Reporting developments affecting employee benefits and executive compensation
California recently enacted Section 16608 of the California Business and Professions Code, which bans agreements that require employees to pay a “penalty, fee or cost” upon termination, effective January 1, 2026.
Bonuses that are subject to repayment will be prohibited by this new law, unless they satisfy the following requirements:
As previewed in our previous blog post, the Securities and Exchange Commission (SEC) hosted a roundtable on executive compensation disclosure on June 26, with panelists considering whether and to what extent the current executive compensation disclosure requirements for public companies should be reformed.
The SEC announced on May 16 that it will host a roundtable discussion with representatives from public companies, compensation consultants, lawyers, investors, and other stakeholders on the topic of executive compensation programs and the related disclosures required in public company proxy statements. The roundtable will take place on June 26 at the SEC’s headquarters. If you are interested, you can register in advance to attend in-person, or you can watch the roundtable virtually. The virtual link will be available on June 26 at www.sec.gov, and the SEC intends to make a recording available at a later date. The agenda and panelists for the roundtable were announced on June 11 and are described in more detail here.
Though the FTC’s noncompete ban has since fizzled out, the commotion around noncompetes also led to conversations about “forfeiture-for-competition” clauses — a similar, but distinct type of agreement.…
The SEC adopted long-awaited final rules that require the recovery of erroneously awarded incentive-based compensation of executive officers, as required by the Dodd-Frank Act. Under Rule 10D-1, each exchange must adopt listing standards that will apply to all listed issuers, with limited exceptions. Each issuer must adopt a clawback policy…
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