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- The Yates Memo’s Illusory “Extraordinary Circumstances” Exception
- Kiss Your Retaliation Suit Hello: Company Faces Trial after Changing Explanation for Firing
- Federal Whistleblower Statutes Aren’t a Cure-All
- Hold on to Your (Top) Hat: ERISA Section 502(a)(3) May Be Used to Enforce the Terms of a “Top-Hat” Benefits Plan
- A Bitter Pill for Ex-Rite Aid GC: Delaware Court Finds His 2015 Suit for Indemnification Untimely
- A Funny Thing Happened to the Forum Selection Clause
- Fired for Taking the Fifth: Famous Firings in History
- A Fifth Amendment Right to Not Talk to Your Employer?
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Showing 48 posts in Executive Compensation.
As employees of the New York-based Chobani yogurt plant filed into work last Tuesday, they were met with sealed, white envelopes containing a sweet financial surprise.
Little did they know, the owner and CEO, Hamdi Ulukaya, had been working with the human resources consulting firm, Mercer, to hatch a plan to transfer 10 percent of his stock in the company to roughly 2,000 full-time employees. Read More ›
When employees and employers are approaching the end of an employment relationship, they should consider their existing rights and how their conduct may impact those rights. A recent decision from the Minnesota Court of Appeals demonstrates how one hasty email can change everything.
Beginning on January 1, 2010, LifeSpan of Minnesota, Inc. employed the plaintiff in the case, Mark Sharockman, as its chief financial officer and executive vice president. Mr. Sharockman’s three-year employment agreement with LifeSpan provided, among other things, that he would receive annual pay increases that were at least equal to the average pay increases granted to the other two executive officers. Read More ›
The turn of the calendar is always a good time to reflect on what has come before and preview what lies ahead. In this post, we count down our most popular posts of 2015 about executive disputes. Later, we’ll look at what to expect in 2016. Read More ›
It’s an obvious best practice to put the terms of an employment agreement in writing. Equally obvious is the notion that the writing should be complete, whether in a single document or with reference to other items, such as employee manuals or company-wide incentive plans.
However, it’s not always obvious which documents make up an employment agreement.
A contract between an executive and an employer does not always have to be in writing.
Sometimes, employees can enforce oral promises. Agreements can also be implied based on the parties’ conduct, even when no one made a promise, either in writing or orally.
When an executive and a company enter into a lucrative severance package, those benefits aren’t necessarily ironclad.
As we covered in this June 2014 post, when a company declares bankruptcy, its trustee can ask the court to allow the company to avoid its executives’ severance rights.
F-Squared Investments Inc. is now seeking to do precisely that. In late October, F-Squared moved to reject its separation agreement with former CEO Howard Present, seeking authority “to avoid the financial burden” of making a $500,000 payment to him and to cease the accrual of his COBRA payments.
Mr. Present and F-Squared have had a troubled couple of years. Read More ›
In the corporate world, the treats offered to executives can be as sweet as stock incentives and cash bonuses. But the tricks can be as sour as individual liability for wrongdoing and salary disgorgement.
NJ Supreme Court Makes It Easier For Employers To Take Back Executive Salaries
Lately, we’ve been discussing the Yates Memo and the alarms it must be sounding in corporate board rooms across the country. In a similar vein, the New Jersey Supreme Court offered little comfort to spooked executives when it recently decided to broaden the remedies available to employers who seek disgorgement of former high-level employees’ salaries. Read More ›
In our last post, we discussed differences between “pay to stay” arrangements, which face stricter scrutiny in bankruptcy cases, and “Produce Value for Pay” plans, which provide incentives for executives based on strong corporate performance. As promised, we now examine two cases that illustrate acceptable ways for companies to motivate their executives to perform through a Chapter 11 bankruptcy.
The first is the case of Chassix Holdings, Inc., which manufactures parts for approximately two-thirds of automobiles made in North America. After a sequence of unfortunate financial and operational setbacks during 2014, Chassix found itself a petitioner under Chapter 11 of the bankruptcy code last month. Included among the operational setbacks was the fact that approximately 1,100 employees voluntarily left Chassix during 2014. Since it was critical to have a work force with the proper experience, skill, and know-how to manufacture the auto parts, Chassix found itself exploring ways to enhance its compensation options prior to the petition date in order to retain more of its employees. Unfortunately, it didn’t finish these plans prior to the petition date.
Chassix took a couple of important steps in designing its KERP and seeking authority from the bankruptcy court to implement it. First, and foremost, it limited its KERP to a pool of employees who were not company “insiders.” Therefore, the bankruptcy court applied the more liberal standard of business judgment when it evaluated the plan, even though Chassix had not established and regularly implemented the plan before its bankruptcy petition. Under this standard, and considering the pre-petition employee turnover and the support of the various creditor constituencies, the bankruptcy court approved the KERP. Read More ›
At the outset, the answer to the question posed in this article seems simple: employers should just pay their employees as much as is reasonably possible. However, when a corporation finds itself in Chapter 11 reorganization, the Bankruptcy Code restricts the use of some traditional motivational methods. Simultaneously, competitors might make tempting job offers to quality employees, inducing them to leave the business. This combination of factors can distract employees from the main task of getting the debtor through the reorganization process.
To provide sufficient compensation and persuade employees to remain with the business, a debtor can attempt to adopt a key employee retention plan (KERP for short), also known as a “pay to stay” arrangement. This is in contrast to a “Produce Value for Pay” plan that provides incentives for strong corporate performance. Read More ›
Big Brother is watching you, or at least tracking your movements through your smartphone. According to the Washington Post, employers have steadily increased their use of GPS-enabled technology to track the movements and location of “field employees” like salespeople and delivery drivers. In fact, a 2012 study by the Aberdeen Group cited an increase of over 30% in the tracking of employees over the previous 5 years. Legitimate reasons exist to track field employees, such as making sure that drivers take the best routes and sales calls are conducted efficiently. But it’s more tricky to justify the tracking of employees who are off the clock. For example, Myrna Arias, a former sales executive with Intermex, was allegedly fired for disabling a tracking app called Xora StreetSmart when she was off duty. Now Ms. Arias has sued the company, alleging wrongful termination and invasion of privacy. Jay Stanley, a senior policy analyst at the ACLU, cautions employers against collecting off-the-clock data, because it opens the door to discriminatory practices. Mr. Stanley wondered, "What happens if an employer doesn't like the choices a worker makes in their personal lives and retaliates professionally?"
We discussed emerging trends in the c-suite recently, and found that companies are increasingly tying executive compensation to performance. For those that do not, we can imagine a corporate shareholder version of peasants storming the castle with pitchforks in hand, thanks to say-on-pay voting. In the case of JP Morgan CEO Jamie Dimon’s 2014 compensation, the shareholders’ rebellion led to a relatively low approval rate for Dimon’s and other executives’ compensation. According to USA Today, 61.4% of shareholders approved the payouts, which starkly contrasts with an average 90% approval rating for companies that seek shareholder input on salary and bonus plans. Advisory firm ISS encouraged shareholders to rebuke the plan when they learned of Dimon’s $7.4 million cash bonus. ISS advised that “[t]he reintroduction of a large discretionary cash bonus in the CEO’s pay mix, without a compelling rationale, has substantially weakened the performance-basis of his pay.” If corporate leadership can provide a strong rationale for a big bonus, it’s more likely that the shareholders will drop their pitchforks and fall in line. Read More ›