Employee Benefits and Executive Compensation Alert - Venable LLP

The IRS recently issued proposed regulations under Internal Revenue Code Section 409A for deferred compensation arrangements that apply to all employers. The IRS also recently proposed regulations under Internal Revenue Code Section 457 for deferred compensation plans of tax-exempts and governmental entities. In addition to traditional deferred compensation arrangements, certain employment agreement provisions, severance arrangements, equity grants and expense reimbursement arrangements, and other similar arrangements, may be impacted.

Proposed regulations under Section 409A

There are extensive existing final regulations and proposed regulations under 409A, and the recently issued proposed regulations modify both and clarify specific issues.

How One Company Put Its Team’s Compensation On The Line-And Sparked 10X > Growth

Ten years ago, LEAP Legal Software had grown slowly to only 27 employees its first 14 years in business. Today it has a team of 300 and generates $50 million in annual revenue. LEAP accelerated its growth dramatically by tying its team’s pay to achievement of its quarterly goals.

At LEAP legal software, Executive Chairman Richard Hugo-Hamman doesn’t worry about the Millennials on his team getting bored and jumping ship. They change jobs frequently, because the company has been growing so quickly.

The median compensation of CIOs in U.S. medical groups was $170,314 in 2015, according to the Medical Group Management Association

The median total compensation of CIOS in U.S. medical groups was $170,314 in 2015, according to executives at the Englewood, Colorado-based Medical Group Management Association. MGMA executives released that figure to Healthcare Informatics upon the release of broader statistics on June 27 around medical group CEO and group practice executive compensation, based on that association’s recent surveying of executives about what they earned.

MGMA’s compensation survey found that those executives who work for large practices and for hospital-owned group practices, are earning the highest salaries, with non-physician CEOs of medical group practices owned by hospitals having median compensation of $305,000, versus $242,000 being the median for non-physician CEOs at physician-owned practices. Meanwhile, the $170,314 figure that MGMA released exclusively to HCI detailing the median compensation for CIOs of medical group practices, places medical group CIO salaries somewhat lower on average than those of CIOs in hospitals, yet probably comparable with regard to organizational size.

Bank Of America Executive Compensation History Compared With Other Large Banks

William Darusmont

A friend, Graef "Bud" S. Crystal, wrote a book in 1992 titled In Search of Excess, an obvious parody on the Tom Peters, Robert Waterman Jr, book In Search of Excellence. I had conversations with Bud but never read the book till recently. What is amazing is that a book could have been published 24 years ago and investors not learn from it: they are giving away the store.

Crystal is no academic; he spent 25 years as a compensation analyst with Towers, Perrin, but seeing his suggestions to rein in compensation being ignored drove him to leave the business. Why didn't anyone object to the obvious? First, it wasn't in anyone's interest, except a few dissident shareholders. After all, why would a Wall Street firm support taking away money from the CEO of a client company? Frustrated, he went to U.C. Berkeley's Haas School of Business to teach and then wrote for both Forbes and later Bloomberg News.

How to Fix Wall Street’s Flawed System of Compensation

When a professor emeritus at the London School of Economics, who also spent many years as an adviser at the Bank of England, publicly endorses a much-needed – but generally overlooked – overhaul of Wall Street, that is an occasion for celebration.

The distinguished economist in question is Charles Goodhart, who, speaking with considerable gravitas and wit last week at a European Central Bank forum in Sintra, Portugal, wondered aloud why prudential regulators of the world’s financial system had spent so much time in recent years worrying about capital ratios and liquidity and so little time worrying about Wall Street governance and pay practices. These issues, he said, “much more fundamentally influence personal incentives and therefore business decisions.”

Growth Options and CEO Compensation

It is that time of year when CEO compensation is revealed and debated.  The Los Angeles Times just published its list of the 100 highest paid executives in California for 2015.  At the top of this list were co-CEOs Mark Hurd and Safra Catz of Oracle, each of whom received total compensation of $53.25 million.  A lot of money to be sure, but as most compensation analysts note, unreasonable given the impact their decisions can have on Oracle shareholders.  But if shareholder benefits are to be the basis for evaluating CEO compensation, how are shareholder benefits to be measured?

