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Sinead Kelly

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On April 12, 2024, Treasury and the IRS published proposed regulations on the 1% excise tax imposed by Internal Revenue Code Section 4501 on the value of stock repurchased by a US public corporation or a 50% affiliate. The proposed regulations elaborate on and clarify compensation-related issues that arose in Notice 2023-2, December 27, 2022 (addressed in our prior blog post), including: how to value repurchased stock for purposes of calculating the amount subject to the…

The Securities and Exchange Commission (SEC) last year amended rules under the Securities Exchange Act of 1934 to shorten the securities transaction settlement cycle for most broker-dealer securities transactions, from “T+2” to “T+1,” meaning that securities transactions will need to be settled within one business day of the transaction date (“T”), effective as of May 28, 2024. Impact on Equity Awards The new SEC-required settlement timing will directly impact equity awards that are settled through…

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…

The United States Dodd–Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as implemented by Section 10D of the US Securities and Exchange Act of 1934, Rule 10D-1 thereunder, and applicable stock exchange listing standards, requires US listed companies, by December 1, 2023, to adopt a clawback policy applicable to executive officers in the event of an accounting restatement due to material noncompliance with financial reporting requirements.The policy must provide for the recovery…

On June 9, 2023, the Securities and Exchange Commission (“SEC”) approved listing standards proposed by the NYSE and Nasdaq to implement its final Rule 10D-1 regarding recoupment of erroneously awarded compensation under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Pursuant to this approval, the effective date of the listing standards is October 2, 2023 and the deadline for U.S. listed companies to adopt a Dodd-Frank-compliant clawback policy is December 1, 2023. For…

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…

This post was originally issued as a Baker McKenzie client alert authored by Geoff Martin and Maria Piontkovska in our Government Enforcement Group, Sinead Kelly in our Executive Compensation Group and Benjamin Ho in our Labor & Employment Group. ———- On March 3, 2023, the Criminal Division of the United States Department of Justice (“DOJ”) published details of a three year Pilot Program Regarding Compensation Incentives and Clawbacks (the “Compensation Pilot Program”). The Compensation Pilot…

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…