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Cool Compensation Considerations for the Private Company 2019: Pay, Performance and Perspectives


Speaker(s): Alicia C. McCarthy, Andrew L. Oringer, Arthur H. Kohn, David Lewin, Ph.D., Gregory T. Grogan, Heather L. Coleman, Joel I. Krasnow, Jonathan F. Lewis, Kyoko Takahashi Lin, Laurence Wagman, Marissa J. Holob, Michael R. Marino, Steve Rimmer, Steven W. Rabitz
Recorded on: Mar. 11, 2019
PLI Program #: 248825

Alicia C. McCarthy is Counsel in the Executive Compensation and Benefits Department at Wachtell Lipton.  Ms. McCarthy advises clients with respect to executive compensation and employee benefit matters involving mergers and acquisitions, spin-offs, joint ventures, financings, litigation as well as plan compliance.  Her experience includes ERISA’s fiduciary rules and the investment of plan assets with an extensive background representing financial institutions, fund sponsors and ERISA investors.  She also advises on executive compensation matters including performance-based compensation plans, nonqualified pension plans, and employment, severance and change in control agreements.

Ms. McCarthy chairs the Committee of Employee Benefits and Executive Compensation of the Association of the Bar of the City of New York.  She speaks frequently on executive compensation and ERISA topics for the Practicing Law Institute where she co-chairs the ERISA Investment Fiduciary Basics program.  She is the recipient of the Pro Bono Publico Award (2010, 2011 and 2014) for her services to The Legal Aid Society.  She is also recognized in Best Lawyers of America (2012-2019) in Employee Benefits (ERISA) law and New York Super Lawyers (2013-2018).  She recently co-authored the articles “Sun Capital Redux:  Private Equity and Pension Liability,” The Harvard Law School Forum on Corporate Governance and Financial Regulation (April 5, 2016); “Counting to 80,” Private Equity Manager (August 2013); and “New Ways to Manage Old Pension Liabilities,” Law 360 (June 17, 2013).

Ms. McCarthy received her B.A. in 1981 from Georgetown University and her J.D. cum laude in 1984 from Brooklyn Law School, where she was a member of the Journal of International Law.


Andrew L. Oringer is a partner and the co-chair of the Employee Benefits and Executive Compensation Group at Dechert LLP.  He is the Emerging Issues Coordinator of the Employee Benefits Committee of the American Bar Association’s Section of Taxation, a former co-chair of the Employee Benefits Committee of the Tax Section of the New York State Bar Association and chair of the NYSBA’s Committee on Attorney Professionalism.  Mr. Oringer is a charter member of the Practical Law Employee Benefits and Executive Compensation Advisory Board and was a long-standing member of the Advisory Board for the Bloomberg BNA Benefits Resource Practice Center and for the Tax Management Compensation Planning Journal.  He is a Fellow of the American College of Employee Benefits Counsel, a Senior Fellow from Practice for the Regulatory Compliance Association and an adjunct professor at the Maurice A. Deane Law School at Hofstra University.  He has authored a chapter in a leading treatise on the taxation of nonqualified deferred compensation and is co-editor of a leading treatise on ERISA fiduciary law.  Mr. Oringer is highly rated by a number of key ranking organizations, is included in a widely disseminated list of the Top 100 lawyers in New York City across all practice areas and is a member of The Legal 500 Hall of Fame.


Arthur Kohn is a partner at Cleary Gottlieb Steen and Hamilton LLP. His practice focuses on compensation and benefits matters, including executive compensation, pension compliance and investment, employment law and related matters.

He repeatedly has been recognized for his work on behalf of clients by the business and legal press, including Best Lawyers, which named him its 2014 New York Employee Benefits (ERISA) Lawyer of the Year. He has also been recognized for his work in employee benefits and executive compensation law by Chambers USA, The Legal 500, Super Lawyers of New York and others.

He is frequently invited to speak about executive compensation, taxation and corporate governance matters across the United States. Arthur is an adjunct professor at  New York University School of Law, a guest lecturer at Columbia Law School and a member of the Columbia College Alumni Association Board of Directors.

Arthur joined Cleary in 1986 and became a partner in 1995.

He received a B.A. from Columbia University and a J.D. from Columbia Law School, where he was a Harlan Fiske Scholar and received Phi Beta Kappa honors.


