Our executive compensation team delivers comprehensive advice and practical solutions for compensation and executive benefit programs. Around the world, our lawyers assist private, public, global, and emerging growth companies, as well as tax-exempt and governmental entities, in designing, implementing, and administering compensation programs to motivate and retain key employees. We also advise companies engaged in public stock offerings and mergers and acquisitions transactions, as well as compensation, investment, and fiduciary committees.
Our lawyers help clients design and implement executive compensation and equity compensation plans and arrangements. We counsel on the legal and practical ramifications of such plans and arrangements, including the effects of tax, securities, employment, and corporate laws, as well as litigation risk and accounting standards. We help companies, organizations, and individuals with executive compensation contracts, which often include noncompetition, nonsolicitation, confidentiality, and clawback provisions, and require careful coordination with tax and employment laws.
Our team of more than 25 lawyers helps clients design, implement, and administer all types of executive compensation plans and arrangements, including:
The scope of our executive compensation counseling goes beyond assisting with these plans and arrangements—it includes advice on corporate governance issues affecting executive compensation, executive healthcare continuation, fringe benefits, Internal Revenue Service (IRS) and US Department of Labor (DOL) audits, international tax issues, and qualified and nonqualified retirement plan design.
As part of a global law firm, our group works seamlessly with colleagues in other practices to provide clients with the highest level of service.
Teaming with our corporate business transaction practitioners, we counsel clients on corporate and disclosure issues such as disclosures through compensation discussion and analysis (CD&A) in proxy statements, and disclosures with respect to equity plan approval, as well as internal and external public and shareholder relations efforts such as press releases.
Drawing on the experience of our labor and employment colleagues, we advise on employment issues such as noncompetition, nonsolicitation, and confidentiality provisions and releases.
In conjunction with the firm’s Employee Retirement Income Security Act (ERISA) litigation team, we advise on executive compensation litigation risks and best practices. We frequently address the special considerations and tax requirements for executive compensation provided by universities and other nonprofit organizations.
Equity compensation is an essential tool to attract and retain top talent, provide appropriate performance incentives, and reward exceptional service. Our lawyers help public, private, global, and emerging companies design and implement broad-based and executive-level equity compensation plans.
We assist clients daily with the full range of equity compensation, including stock options, restricted stock and restricted stock units, performance shares, stock appreciation rights (SARs), hybrid rights, and other phantom equity structures, as well as ESPPs. We design performance-based equity compensation that meets complex tax requirements, including sections 409A and 162(m) of the Internal Revenue Code (IRC). We assist clients with identifying the accounting issues associated with equity compensation plans, including issues raised by performance-based grants and modifications of equity grants.
Representing clients with multinational operations, our lawyers routinely help design, implement, and maintain global equity plans.
We take a comprehensive approach—taking into account income and employment tax laws, ERISA, corporate laws, and employment laws associated with various types of equity compensation plans. We assist companies and executives with securities law compliance, including proxy disclosure, registration requirements, and insider trading/short-swing profits restrictions.
We help clients secure shareholder approval of equity plans, considering the views of various constituencies, including Institutional Shareholder Services Inc. (ISS); Glass, Lewis & Co.; and others.
Among our broad client base, our team assists a number of large financial institutions and brokerages with their broker-related compensation programs. We assist these clients with broker-specific fringe benefits, offer letters, and incentive compensation, equity compensation, and deferred compensation programs.
Our legal professionals understand the complex statutory and regulatory provisions that apply to nonqualified plans and deferred compensation plans. When helping to design, implement, and administer such plans, we regularly work through issues that arise under the IRC, ERISA, the Dodd-Frank Act, the Sarbanes-Oxley Act (SOX), and the relevant accounting, legal, and practical considerations.
Working with companies and executives, our lawyers structure nonqualified and deferred compensation plans that yield tax benefits and achieve business goals. For example, we help clients create plans with flexible distribution options, appropriate long-term retention incentives, benefit security, and financial efficiency. We work with our university and nonprofit clients to design and implement plans that address the special requirements and concerns of tax-exempt organizations.
