The Inbox - October 4, 2013
In honor of both our Tampa- and Baltimore-based colleagues (including yours truly), this week's Suits by Suits Inbox is rooting for the Tampa Bay Rays to defeat the Boston Red Sox in the American League Division Series; game 1 starts tonight. Alternatively, if you're not into baseball, perhaps you'd prefer a tasty beverage? Here's a link to 31 days of Disney-themed craft cocktails, one for each day of October. With that in mind -- or perhaps in hand, depending on when you read this -- on with our weekly recap:
- Speaking of the baseball playoffs, we'd be remiss if we didn't at least mention non-playoff bound New York Yankee 3B Alex Rodriguez's lawsuit against Major League Baseball filed late yesterday; the complaint alleges "tortious and egregious conduct [by MLB] with one and only one goal: to improperly marshal evidence that they hope to use to destroy the reputation and career of Alex Rodriguez, one of the most accomplished Major League Baseball players of all time." We'll have more on this in the coming days.
- We previously alerted you to proposed rulemaking by the Securities and Exchange Commission that would require large corporations to disclose the ratio between the compensation awarded to their CEO and the median compensation of all other employees pursuant to Section 953(b) of Dodd-Frank. This week, the SEC published those proposed rules. The public notice and comment period runs through December 2, 2013.
- If you want to understand the SEC's thought process, our friends at the Harvard Corporate Governance have published a statement by SEC Commissioner Luis A. Aguilar explaining the purpose behind those proposed rules.
- Forbes magazine reports that the Supreme Court has granted certiorari in In re Quality Stores, Inc., in order to resolve a split among the circuits as to whether severance pay should be subject to the FICA payroll tax (as ordinary income), or whether it should be exempt (because the employee is no longer "rendering services"). We're obviously watching what the Supreme Court does in this case very carefully. (For more on the details of the case, take a look at coverage by the Chicago Tribune; Quality Stores was headquartered in the midwest.)
- Obviously, large executive termination packages -- so-called "golden parachutes" -- can be controversial, particularly when the compensation doesn't appear to be tied to the firm's performance. (See, for example, our previous coverage of the controversial $20 million severance package awarded to the outgoing CEO of (bankrupt) American Airlines, Tom Horton.) This week, the Financial Post got in the act with an article discussing the severance payments made to the outgoing CEOs of BlackBerry, Ltd. and Nokia Corp. The article argues, among other things, that bonus payments in the event of a merger (such as BlackBerry) should be tied to the sale price of the acquired company and not simply a flat bonus tied to the event of closing itself, in order to incentivize CEOs to seek the highest possible sale price and thus return to shareholders. It's a provocative read.
- For more on the controversial $28 million severance package awarded to outgoing Nokia CEO Stephen Elop, there's this article in Quartz, which discusses what it calls the "sloppy" legal drafting behind Elop's contract.
- And, as long as we're talking about golden parachutes, it turns out that the student newspaper The Aggie Guardian discovered, through FOIA requests, that outgoing Texas A&M University President R. Bowen Loftin will receive an $850,000 severance package that also includes a six-figure consulting job and other perks when he steps down as president in 2014. Needless to say, that's caused some consternation on campus, particularly in light of further discoveries that Loftin apparently requested that campus officials delete various emails and files related to the compensation negotiations.
- Finally, in our news of the weird: EchoLight Studios LLC, a film company specializing in conservative Christian films helmed by former Senator and Presidential candidate Rick Santorum, has sued two of its former executives, chief global strategist Christopher Morrow and president Robert Downes in Texas State court this Monday. The lawsuit alleges that EchoLight terminated Morrow and Downes for cause after the duo allegedly disparaged Santorum and EchoLight, and, after termination, that they allegedly "hijacked" EchoLight's Facebook account to post false information and refused to turn over documents related to a "faith-based" movie projected called "Hoovey." EchoLight seeks injunctive relief and damages for breach of contract, conversion, and breach of fiduciary duty.