Practice Areas: Executive Compensation

McGuireWoods' executive compensation practice encompasses the entire spectrum of executive compensation matters for clients ranging in size from start-up companies to established Fortune 100 companies. The group’s practice covers not only the tax aspects of executive compensation matters, but also the corporate, securities, employment and other legal issues related to compensation arrangements. We also help tax-exempt organizations, such as universities and colleges, design and implement executive compensation programs.

Our experience has shown that effective executive compensation planning requires that all of the constituencies that have a stake in executive compensation must be considered, including executives, institutional shareholders and outside directors. We have experience in working with compensation committees, outside accountants and other parties to create innovative solutions to executive compensation needs. Additionally, we assist boards of directors develop effective director compensation programs.

An emerging trend in this area affects those outside the executive ranks. We have developed innovative equity compensation such as broad-based stock purchase and stock option programs that reflect the increasing importance of equity in non-executive compensation.

Our areas of service include:

• Incentive and Performance Compensation Programs
• Equity-Based Compensation Programs
• Deferred Compensation Arrangements
• Securities Law Disclosure and Compliance
• Employment Agreements
• Multinational Issues (including in-bound and out-bound equity based compensation programs)

Representative Matters

• A number of public companies have engaged us to review all of their compensation and benefit programs to determine whether those programs are subject to the special requirements for nonqualified deferred compensation plans that are imposed under Section 409A of the Internal Revenue Code and to determine what changes would need to be made to covered arrangements to bring them into compliance with Section 409A. In the course of these reviews, other design and legal compliance issues are frequently identified.
• Assisted a public company in an overhaul and redesign of its equity compensation plans. The work included consolidation of various plans, including plans not previously approved by shareholders, and updates of the type of equity offered under the plans. We prepared the prospectus, proxy materials, securities registration, and forms of grant for the new plan.
• When a long-serving CEO approached retirement, a client sought our assistance to design and implement a transition program. Working with the board and management, we proposed a structure that balanced the needs of the company and the potential concerns of the investment community. The implementation of the transition program included a post-retirement consulting arrangement, securities filings to disclose the various steps in the process, structuring benefits and an employment contract for the new CEO, board and compensation committee documentation of the process, and the description of the transition program in the proxy.
• Following a “merger of equals,” we assisted in the integration of two very different compensation programs. Officers of both companies were on the new management team. Our work included redesign of bonus and long-term compensation plans, restructuring of outstanding equity grants, and design of new equity grants. We also merged several SERPs and their related rabbi trusts while preserving guaranteed benefits.
• We have helped a number of companies with golden parachute tax liability in connection with an acquisition. We have helped target companies understand the alternatives to lower the tax liability and to implement the chosen alternatives. We have provided tax opinions for such companies and their affected executives on the golden parachute tax liability.
• We have helped a number of companies develop new and redesign existing executive compensation arrangements in anticipate of becoming publicly traded, either in connection with a spin-off or an initial public offering.
• We have helped universities and other tax-exempt organizations design employment agreements, performance bonus programs and deferred compensation arrangements for their presidents and other senior officers. Our work includes working with the organization’s board of directors to establish compliance with the intermediate sanctions rules.