Executive Compensation

A case decide this week by the U.S. Court of Appeals for the Second Circuit demonstrates the high states of stock plan miscommunications. In Bell v. Pfizer Inc. (Aug. 30, 2010), a 2-1 majority of the Court held that Pfizer did not breach its fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) by making potentially misleading statements, albeit unintentional, to an employee about her ability to exercise millions of dollars in stock options.

. . .

So read the headline of a story in The Wall Street Journal yesterday. My first thought was: No kidding. 

Fall 2010 is likely to see the most significant effort to accelerate income since 1994. The common element? Big tax increases. Absent some quick and unexpected action by Congress, beginning January 1, 2011:

• the top individual ordinary income tax rate will increase to 39.6% from 35%, 
• the top dividend tax rate will increase . . .

Yesterday morning, the SEC adopted proxy access rules at an open Commission meeting by a 3-2 vote and posted its 451-page adopting release. Neither the adopting release nor Proxy Access generally has an automatic or direct impact on executive compensation. However, one of the announced purposes of proxy access is to enhance shareholders' abilities to hold directors feet to the fire on executive compensation, as ind . . .

In the “excitement” over the Dodd-Frank Act, many folks may have missed the so-called "Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010," which President Obama signed into law on June 25, 2010. Among other things, this Act extended the time period over which ERISA and the Internal Revenue Code require an employer to fully fund its defined benefit pension plan. (Pension plan funding became a major problem for many employers after the market cras . . .

Today I will discuss a couple more items on the "Dodd-Frank Wall Street Reform and Consumer Protection Act." Next, I will begin discussing action items and a task list/time line for compliance.

Dodd-Frank Section 955 adds a new subsection 14(j) to the Exchange Act, "Disclosure of Hedging by Employees and Directors." This section requires the SEC to require companies to disclose in their annual proxy statement whether the company permits any employee or director (or any designee of suc . . .