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 August 16, 2022, President Biden signed the Inflation Reduction Act (“IRA”) into law. One of the new provisions the IRA introduced is the stock buyback excise tax under Code section 4501, which applies as of January 1, 2023 and was designed to target large corporations that implement stock buybacks. Background Code section 4501 imposes a 1% excise tax on the value of covered corporation stock that is repurchased by the covered corporation or a…
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…
March 14, 2023, is recognized as Equal Pay Day in the US. This date symbolizes how far into the year women must work to earn the same amount that men earned in the previous year. Because women earn less, on average, than men (according to the US Census Bureau), they must work longer for the same amount of pay. It is vital to know that the wage gap is even greater for most women of color. In recent years, legislatures have…
On February 10, 2023, the Securities and Exchange Commission (SEC) issued Compliance & Disclosure Interpretations (CDIs) regarding the pay versus performance (PVP) disclosure rules under Item 402(v) of Regulation S-K[1]. The PVP disclosure rules apply to covered companies beginning with proxy statements or information statements filed for fiscal years ending on or after December 16, 2022 and generally require disclosure of (i) a PVP table accompanied by a narrative and/or graphical explanation of the relationship…
The short answer is âno.â Typically the enforceability of non-compete clauses has been subject to state law and more recently, many states have imposed limitations on the enforceability of non-competes. Some states, like California, North Dakota and Oklahoma, ban them entirely. However, the Federal Trade Commission (âFTCâ) on January 5, 2023 issued a proposed rule that would significantly restrict the use of non-compete clauses between employers and employees as a matter of federal law. The…
On December 14, 2022, the SEC adopted final rules amending Rule 10b5-1 under the Securities Exchange Act of 1934 (the âExchange Actâ), which provides an affirmative defense to insider trading for trades made under a written plan adopted when not aware of material nonpublic information (âMNPIâ). 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 (âISSâ) released its updated FAQs on Equity Compensation Plans, which will apply to its âEquity Plan Scorecardâ 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 âcostâ under a âShareholder Value Transferâ 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: âThe rule, known as Rule 10D-1, directs national securities exchanges to establish implementing listing standards within 90 days from publication of the final rule in the Federal Register. Companies that fail to comply with the rule may be delisted. U.S. listed issuers who do not already have a clawback policy should begin preparations to design, adopt and implement…
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…