white paper to reflect the new financial performance alignment test. Here’s Ed Hauder’s blog about the equity plan FAQs entitled “Maximum Tax Withholding and Liberal Share Counting – A Deadly Combination” – and this Davis Polk blog…

I haven’t hashed out all the FAQs. But for the peer group ones, the changes are fairly minor & often ministerial, as reflected in this blackline of those FAQs…

– Broc Romanek

As noted in this Cooley memo, California Governor Jerry Brown recently signed legislation into law that prohibits employers from requiring employees who primarily reside & work in California to agree to contract provisions that require them to adjudicate claims arising in California outside of the state. In addition, employees who primarily reside & work in California cannot be forced to sign agreements that deprive them of the substantive protections of California law…

– Broc Romanek

For the first time in several years, ISS has updated its FAQs about peer groups. The changes are fairly minor & often ministerial, as reflected in this blackline of the FAQs…

– Broc Romanek

I swore I already blogged about this – but maybe I just meant to. Anyway, this blog by Davis Polk’s Ning Chiu gave me the reminder about the news from this NY Times article:

The pay ratio rule has already produced unforeseen consequences. Quoting economist Thomas Piketty and citing numerous statistics on income inequality and CEO compensation, the city of Portland, Oregon, recently passed an ordinance authorizing a surtax to the city’s business license tax for public companies doing business in Portland based on their pay ratio disclosure.

In addition to the current 2.2% business license tax, a surtax of 10% of base tax liability will be imposed once the disclosure is effective if a company reports a pay ratio of at least 100:1 but less than 250:1. Companies with pay ratios exceeding 250:1 will face a surtax of 25%.

There are currently at least 545 publicly traded companies subject to this tax in Portland, with collective revenue of $17.9 million. The new surtax is projected to bring in annual tax revenue of between $2.5 to $3.5 million, and will be used to partly fund a city office devoted to homeless services.

In 2014, the California State Senate considered, but did not pass, a bill which would have enacted a new higher tax rate on all public companies, but reduce the rate for companies where the CEO’s pay was less than 100 times that of the median worker.

In the same year, the Rhode Island State Senate passed a bill that would have given preference in state contracts to companies with small differences between CEO and worker pay, but it was defeated in the House. Massachusetts has also shown interest in enacting similar measures, so this may only be the beginning.

Also see this Fortune article entitled “Why Portland’s Drastic Move to Limit CEO Pay Will Make ‘Virtually No Impact’…

– Broc Romanek

This 17-page memo from Davis Polk gives the rundown on possible predictions on how it might all play out for the executive pay provisions in Dodd-Frank & much more…

Apparently, as noted in this Reuters article, SEC Chair White is trying to push through some “midnight rulemaking” – contrary to what I blogged last month. However, there isn’t any indication whether that includes the Dodd-Frank executive pay rulemakings that remain proposed but not adopted…