Ten Considerations for Performance-Based Compensation

With the dawn of the new year, many companies are taking the initial steps that they hope will allow them to meet their financial and strategic goals in 2020 and beyond.  Often, one core element of this process is designing a system of performance awards that will be granted to the executive team, with the intent to motivate executives to achieve the company’s goals by aligning the executive team’s interests with the performance of the company.   Performance awards can come in many forms, including stock options, performance-vesting restricted stock or stock units, or cash bonuses.  The process of designing performance awards is often messy because there are too many choices and too many unknowns, and companies must also face the risk of inadvertently designing a program that could incentive bad behavior.   As you think about your performance awards, here are ten considerations to keep in mind: READ MORE

Everything you need to know about the government's new stock option taxation rules

Last week, the federal government introduced draft legislation that proposes to limit the preferential tax treatment associated with certain employee stock options. The new rules, originally introduced in the March 2019 federal budget, fulfill a 2015 Liberal party election platform promise to limit the benefits of the stock option deduction by placing a cap on how much can be claimed. At the time, the Liberals quoted a Department of Finance estimate which found that 8,000 “very high-income Canadians deduct an average of $400,000 from their taxable incomes via stock options.” READ MORE

Global Compensation Considerations

As companies continue to expand internationally, increasing market share, growing profits and developing low-cost production centers have become leading corporate goals. The need for a long-term vision on a global strategy has never been more important — and developing a smart compensation plan to support that strategy is a central component of corporate success. READ MORE

Delaware Court Of Chancery Reaffirms Entire Fairness Standard In Director Compensation

On May 31, 2019, in Stein v. Blankfein, et. al., the Delaware Court of Chancery reaffirmed the Delaware Supreme Court’s holding in In re: Investors Bancorp, Inc. Stockholder Litigation (more information here) that the “entire fairness” standard applies with regard to director approval of director compensation. The Stein case builds on the precedent set in Investors Bancorp and provides additional insights. READ MORE

Strategies for Protecting Compensation and Careers

In the not so distant past, it was not uncommon for successful executives and professionals to spend decades, if not their entire career, with one organization. Increasingly, however, that is not the case. These days, many executives, at one point or another, see their career, compensation, and reputation jeopardized amid allegations of wrongdoing – whether based upon individual performance, overall business performance, or allegations of misconduct. READ MORE