David Lewin, Ph.D., is the Neil H. Jacoby Professor Emeritus of Management, Human Resources and Organizational Behavior at the UCLA Anderson School of Management, and a Managing Director and Head of the Labor & Employment and Human Capital Practices at the Berkeley Research Group (BRG). He is a recent past President of the Labor and Employment Relations Association (LERA) and presently chairs the LERA’s Strategic Thinking Committee.

Dr. Lewin is the author of many published works on such topics as human resource strategy, human resource management practices and business performance, workplace and organizational dispute resolution, and compensation and reward systems, including executive compensation and public sector compensation. He serves on the editorial boards of several journals, is a Director and Fellow of the National Academy of Human Resources, and is a founder and faculty member of the Columbia Business School/New York City Police Department Police Management Institute (PMI).

Dr. Lewin consults widely on human resource management issues with business, government and voluntary organizations in the United States and abroad and also serves as an expert witness in employment litigation. Among his current expert retentions are numerous matters involving the reasonableness of executive compensation, especially in privately held companies, alleged gender and racial discrimination in employee compensation, alleged improper practices involving the determination and payment of sales employee commissions, and disputes over independent contractor vs. employee status. In these and related matters, he has often testified at trial in Federal, state and local courts, administrative law courts, U.S. Tax court, and in arbitration proceedings.


Greg Grogan is a Partner in Simpson Thacher’s Executive Compensation and Employee Benefits Practice and focuses his work on executive retention and motivation in M&A transactions and IPOs, with a particular focus on private equity. 

Greg has advised on approximately 100 investments or exits by Blackstone, including: the acquisition and subsequent IPOs of Hilton Hotels, SeaWorld, Invitation Homes, and Gates Global; the acquisitions of Equity Office Properties, Motel 6, Cosmopolitan Las Vegas, Refinitiv, StuyTown, PSAV, Performance Food, and GSO Capital.

Greg also regularly advises BC Partners (PetSmart, MultiPlan) and Centerbridge (Great Wolf Resorts, GSI, American Renal, BankUnited), as well as companies engaging in sales to private equity buyers (such as ADT and Johnson Controls/Tyco).

Greg has assisted on the following private equity transactions:

  • Microsoft in its $28.2 billion acquisition of LinkedIn, its $7.5 billion acquisition of GitHub, its $7.2 billion acquisition of Nokia’s phone business, and in its $8.5 billion acquisition of Skype from Silver Lake Partners
  • Vodafone’s $130 billion sale of its U.S. group to Verizon Communication
  • Invitation Homes in its $20 billion merger of equals with Starwood Waypoint Homes
  • Tyco in its merger of equals with Johnson Controls
  • Spinoffs of Hilton, Tyco, and PPL (and subsequent merger “reverse Morris trust” transactions at Tyco and PPL)
  • SiriusXM's acquisition of Pandora

Greg routinely advises boards of directors with regard to CEO succession matters, including at Hilton, PetSmart, Johnson Controls, Gannett, SeaWorld, Change Healthcare, and Cosmopolitan Las Vegas (and, at the height of the financial crisis, both Wachovia and Washington Mutual).

In 2016, Chambers USA described Greg as “very technically proficient, practical, timely, responsive and just a wonderful lawyer.”

Greg attended Georgetown University Law Center and California State University, Northridge.  He serves on the Board of Visitors at Georgetown University Law Center.


Heather Coleman is a partner in Sullivan & Cromwell’s General Practice group, focusing her practice on a variety of executive compensation, corporate governance and securities matters.  She is also active in the Firm’s restructuring practice.  Ms. Coleman has broad experience advising public and private companies and individual senior executives on executive compensation and benefits matters in a range of corporate transactions and in a regular advisory role.  She also frequently counsels clients on ongoing public company matters, including their Securities Exchange Act of 1934 reports and corporate governance and disclosure compliance. 

Ms. Coleman joined the Firm in 2008 after graduating from Yale Law School (J.D., 2007) and Washington and Lee University (B.A., 2004) and completing a clerkship for the Honorable Michael A. Chagares, United States Court of Appeals, Third Circuit (2007-2008). 

Ms. Coleman is a visiting lecturer in law at Yale Law School, where she teaches Corporate Crisis Management.


