Executive compensation, and in particular excessive executive compensation, has been a major topic of conversation in recent years both on Wall Street and Main Street. The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2011 in response to the economic recession and general public mistrust of Wall Street, has once again brought the topic of executive compensation front and center. With this background in mind, we have addressed two topics in this article that remain the focus of the Securities and Exchange Commission rule-making: “golden parachutes” and CEO-to-employee pay-ratio disclosures.
Golden-Parachute Payments
Golden parachutes are compensation arrangements with executives relating to any type of compensation payable in connection with a change in control transaction, such as an acquisition, merger, disposition or similar transaction. The principle behind golden parachutes is to protect an executive who engages in a transaction that may be in the best interest of shareholders but which may result in the executive losing his or her job.
