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Victor Flores

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As many readers likely know, last fall California doubled-down on the state’s hostility to noncompete agreements. Assembly Bill 1076 codified the landmark 2008 Edward v. Arthur Andersen decision that invalidated all employment noncompetes, including narrowly tailored ones, unless they satisfy a statutory exception.AB 1076 also added new Business & Professions Code §16600.1, requiring California employers to notify current (and certain former) employees that any noncompete agreement or clause to which they may be subject is void (unless it falls within one of…

In welcome news for U.S. listed companies, both the New York Stock Exchange (NYSE) and NASDAQ have extended the effective date of their proposed listing standards to implement the Dodd-Frank clawback requirement to October 2, 2023 (see the NYSE Amendment and Nasdaq Amendment, filed with the Securities and Exchange Commission (SEC) on June 5, 2023 and June 6, 2023, respectively). If the SEC approves the listing rules as proposed, listed companies will have until December…

On December 14, 2022, the SEC adopted final rules amending Rule 10b5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”), which provides an affirmative defense to insider trading for trades made under a written plan adopted when not aware of material nonpublic information (“MNPI”). The final rules add several new conditions for the availability of the affirmative defense and require new quarterly and Form 4 disclosures regarding the Rule 10b5-1 trading arrangements of…

On December 16, 2022, Institutional Shareholder Services (“ISS”) released its updated FAQs on Equity Compensation Plans, which will apply to its “Equity Plan Scorecard” evaluation of equity plan proposals in shareholder meetings held on or after February 1, 2023. Under the Equity Plan Scorecard, ISS scores a proposed equity plan based on factors relating to (i) plan “cost” under a “Shareholder Value Transfer” model, (ii) plan features and (iii) company grant practices. Although the only…

On October 26, 2022, the SEC adopted its much-anticipated final clawback rules requiring U.S. listed issuers to: develop and implement a policy for the recovery of incentive-based compensation that is erroneously “received” by current and former executive officers during the three completed fiscal years immediately preceding the date that the issuer is required to prepare an accounting restatement (capturing both “Big R” and “Little R” restatements); and file that policy as an annual report exhibit…

It’s been 12 years in the making, but the SEC has finally released rules to implement the “pay versus performance” disclosure required by Section 953(a) of the Dodd-Frank Act. The new disclosure of the relationship between executive compensation “actually paid” and financial performance is required to be included in proxy statements or information statements for fiscal years ending on or after December 16, 2022 and is therefore effective for the upcoming 2023 proxy season. For a…

In welcome news, Delaware recently amended its General Corporation Law (DGCL) to increase flexibility for delegating share award granting authority. The amendments became effective on August 1, 2022. The changes expand the elements of granting share awards that a board of directors may delegate, including, and most notably, the authority to determine the terms and conditions of the awards. If a board of directors wants to take advantage of the increased flexibility provided by the…

The question of mid-offering period changes to employee stock purchase plans (ESPPs) has been coming up with unusual frequency, in some cases due to stock price volatility causing an earlier-than-expected shortage of shares and in others due to companies desiring to quickly make their plans more competitive in the ongoing battle for talent. Impact of a Modification of a Section 423 ESPP Option But a mid-offering change to the terms of a Code[1] Section 423…

On December 15, 20211, the Securities and Exchange Commission (“SEC”) issued proposed rules that would significantly impact Rule 10b5-1 trading plans. Among other things, the proposed rules impose new conditions on the availability of the affirmative defense to insider trading afforded by 10b5-1 plans, require quarterly disclosure of the adoption, modification and termination of trading plans by directors, officers and issuers and require identification of transactions made pursuant to such plans on Forms 4 and…

On Nov. 29, 2021, the staff of the U.S. Securities and Exchange Commission (SEC)’s Office of the Chief Accountant and the Division of Corporation Finance released Staff Accounting Bulletin No. 120 (SAB 120), which is effective immediately and provides guidance on how to properly recognize and disclose the compensation cost for “spring-loaded” awards made to executives of public companies subject to reporting requirements under US securities laws. SAB 120 describes spring-loaded awards as share-based compensation…