Contributors

A series of recent Delaware Chancery Court and Securities and Exchange Commission (“SEC”) decisions—coupled with anticipated SEC action to finalize the three remaining Dodd-Frank Wall Street Reform and Consumer Protection Act compensation rules—emphasize that director and executive compensation remains a hot topic for 2016. As a result of the heightened scrutiny of board decisions involving director or executive compensation, directors should consider whether their corporate governance practices could be enhanced by stepped-up periodic review of compensation practices and enhanced board and committee action documentation. The SEC’s expectation of reimbursement of even de minimis compensation amounts following financial restatements born from misconduct, even if the CEO or CFO is not found to have participated in the misconduct, suggests that companies should closely examine their clawback policy if they have one, or consider implementing one if they don’t. This client alert highlights for boards and management recent and pending developments in this area.