Joel Krasnow is member of the Firm’s Executive Compensation and Employee Benefits Group and has over 25 years’ experience in all aspects of compensation and benefits law, with a particular focus on ERISA’s fiduciary rules. Joel also has significant experience in executive compensation matters and the compensation and benefit aspects of merger and acquisition and financial restructuring transactions.

Primary Focus & Experience

Mr. Krasnow’s practice includes all aspects of compensation and benefits law, with a particular focus on ERISA’s fiduciary rules. He regularly advises clients concerning the ERISA aspects of investment products designed for pension plans and the structuring of such products, representing sponsors, underwriters and investors. He also advises clients on the fiduciary obligations imposed on plan fiduciaries, including the impact of ERISA’s prohibited transaction rules, and has obtained, on behalf of clients, Department of Labor exemptions from ERISA’s prohibited transaction rules.

Mr. Krasnow also has significant experience in executive compensation matters, the benefit aspects of merger and acquisition transactions and ERISA-related litigation.

Recognition & Accomplishments

Mr. Krasnow co-authored “Application of Plan Asset Rules to Plan Investments and Contributions” in the ERISA Fiduciary Law treatise (BNA Books 2006, Supp. 2009) and “ERISA's New '25%' Test -- What's in it for Private Equity Fund Sponsors and Institutional Investors?” in the Venture Capital and Private Equity Yearbook 2006/07 (Euromoney Yearbooks, 2006). He is listed in The Best Lawyers in America for Employee Benefits Law.

 


Jonathan F. Lewis is a partner in the firm’s Employee Benefits & Executive Compensation Group in New York. His practice encompasses a broad range of executive compensation, employee benefits and human resources matters. The scope of his practice includes:

  • Public and private mergers and acquisitions, with an emphasis on the private equity, healthcare and insurance sectors.
  • The design, operation and disclosure of executive compensation plans and programs.
  • The formation of private equity funds and the investment in the funds by ERISA pension plans

Mr. Lewis is recognized by Chambers USA as a leader in Employee Benefits & Executive Compensation, where he is described by clients as “an outstanding lawyer,” and “a superstar” with “incredible knowledge of a complex field, he is very practical and gives advice that is appreciated from a client’s perspective.” The Legal 500 US also recommends Mr. Lewis, with clients praising his “creative and practical approach.”

Mr. Lewis is a frequent writer on legal developments regarding employee benefits and executive compensation. He is the author or co-author of the Russian chapter of “Executive Compensation & Employee Benefits,” Getting The Deal Through, (July, 2015), “Counting To 80,” Private Equity Manager (August, 2013), “Impact of Health Care Reform on Employers: Two Years In,” Westlaw Journal - Health Law (March, 2013), Employee Equity Repurchases Draw SEC Scrutiny,” The M&A Lawyer (March, 2013), “Buyer Beware (Employee Edition): Employee Benefit Covenants Could Have Unintended Consequences On ERISA Plans,” The M&A Lawyer (March, 2012), “Wage and Price Controls in Private Equity?,” The M&A Journal (June, 2011), “To Change or Not to Change: Should Sponsors Modify Management Equity Due to the Market Downturn?,” The M&A Lawyer (February, 2010), “Private Equity and Hedge Fund

Arrangements,” a chapter in Section 409AHandbook (BNA Books, 2d ed. 2016) and “Mind the (Funding) Gap: Trouble Ahead for Multiemployer Plans,” Private Equity Manager (January, 2010).Mr. Lewis is also a frequent speaker at seminars and conferences, including Practicing Law Institute’s “Cool Compensation Considerations for the Private Company” (March, 2017).

Mr. Lewis received his B.A. from Harvard College in 1990 and his J.D. with high honors from The George Washington University Law School in 1994, where he was Editor-in-Chief of The George Washington Law Review. Mr. Lewis served as a law clerk to the Hon. Stewart Dalzell in the U.S. District Court for the Eastern District of Pennsylvania from 1994 to 1996.


Laurence Wagman is a Certified Public Accountant and the founding principal of Golden Parachute Tax Solutions LLC.  His technical expertise is primarily in the area of taxation of executive compensation and is a nationally known resource within the area of golden parachute tax penalties (Internal Revenue Code Sections (“IRC”) 280G and 4999.

