Julia L. Petty

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The following is part of our annual publication Selected Issues for Boards of Directors in 2026. Explore all topics or download the PDF.

A number of changes to executive compensation disclosure may occur in 2026, reflecting potential Securities and Exchange Commission (SEC) rulemaking previewed during a July 2025 roundtable discussion as well as separate updates to guidance from ISS and Glass Lewis.Continue Reading Rethinking Compensation Disclosure

The following is part of our annual publication Selected Issues for Boards of Directors in 2025. Explore all topics or download the PDF.

Heading into 2025, boards of directors must be prepared to address both rising concerns around executive security costs and new Securities and Exchange Commission (SEC) disclosure rules relating to the timing of option and stock appreciation right (SAR) awards. We discuss the issues directors should consider below.Continue Reading Focus on SEC Executive Compensation Disclosure Obligations in 2025: Security Costs and New Item 402(x)

On January 30, 2024, the Delaware Court of Chancery struck down Tesla CEO Elon Musk’s $55 billion performance-based stock option package, ruling that Tesla’s directors did not satisfy the stringent “entire fairness” standard in approving his compensation. This case comes on the heels of a $735 million settlement in which Tesla directors disgorged previously-received compensation following shareholder claims of unjust enrichment and breach of fiduciary duty.[1] The court applied the entire fairness standard because of Musk’s enormous control over the transaction, referring to him as a “Superstar CEO”[2] who wielded maximum possible influence over the board. While the compensation package was approved by a majority of disinterested shareholders, the court concluded proxy disclosure was deficient and therefore shareholders were not fully informed.[3] Ultimately, the Tesla board was not able to prove the benefit received from Musk’s leadership was worth the $55 billion Tesla paid for it.Continue Reading It’s Not DE, It’s You: 55 Billion Reasons Tesla is Not ‘Your Company’

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.

Executive compensation issues may not have been the predominant focus for boards of directors in 2023 given the enhanced attention to antitrust, diversity and climate reporting matters, among others. However, there have been several notable developments in executive compensation that boards should be mindful of in 2024. We discuss these developments below.Continue Reading A New Season for Executive Compensation Disclosure

On October 26, 2022, the Securities and Exchange Commission adopted final rules implementing the Dodd-Frank requirement for issuers to recover incentive-based compensation erroneously paid to current and former executive officers due to an accounting restatement.

These rules were originally proposed in July of 2015, and subsequently reopened for comment in October 2021 and June 2022.3…

On August 25, 2022 the SEC adopted final rules (the so-called “pay vs. performance” rules) that will require U.S. public companies (including smaller reporting companies (“SRCs”) but excluding emerging growth companies, foreign private issuers, and registered investment companies) to disclose information reflecting the relationship between executive compensation “actually paid” and company financial performance for the five most recently completed fiscal years (three years for SRCs).
Continue Reading Final Pay vs. Performance Rules: Teaching Old Disclosure New Tricks