Executive Compensation and 409A Compliance

"They're savvy with business issues and understand what we need commercially, keeping us abreast of new developments and their implications."
– Chambers USA 2012

Increasing public scrutiny and changing tax, employment, and securities law requirements make it challenging for organizations to attract and retain talented executives and to handle executive separations efficiently and effectively. Sought-after executives likewise find it challenging to find opportunities that are personally and financially rewarding but do not subject them to crippling restrictions or constraints.

BakerHostetler attorneys have extensive experience providing both long- and short-term executive compensation strategies and sophisticated and innovative solutions for organizations and executives. Our Executive Compensation team helps clients reach the best outcomes possible while mitigating their risks—regardless of the side of the negotiating table they occupy, and regardless of the level of attention paid to the arrangement that ultimately is put in place.

It takes a holistic and collaborative team of professionals to be able to develop such strategies and provide such solutions; BakerHostetler has that team. Clients benefit from team members’ experience in fields such as income and employment taxation, employment arbitration and litigation (including the enforcement and challenging of restrictive covenants), employee benefits and benefit plans, securities regulation, corporate governance, personal risk management, intellectual property, domestic relations, private wealth and estate planning, and creditors' rights/bankruptcy.

We help clients understand not just what is possible but what is likely, so that tax-efficient compensation alternatives can be identified and presented fairly to stakeholders while keeping attention focused on furthering the client's strategic and organizational objectives.

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Our lawyers also have substantial experience advising clients on alternative approaches to providing retirement and deferred income to executives; negotiating and implementing equity and equity-based incentive programs, on-shore and off-shore non-qualified plans and excess benefit plans, individualized deferred compensation arrangements and change in control agreements; and developing and implementing strategies that do not violate restrictions imposed on executive compensation arrangements by the Section 409A rules, the Section 162(m) rules, the Section 280G rules, or the Section 457A rules.

Team members also regularly support the firm’s merger and acquisition lawyers in providing counsel in transactions, which often involve significant executive compensation issues that can impact a transaction’s structure.

Select Experience

  • Advised a public company that needed to exit certain C-level executives in the context of a Securities and Exchange Commission and Department of Justice investigation involving allegations of RICO and fraud.
  • Advised a public company seeking to retain its CEO who seemed interested in moving to another opportunity.
  • Represented three publicly traded companies that needed new omnibus equity compensation plans and proxy disclosures, award agreements, and plan summaries.
  • Represented a publicly traded oil industry company that amended its equity plan to update its Internal Revenue Code Section 162(m) required provisions and evaluated its 162(m) compliance and how to remediate awards in excess of those authorized.
  • Advised an oil industry public company that needed to evaluate and debunk a threatened shareholder derivative action regarding allegedly false and misleading proxy statement disclosures relative to Internal Revenue Code Section 162(m).
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Experience

  • Advised a public company that needed to exit certain C-level executives in the context of a Securities and Exchange Commission and Department of Justice investigation involving allegations of RICO and fraud.
  • Advised a public company seeking to retain its CEO who seemed interested in moving to another opportunity.
  • Represented three publicly traded companies that needed new omnibus equity compensation plans and proxy disclosures, award agreements, and plan summaries.
  • Represented a publicly traded oil industry company that amended its equity plan to update its Internal Revenue Code Section 162(m) required provisions and evaluated its 162(m) compliance and how to remediate awards in excess of those authorized.
  • Advised an oil industry public company that needed to evaluate and debunk a threatened shareholder derivative action regarding allegedly false and misleading proxy statement disclosures relative to Internal Revenue Code Section 162(m).
  • Advised a public company chief financial officer who had to negotiate simultaneously both a new chief financial officer’s position with a new public company while negotiating his separation from his old company.
  • Advised a public company that needed to rotate its key managers among an array of subsidiaries and affiliates, including some situated in foreign countries.
  • Advised a privately held company that sought to separate certain of its key employees from their employment during an ownership transition, without driving them into the arms of a competitor and impairing the company's enterprise value.
  • Advised an Internet company that needed to rebuff attempts by a former executive to exercise his stock options, and needed to offset built-up deferred compensation owed to a departing executive against amounts owed to the company by the executive.
  • Advised a tax-exempt institution that sought to retain its executive director because of his unique fund-raising abilities, while grooming a suitable successor to take the executive director’s place.
  • Advised a privately held real estate development company that needed to develop new incentives for its executive team to help reposition itself as a seller of condominiums and time-share interests rather than a hotel management company.
  • Advised a professional services company that needed to reinforce its collaborative culture through the use of project-based profit-sharing pools controlled by those who participated in the project.
  • Advised an investment management company that needed to retain talented investment managers through the use of investment fund-based deferred compensation pools generated by carried interests held by the management company.
  • Advised public company executives who needed to preserve built-up contract and stock rights in order to comply with company-based stock ownership requirements, which were threatened by divorcing spouses.

Recognition

  • Chambers USA 2014 ranks BakerHostetler’s Employee Benefits and Executive Compensation Band 1 in Ohio.
  • Chambers USA 2014 ranks four BakerHostetler employee benefits and executive compensation partners.
  • BakerHostetler received 2014 “Best Law Firms” National rankings in the areas of Employee Benefits (ERISA) Law and Litigation – ERISA from U.S. News – Best Lawyers®.
    • Regional Tier 1 and 2 rankings were earned in Employee Benefits (ERISA) Law and Litigation – ERISA in Cleveland and Orlando.
  • Four partners were selected by their peers for inclusion in The Best Lawyers in America© 2014 in various employee benefits and executive compensation-related fields.
    Copyright 2013 by Woodward/White, Inc., of Aiken, SC.