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JOBS Act Exemption from Executive Compensation Reporting Requirements

The JOBS Act, which was signed into law on April 5th, exempts an “emerging growth company” from certain executive compensation reporting requirements. An “emerging growth company” is an issuer with total annual gross revenues of less than $1 billion until (1) the company has total annual gross revenues of $1 billion or more (subject to indexing), (2) the fifth anniversary of the first sale of common equity securities pursuant to a registration statement, (3) the company has issued more than $1 billion in non-convertible debt within a 3-year period, or (4) when the company is deemed to be a “large accelerated filer.” However, a company that first sold common equity securities pursuant to a registration statement on or before December 8, 2011, cannot be an emerging growth company. An emerging growth company is exempt from rules requiring shareholder advisory votes on executive compensation and golden parachute payments. Such a company… Continue Reading

JOBS Act Expands Registration Exception for Private Companies and Employee Stock Plans

Prior to the JOBS Act, Section 12(g) of the Securities Exchange Act of 1934 required companies with total assets of more than $10 million and a class of equity securities held of record by 500 or more persons to register that class of equity security. The JOBS Act expands the exception for private companies by amending Section 12(g)(1)(A) of the Exchange Act to increase the number of holders of records to (i) 2,000 persons, or (ii) 500 persons who are not accredited investors. More significantly, with respect to compensatory employee stock plans, the JOBS Act amended Section 12(g)(5) of the Exchange Act by excluding for purposes of determining any holders of record, any persons who received the securities pursuant to an employee compensation plan in transactions exempted from the registration requirements of Section 5 of the Securities Act of 1933. The JOBS Act also requires the SEC to adopt safe… Continue Reading

Fiduciary Exception to Attorney-Client Privilege Does Not Apply to Top Hat Plan

The court considered an employee’s motion to compel documents with respect to her employer’s nonqualified pension benefit plan called the “Wealth Accumulation Plan.” The employee asserted that the lawsuit turned on the single issue of whether the Wealth Accumulation Plan was a valid “top hat” plan exempt from certain ERISA requirements. The court denied the plaintiff’s motion to compel documents, finding that the employer’s “pleadings and exhibits sufficiently show, for the limited purpose of this discovery dispute only, that the [plan] is a top hat ERISA plan.” Therefore, the fiduciary exception to the attorney-client privilege that applies to plans covered by ERISA’s fiduciary requirements did not apply and thus the documents protected by attorney client privilege were not discoverable. Tolbert v. RBC Capital Markets, Corp., No. H-11-0107 (S.D. Tex. Mar. 28, 2012).

April 2012
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