Negotiating Executive Employment Agreements: Cutting A Path Through The Regulatory Thicket
Wendi S. Lazar and Katherine Blostein write about negotiating executive compensation agreements, and current issues. The landscape of executive compensation has changed significantly since the financial crisis of 2008. As a result of the ensuing downturn and increased public scrutiny, executives’ leverage in negotiating the terms and conditions of their employment and equity agreements has decreased. The overwhelming outcry about excessive pay from shareholders and the public following the downturn resulted in new legislation that limits executive pay for top executives at public companies and imposes compensation restrictions and disclosure requirements on large companies generally. However, in the intervening years, the Securities and Exchange Commission still has not enacted rules implementing a significant portion of the new legislation, and therefore much uncertainty remains. In addition, the past several years have seen a return to performance-based compensation, as well as a movement towards eradicating excessive guaranteed bonuses on Wall Street and among other bonus-based businesses. Wendi S. Lazar and Katherine Blostein write about negotiating executive compensation agreements, and current issues. Bloomberg BNA, Pensions and Benefits Daily. Reproduced with permission from Pension & Benefits Daily, 127 PBD, 07/02/2014. Copyright 2014 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
By employment attorneys Tammy Marzigliano and Delyanne Barros. In Crawford v. Metropolitan Gov’t of Nashville & Davidson County, Tennessee, the Supreme Court unanimously decided that protection under Title VII of the Civil Rights Act extends to an employee who speaks out about discrimination when answering questions during an employer’s internal investigation. Employment attorneys Tammy Marzigliano and Delyanne Barros.
Vicky Crawford was an employee of Metro for over 30 years. In 2002, Veronica Frazier, a Human Resources employee, conducted an internal investigation regarding allegations of “inappropriate behavior” by the relations director, Gene Hughes. Frazier asked Crawford if she had witnessed any “inappropriate behavior” by Hughes. Crawford told Frazier that Hughes had asked to see her breasts on numerous occasions, grabbed his genitals in front of her and, on one occasion, and pulled her head down towards his crotch. The employer took no action against Hughes; however, a few months later Crawford and two other accusers were terminated. The employer alleged that it terminated Crawford and the other accusers because they embezzled money.
Crawford brought a lawsuit against her employer for retaliation in violation of Title VII. The district court ruled for the employer and the 6th Circuit affirmed the decision, holding that Crawford did not “oppose” the harassment under Title VII because she had not “instigated or initiated a complaint” and no EEOC charge had been filed.
However, the Supreme Court found the embezzlement allegation was completely unfounded and unsupported. In addition, the Court rejected the Circuit Court’s reasoning that Crawford’s actions did not qualify as “opposition” because she had not “instigated or initiated any complaint.” The Court applied the ordinary meaning to “opposition” finding that it merely means to “resist or antagonize” and that Crawford’s statement to Frazier clearly fell within that definition. As a result, the Court reversed the 6th Circuit’s decision granting judgment for the employer and sent the case back to the 6th Circuit to be decided in accordance with the Court’s analysis.
In Crawford v. Metropolitan Gov’t of Nashville & Davidson County, Tennessee, the Supreme Court unanimously decided that protection under Title VII of the Civil Rights Act extends to an employee who speaks out about discrimination when answering questions during an employer’s internal investigation.
Advising A Whistleblower After Dodd-Frank: What Every Employer Needs To Know
Tammy Marzigliano, Law Journal Newsletters, Employment Law Strategist, ALM, Volume 19, Number 10, April 2012. This article examines the retaliation protections provided by Dodd-Frank and how employment lawyers might deal with their impact.
On July 21, 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, the most significant financial reform effort since the Great Depression. 17 CFR § 240.21F-1, et seq. Part of that legislation directed the Securities and Exchange Commission (SEC) to establish a whistleblower program that pays monetary rewards to eligible whistleblowers, and prohibits workplace retaliation by employers against whistleblowers. This article examines the retaliation protections provided by Dodd-Frank and how employment lawyers might deal with their impact.
Wendi S. Lazar and Katherine Blostein. Bloomberg BNA, Reproduced with permission from Pension & Benefits Daily, PBD, 11/02/2011. Copyright 2011 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
The financial crisis of 2008 and the ongoing down-turn in the economy has had a significant effect on executive compensation and on executives’ leverage in negotiating the terms and conditions of their employment and equity agreements. The overwhelming outcry about excessive pay from shareholders and the public has resulted in federal regulations that limit executive pay for top executives at public companies and impose compensation restrictions and disclosure requirements on large companies generally. In addition, there has been a return to performance-based compensation, as well as a movement toward eradicating guaranteed bonuses on Wall Street and among other bonus-based businesses.
However, because of a need for top talent in tough times, companies are adjusting to the newly imposed restrictions and, where possible, are finding creative ways to structure compensation packages for employees. Unfortunately, public opinion is not as easily assuaged. The current challenge for companies and their counsel negotiating executive agreements is to balance the need for attracting and compensating top talent against potential negative public opinion. How hard and where to push becomes a concern in order to ensure that these agreements pass muster with the companies’ shareholders.
With these considerations in mind, attorneys representing executives should be aware of the most recent trends, developments, and regulations that will affect negotiations in the current economy.
Executive Pay: Skydiving With a New Parachute; Recent regulations affecting Executive Compensation.
