New “compensation actually paid” rule reveals millions of dollars of differences in total CEO pay

CEO pay is an important metric for many investors. However, reported compensation often has been a snapshot in time that may not always reflect the complete pay package – until now.

The Securities and Exchange Commission last August enacted a rule requiring disclosure of “compensation actually paid” for executives, accounting for changes in stock award values as prices fluctuate. The rule already has shown that the true value of some pay packages can differ from traditionally reported total compensation, sometimes by tens of millions of dollars. READ MORE

DOJ Announces Pilot Program and Updated Expectations on Corporate Compensation Programs

The U.S. Department of Justice (DOJ) on March 3, 2023, unveiled a new pilot program and announced several important updates to its Evaluation of Corporate Compliance Programs (ECCP) regarding corporate compensation incentives and clawbacks. These updates build on and clarify Deputy Attorney General (DAG) Lisa Monaco’s policy announcements from September 2022 regarding corporate criminal enforcement.

This most recent guidance provides valuable insight into the DOJ’s expectations regarding compliance-conscious compensation. However, implementing this guidance will require navigating complex issues of labor and employment law, both domestic and foreign, and will produce potentially significant shifts in corporate culture around compensation. READ MORE

Supreme Court Clarifies a “Day-Rate” Does Not Meet the FLSA “Salary Basis” Test, Even for Highly Compensated Employees

The Fair Labor Standards Act of 1938 (“FLSA”) created the right to a minimum wage and overtime pay. The FLSA also provides exemptions to overtime pay requirements for certain employees. Under the “bona fide executive” exemption, “highly compensated employees” are exempt from overtime if performing at least one qualifying job duty. However, on February 22, 2023, the United States Supreme Court, in its 6-3 decision in Helix Energy Solution Group, Inc. v. Hewitt, clarified that highly compensated employees paid on a “day-rate” do not qualify for this exemption because a day-rate does not satisfy the salary basis test. READ MORE

Layoffs, Return-To-Office Mandates, Hiring Freezes And Reduced Compensation Will Be Results Of Silicon Valley Bank’s Collapse

When there is uncertainty, business leaders will adjust to the new reality. Upon entering this new phase, Meta CEO Mark Zuckerberg called for a “year of efficiency.” In addition to the 11,000 layoffs in November, Zuckerberg announced that 10,000 more people would be let go. Executives at other companies will follow Zuckerberg’s lead. They’ll tell their board of directors that the organization must enact fiscally responsible measures to get through a potentially turbulent time and likely recession. READ MORE

DOJ's Pilot Program Regarding Compensation Incentives And Clawbacks

On March 3, 2023, AAG Polite announced the launch of the Division’s Pilot Program on Compensation Incentives and Clawbacks.

The Pilot Program comes less than six months after Deputy Attorney General (“DAG”) Lisa Monaco’s September 2022 announcement of changes strengthening DOJ’s corporate enforcement policy. As noted in our prior client alert on those policies, DOJ has stated that it wants to “empower” companies to “do the right thing” by rewarding companies that invest in compliance and that identify and voluntarily disclose misconduct in a timely manner.  READ MORE

How Executive Pay Packages are Negotiated

As turbulent economic conditions persist and layoffs become more commonplace, some high-profile tech CEOs have elected to take large pay cuts to preserve cash flow. This has sparked a larger conversation about how, exactly, executives’ salaries are decided. 

In February, Eric Yuan, CEO of Zoom, told his staff he would cut his pay by 98% and forgo his yearly bonus. Similarly, Tim Cook, CEO of Apple, plans to cut his salary by 40% in 2023, bringing his annual target salary to $49 million. READ MORE

Almost half of all U.S. job postings include salary information now

After new pay transparency laws in California and New York City faced rocky starts, employer compliance is up not just in two of the biggest labor markets in the U.S., but across the country.

About three quarters of job listings in New York City and two thirds in California now include pay information, according to data compiled by Roger Lee, co-founder of Comprehensive.io, a pay data and analytics site. Nationally, salary ranges appear on 44% of posts on Indeed, up from 18% three years ago, data released Tuesday by the job search site shows. READ MORE

Salary transparency alone won’t close the pay gap

A growing number of US states and localities have laws mandating pay transparency, with requirements varying from state to state. Beginning in 2021, Colorado required all companies to include a salary range and benefits on their job listings. A law put on the books in New York City last fall is similar, adding a “good faith” range in pay on each posting. And states like California and Rhode Island make employers provide a salary range only to candidates that request it during the interview process. READ MORE

3 Most Common Reasons Why Employees Don’t Negotiate Their Salaries

How often do you negotiate your salary? While some people may be well-versed in advocating for their financial worth, others will avoid a discussion about a possible salary boost as much as possible.

There are a lot of reasons to sidestep a salary negotiation, but hardly any of them are good or will help you in the long run. Here are some of the most common reasons why employees don’t negotiate their salaries and how to advocate for your earnings instead. READ MORE

DOJ Corporate Enforcement Policy Revisions Target Executive Compensation

On March 2, 2023 and March 3, 2023, in a pair of speeches by Deputy Attorney General (DAG) Lisa Monaco and Criminal Division Assistant Attorney General (AAG) Kenneth Polite, the U.S. Department of Justice (DOJ) announced revisions to its corporate enforcement policy. The changes tie corporate wrongdoing to executive compensation through a two-pronged approach: (1) mandating that companies that enter into agreements to resolve criminal allegations adopt prospective compliance-related criteria in their compensation and bonus structures and (2) offering fine reductions to companies that attempt to claw back compensation from individual wrongdoers. READ MORE

Tech titan to reportedly press pause on some bonuses

Certain corporate Apple employees will reportedly have their upcoming bonuses postponed until later in the year.

Citing unnamed sources, Bloomberg reported Tuesday tech giant Apple will do so for workers in corporate divisions that usually get bonuses on a biannual basis. Those affected will go from having their bonuses split between the two months of April and October to receiving the payment in-full in the fall, according to the outlet. READ MORE