We have experience with supplemental executive retirement plans (SERPs), rabbi and secular trusts, corporate-owned life insurance (COLI), and other funding devices. We routinely address the application of Section 409A to forms of compensation that do not fit the typical deferred compensation mold, such as severance pay and equity compensation, and address complex Section 409A issues that arise in transactions.
A volatile business climate can lead to frequent restructurings, including reductions in force. Improper handling of employee benefit liabilities can derail potential mergers, acquisitions, or spinoffs—and hidden liabilities can be a time bomb for the postclosing entity. Drawing on our experience in some of the largest corporate transactions in the United States, our lawyers advise clients on the executive compensation and employee benefits aspects of mergers, acquisitions, spinoffs, divestitures, and other transactions.
Prior to and during a transaction, our services include conducting due diligence of executive plans and agreements, equity plans, retirement plans, and health and welfare plans; negotiating the contractual provisions that relate to compensation and benefits; assisting our clients in addressing the potential benefit liabilities (many of which are hidden); and engaging in strategic thinking and advice about how to structure benefits postclosing.
We continue to counsel clients after a deal is completed. Our lawyers advise on ways to transition, integrate, and streamline new benefit structures after the transaction. We work with clients to implement employment agreements, employee equity programs, retention agreements, and other incentive programs in ways to ensure the services of key employees during the postacquisition period. Issues to be addressed include the tax and accounting implications of subjecting employee equity to indemnity escrows or earn-out arrangements; the application of the “golden parachute” tax rules (Section 280G of the IRC) to accelerated benefits and severance pay; and the development of retention arrangements in the form of employment agreements or special cash or equity grants.
We also assist with designing and implementing severance plans to encourage retention before and after closing.
Examples of our work in transactional matters include:
Our lawyers serve as fund counsel and deal counsel for many private equity funds. In addition, we regularly represent the interests of senior management and assist in large, prominent private equity buyouts.
Through experience in numerous deals, our lawyers have acquired comprehensive knowledge of market and off-market practices in private equity transactions. We also help to analyze the economics of sponsor management equity proposals.
Examples of our management representation service include:
With 12 multinational offices in Europe, Asia, and the Middle East, and extensive working relationships with local counsel in Latin America and across the globe, Morgan Lewis provides comprehensive, cross-platform service to clients with global operations. Our lawyers routinely advise on equity compensation programs, executive compensation, employment agreements, severance benefits, tax equalization agreements, and other issues that arise in connection with global transactions and operations. We also advise on issues that relate to income tax treaties between the United States and its treaty partners.
When we assist with designing and structuring global equity plans, we help clients analyze tax implications to obtain favorable tax treatment while complying with local employer income tax and social contribution obligations. We also partner with clients to ensure that plans comply with local securities registration and disclosure requirements, including preparing and filing prospectuses and registration statements. We advise clients regarding labor and exchange control requirements; data privacy and electronic administration; and cross-border tax consequences of equity grants.
US subsidiaries of non-US corporations seek our service when designing equity compensation and executive compensation arrangements for US employees that coordinate with the objectives of the parent company’s global programs. We also advise multinational clients on issues such as termination of employment, severance obligations, and settlement arrangements.
We advise compensation committees of public and private companies, including private equity–owned, family-owned, and emerging growth companies, on the various aspects of executive compensation.
On behalf of compensation committee clients, our lawyers attend compensation committee meetings, conduct board education, and assist with officer transactions. We advise on equity compensation, incentive programs, employment and change-of-control arrangements, and CD&A and other proxy issues. We also counsel on litigation issues that relate to proxy disclosure and executive compensation.
We help compensation committees address questions as to whether they should have independent counsel that does not otherwise represent the company or its management, and when relying on management counsel is appropriate.