Advocacy & Counsel For The SEC Whistleblower: A Primer For Employment Lawyers
Tammy Marzigliano and Jordan A. Thomas. Bloomberg BNA Daily Labor Report. Reproduced with permission from Daily Labor Report, 196 DLR I-1 , 10/11/2011. Copyright 2011 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
In the wake of multiple far-reaching corporate scandals and pervasive misconduct that have eroded public faith in the markets, Congress enacted the whistleblower provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The provisions require the SEC to pay financial awards to whistleblowers who voluntarily provide original information leading to a judicial or administrative action in which the SEC obtains monetary sanctions over $1 million, subject to certain limitations. Whistleblowers who provide such information are eligible for an award of 10 percent to 30 percent of the monetary sanctions.
Since the enactment of the whistleblower provisions, there has been undue emphasis on the financial incentives available to qualified SEC whistleblowers. However, the new robust anti-retaliation provisions contained in the guidelines are equally important. Employers are prohibited from retaliating against individuals who provide the SEC with information about possible federal securities law violations, and victims of retaliation are granted an independent cause of action with significant potential remedies. Providing additional protection, whistleblowers are also permitted to report securities violations anonymously if they are represented by counsel.
These protections and incentives will result in a significant increase in whistleblower activity and, by extension, will have a huge impact on the workplace environment. This article examines the protections provided by the statute and offers practical guidance for the plaintiff’s employment lawyer in identifying and counseling potential SEC whistleblowers.
This article examines the protections provided by the statute and offers practical guidance for the plaintiff’s employment lawyer in identifying and counseling potential SEC whistleblowers.
Wendi Lazar and Katherine Blostein survey the new laws and regulations associated with the current economic downturn and the resulting shifts in the form, nature, and timing of executive compensation. Recently enacted laws like the American Recovery and Reinvestment Act of 2009 and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as Section 409A of the Internal Revenue Code, impose firm restrictions on the compensation of top executives; the restrictions vary based on the size of the employer and whether it is publicly traded. This article concludes that “the days of paying excessive executive compensation unchallenged by regulators and shareholders [are] over.” The authors emphasize the need for attorneys negotiating executive employment agreements to be aware of these and other developments and their impact on the type of compensation packages employers are offering their top executives. Attorneys also must ensure that all agreements about compensation are memorialized in an employment agreement or other contract, including provisions for the treatment of deferred compensation in the event of termination.
*Originally published as Wendi S. Lazar and Katherine Blostein, “Changing Economy Impacts Executive Pay,” BNA Pension & Benefits Daily, 172 PBD, Sept. 09, 2009.
Reproduced with permission from Executive Compensation Library on the Web, XCLW, 06/06/2011. Copyright
When Your Personal Life Affects Your Professional Life
Tammy Marzigliano and Carmel Mushin. Employment Rights Newsletter, Vol. 17, No. 2, Winter 2010
Almost daily we hear stories about people who were not hired for a job because of something they posted online or someone that lost a job for the same reason. I caution employees regularly to be mindful of what they post online because everyone can see it. I advise them to refrain from posting that “awesome picture” of them playing beer pong or that picture of them at the Mets game when they were allegedly “out sick.” People forget that the internet is not their “private” playground. It is a mechanism in which your world (should you allow it) becomes an open book.
So, what about blogging? People argue it is harmless. It is just my thoughts about a situation. But is it?
The Dodd-Frank Act's Whistleblower Provisions: The Act's Best Hope For Exposing Financial Wrongdoing
In this BNA Insights article, Outten & Golden attorneys Tammy Marzigliano and Cara E. Greene take a close look at these provisions and the effects of preceding laws, such as the Sarbanes-Oxley Act, to examine what their future impact might be. Bloomberg BNA, Workplace Law Report, 10/22/2010.
On Sept. 15, 2008, Lehman Brothers collapsed, sending shock waves through the financial services industry and portending the industry's broader meltdown. Less than two weeks later, Washington Mutual was seized by the federal government and placed into receivership. Over the next year, more than 100 banks folded, Americans saw $13 trillion in wealth evaporate, and massive securities fraud, like that committed by Bernie Madoff, shook investor confidence to the core. The housing market collapsed, the number of people out of work hit 15.6 million, and the federal deficit ballooned. America was in the midst of the Great Recession.
In response, on July 21, 2010, the federal government enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “act” or “Dodd-Frank Act”), which overhauls and strengthens federal oversight of the financial system. While it is impossible to know whether the financial meltdown could have been avoided had the act's provisions been adopted in 2007 instead of 2010, the question on everyone's mind is whether the Dodd-Frank Act will keep it from happening again. Only time will tell if it will have the desired and intended impact, but the act's whistleblower provisions attempt to ensure that in the future financial fraud and irregularities are exposed long before they corrupt the entire system.
Multiple Issues In Corporate Raiding Of Employees: Outside Counsel
Wendi S. Lazar and Katherine Blostein, New York Law Journal (online), May 1, 2009
Now that bankruptcy proceedings have replaced mergers and acquisitions, poaching key employees rather than buying a division can be cost effective. Corporate raiding of employees, however, raises serious legal and financial concerns for everyone involved, but particularly for employees and their counsel.
Poaching a coveted employee or raiding a team is bound to leave behind an angry employer who wants revenge. The hardest job for employee-side counsel is to keep the client from becoming a defendant in a lawsuit against both the employee and the new employer.
Knowing how to prevent or minimize an employee's liability in this situation is critical. Counseling employees on terms and conditions to be negotiated with the new employer before departure will protect them from economic loss and protracted and costly litigation.