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Executive compensation continues to be bombarded with scrutiny by shareholders, shareholder advisory firms, politicians and the media. Taxand USA conducts a comprehensive analysis of executive change in control arrangements.
With say-on-pay voting now well established, the voices of shareholders are getting louder, and companies are listening.
Many companies have made significant changes to their compensation strategy in recent years to appease stakeholders. In particular, companies have altered their course on benefits provided to executives in connection with a change in control, commonly called “golden parachutes.”
Change in control benefits can include severance payments, accelerated vesting and payment of equity awards (such as stock options or restricted stock), fringe benefits, and gross-up payments for excise taxes imposed as a result of Internal Revenue Code Sections 280G and 4999.
The Securities and Exchange Commission (SEC) requires public companies to disclose the value of these benefits in the company’s annual proxy filing. Shareholders can voice their frustration (or satisfaction) with the company’s pay practices through their say-on-pay votes.
Discover more: Golden parachutes still holding steady
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Boards of directors and compensation committees need to remain attentive to changing market trends and be ready to respond when challenges arise regarding the benefits provided to executives.