Pay Me Now: Court of Appeal Delivers Lessons On Fiduciary Duties, the Business Judgment Rule, and Executive Compensation
The business judgment of directors setting executive compensation was front and centre in the Ontario Court of Appeal’s recent decision in Unique Broadband Systems, Inc. (Re), 2014 ONCA 538 (UBS). Although the decision is based on unique underlying facts, it offers several important lessons on corporate governance.
At a recent event focused on the promotion of investment in Africa, top UN officials lent their voices to a message that has gained a consensus of opinion: trade and investment are crucial to achieving the development objectives across the African continent.
In a July 1 speech to the UK Aerospace and Defence Industry Seminar, Ben Morgan of the Serious Fraud Office (SFO) discussed his recommendations for how companies seeking Deferred Prosecution Agreements (DPAs) should interact with the SFO. His resounding message was cooperation on the part of the company, not just “the impression of cooperation” but real, honest cooperative action.
With school holidays just around the corner, thoughts of UK employees are now turning to their summer holidays. Given the far-reaching implications of the recent case of Lock v British Gas, employers with employees on commission arrangements need to take special care when paying employees during annual leave.
Sometimes the parties to a mediation are asked to provide the mediator in advance with a “position paper”. This is a document of a few pages (as a rough rule of thumb, the equivalent of five minutes’ talking). It sets out in broad terms how the parties have got to where they are, how they feel about that and where they want to get to. Often the phrase used here is what they “want tomorrow to look like”.
The 2014 AGM (annual general meeting) season has witnessed high levels of shareholder activism, focused on the emotive issue of executive pay.
One of the key issues raised by investors has been the perception of unfettered remuneration committee discretion. In May we witnessed the first defeat for a London listed company in a legally binding vote over its pay plans with 58 percent of shareholders refusing to back it. The remuneration committee has now had to reconsider its plans and consult investors on a new remuneration policy.
Another consistent theme is a concern amongst institutional investors regarding excessive pay levels and particularly uncapped packages offered to executive directors.
This season has also seen activist investors concerned about long-term incentive plans and bonus schemes involving directors, and particularly when those directors are also significant shareholders. The Local Authority Pension Fund Forum recommended that its member funds oppose one particular such scheme, saying it was inappropriate to “establish an incentive plan with a single board member in mind”.
We have also seen concerns regarding a lack of direct linkage between pay and performance. Investors highlighted particular concerns over executive pay following warnings about lower output.
This rounds off a very active AGM season for investors, which has seen significant protest votes hit a number of London listed companies.
The U.S. Food and Drug Administration (FDA) and Mexico’s National Service for Agro-Alimentary Public Health, Safety and Quality (SENASICA) and Federal Commission for the Protection from Sanitary Risks (COFEPRIS) signed a statement of intent last week forming a partnership to promote the safety of fresh and minimally processed agricultural products.
The “People’s Republic of China Food Safety Law (Revised Amendment)” (“Revised Amendment“) was submitted for public comment via National People’s Congress’ official website in June 2014. The first Amendment is the “People’s Republic of China Food Safety Law (“Amendment“), which was submitted to the State Council for comments in late 2013.