Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 51
EXECUTIVE OFFICER, DIRECTOR, AND
EMPLOYMENT COMPENSATION
§ 51.01 Introduction
The programs under which companies compensate their executives
and directors1 are critical in helping those companies to both attract and
retain top talent. Ideally, these programs are structured so that the
executive’s interests are aligned with those of the company and its
shareholders, and thus reward the executive for both individual and
corporate successes that benefit shareholders. Depending on a company’s
goals, and the level of complexity it is willing or able to manage, a
compensation program may involve any combination of salary, periodic
bonuses, deferred-compensation plans, and various benefits and
perquisites, often using both cash- and equity-based compensation.
The law governing executive compensation encompasses a wide array
of topics from the fields of employment, tax, securities, and corporate
law, including the Employee Retirement Income Security Act of 1974
(“ERISA”);2 Internal Revenue Code (the “Code”) Sections 83(a),
162(m),3 and 409A; Section 16 of the Securities Exchange Act of 1934;
and numerous other federal statutes and regulations. In the first decade
of the twenty-first century, issues such as the corporate scandals of
Enron, Worldcom, and others, as well as the increased shareholder focus
on corporate compensation practices, have resulted in new legislation—
including the Sarbanes-Oxley Act of 2002 and the addition of Section
409A of the Code—and countless new regulations from the Securities
Exchange Commission and Internal Revenue Service. With the continued
focus on increased transparency in executive compensation programs, a
high volume of additional statutes and regulations are likely to follow.
Questions regarding executive compensation are often extremely
complicated and may require significant analysis regarding the
circumstances under which certain actions are to be taken. Thus, an indepth
treatment of the ways in which these areas of the law affect
executive compensation decisions is beyond the scope of this chapter.
Rather, this chapter intends to identify many of the various types of
executive compensation and common issues that surround them, as well
as the legal considerations that are important to attorneys as they
approach issues of executive compensation.
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