‘OBSESSION’ WITH STOCK-BASED COMPENSATION

When LinkedIn announced that it sold to Microsoft for $26.2 billion, the New York Times unveiled the “unspoken reason” behind the deal:  LinkedIn’s “reliance--some might say overreliance--on stock-based compensation.”

In 2015, LinkedIn had $510 million stock-based compensation expense, which represents 17 percent of its net revenue.

IRS Section 457(f) Proposed Regulations for Deferred Compensation of Tax-Exempt Organizations: Worth the Wait

The Internal Revenue Service (IRS) has issued long-anticipated proposed regulations governing Internal Revenue Code (Code) Section 457(f), which applies to nonqualified, unfunded deferred compensation plans or arrangements established by state and local governments and tax-exempt employers. The proposed regulations and related proposed regulations under Code Section 409A were published in the Federal Register on June 22, 2016.

CEO pay takes small haircut

Chief executive officers of the biggest publicly traded companies in the U.S. are still bringing home multi million-dollar paychecks.

They were just slightly smaller in 2015 than in 2014.

How to structure competitive executive compensation packages

Finding great candidates to fill executive positions is inherently difficult. Though quality candidates can be found, companies tend to lose their top pick because they can’t meet a candidate’s compensation expectations.

“Companies often enter into an executive search intending to construct a competitive compensation package for the right candidate,” says Tim Conti, managing partner at ON Partners. “But when it comes time to make an offer, the hiring company balks because an overly generous offer could disrupt the internal equity of compensation packages. That logic is irrelevant to the candidate.”

Is It Ever OK to Quit on the Spot?

For almost all of us, there comes a moment when we are tempted to quit our jobs on the spot.

A growing number are actually doing it, many employers say.

Some bosses blame young employees who feel frustrated by limited prospects or have little sense of attachment to their workplace. But employment experts say some older workers are quitting without notice as well. They feel overworked or unappreciated after years of laboring under pay cuts and expanded workloads imposed during the recession.

​Helping your employees understand their equity compensation

Although equity is an increasingly common form of total workplace compensation, many employees do not realize its full value.

In fact, in a recent Schwab survey of 1,000 residents in the San Francisco Bay Area, one third said they receive equity as part of their overall workplace compensation.

Compensation Plans for Customer Success Managers

There’s wide debate in the customer success discipline regarding the best structure for a CSM compensation plan. Typically, I see the following three CSM compensation models:

• Base Only – pure base salary with no bonus or variable component
• Base + Bonus – base salary with a small bonus structure, usually in the form of a Management by Objective (MBO) bonus
• Base + Variable – base salary with a variable component to not only reward for performance, but also to provide more upside for over-achievement against targets.

Equity Compensation Can Help with Overall Financial Plans

Whether it is to fill in the retirement savings gap or part of an overall financial strategy, equity compensation plans are attractive to employees.

Take another look at nonqualified deferred compensation plans

For executives, taking advantage of their company-sponsored, nonqualified deferred compensation (NQDC) plan now could be one of the wiser moves to make for their future well-being.

Hospital execs deserve their compensation: View

While it is fashionable to cast aspersions on high-income earners, the arguments set forth about the compensation levels of area health-care CEOs are misguided and erroneous.

Retail Execs With Compensation Tied to Stocks

Credit Suisse

We analyzed executive compensation in the hardline-retail sector, primarily focused on short-term annual cash incentives, comparing the key metrics used, the changes over the last couple of years, and how that aligns with evolving strategies and delivering short-term shareholder returns.

6 CEOs with excessive executive compensation packages

Yahoo's business troubles not only puts CEO Marissa Mayer under the harsh glare of the shareholder spotlight, it highlights the issue of sky-high executive compensation packages when the CEO is heading for the door.

The new Valeant CEO's pay package is putting the company in serious danger

If you blinked, you may have missed it - a lot of politicians did. (click text to link to full article)

Reasonable Compensation For C Corporation Shareholder-Employees: How Much Is Too Much?

If you decide to set up your business as a C corporation, you have two primary ways of extractingvalue from the business on an ongoing basis: (click text for link to full article)