Having founded Golden Parachute Tax Solutions in 2010, the firm has become a leader in providing Section 280G advice to both public and private companies either planning for or undergoing a change-in-control.  Since its founding, the firm has advised on over 500 matters, and transactions with an aggregate market cap value greater than $1 trillion.

As a technical resource Laurene has written several articles for both the Journal of Compensation and Benefits and the Taxation of Executive Compensation and Retirement on IRC Section 280G related matters this list includes: Structuring Change in Control Arrangements Within the Current Executive Compensation Environment (Sept 2009), The Golden Parachute Excise Tax; Why it’s about to Become More Expensive, Why a Gross-Up May be Necessary and How to Structure it to be Performance Based (July 2010),  The Golden Parachute Excise Tax – Not Just a Public Company Issue (Sept 2011), and Canadian Employers – Beware the United Stated Golden Parachute Excise Tax as Not Just a U.S. Problem (2012). 

In addition to writing, Laurence has also given numerous live presentations on IRC 280G related topics, including the National Association of Stock Plan Professionals (“NASPP”), Practicing Law Institute (“PLI”) and the knowledge and Knowledge Congress Webcast Series.

Prior to forming Golden Parachute Tax Solutions, Laurence’s experience includes over ten years of “Big 4” experience – focusing mainly on executive compensation/employee benefits matters, and thereafter, traditional executive compensation consulting with James F. Reda and Associates, an independent executive compensation consulting firm. 

Laurence is a graduate of Lehigh University (1995), received his Master of Science in Taxation at Seton Hall University (2002) and is a licensed Certified Public Accountant in the state of New Jersey.  Laurence can be reached at lwagman@280Gsolutions.com.


Marissa J. Holob advises clients on all aspects of employee benefits and executive compensation. She regularly represents public and private companies, and tax-exempt entities, on the design, negotiation, and ongoing compliance of qualified retirement plans, welfare plans, equity and incentive plans, employment agreements, and deferred compensation arrangements. Marissa also counsels on employee benefits and executive compensation-related issues that arise in the context of mergers and acquisitions, restructurings, and other similar transactions. In addition, her work with hedge funds and private equity funds includes issues relating to the application of ERISA's plan asset regulations. Marissa serves as the co-chair of the firm’s Employee Benefits practice.


Michael R. Marino has over 22 years of compensation consulting and corporate experience. Prior to joining FW Cook, Mike was a senior executive compensation consultant and director of performance metrics at another leading consulting firm. He began his career in the investment banking division of Merrill Lynch.

Mike works with a broad range of clients spanning most industries and across a wide spectrum of market cap and revenue, from large global complex businesses to small venture-backed enterprises. In addition to public companies, Mike works very closely with private equity firms, their portfolio companies and private, family-owned businesses.  On behalf of the Firm, Mike is a thought leader in the areas of performance metric selection, goal setting and compensation risk assessments.

Mike attends 80 to 100 compensation committee or board meetings annually. In addition, he is a frequent speaker at the NACD and other industry conferences and has authored many articles, alert letters and research reports on various topics, including private and family-owned compensation, aggregate share usage and dilution, performance metric selection and goal setting, compensation risk assessments and the CEO pay ratio

Currently, he serves as an advisory board member at the NACD New Jersey Chapter, coaches girls lacrosse and is a swim official for the YMCA girls swim team.

Mike attained his B.A. and M.A. degrees in Psychology and an M.B.A. from Columbia Business School.


Ms. Lin is a partner in Davis Polk’s Corporate Department, practicing in the Executive Compensation Group. She advises boards, companies, compensation committees and individual executives on executive compensation, equity-based incentives, deferred compensation, severance plans and other compensatory arrangements, with particular emphasis on issues arising in mergers and acquisitions transactions, initial public offerings and new and joint ventures, as well as for financial institutions. 

She also advises on employment and consulting arrangements, the applicability of securities and tax laws to executives and employers and general employment-related matters. Ms. Lin is co-editor of the "Davis Polk Briefing: Governance" blog, which covers current topics in corporate governance, securities law and executive compensation.

In her pro bono practice, Ms. Lin has represented individuals seeking asylum in the United States and has advised not-for-profit organizations, including Grameen America and International Arts Movement.


Steven W. Rabitz is a Partner at Dechert LLP focusing on executive compensation matters for public and private companies and the fiduciary responsibility, prohibited transaction and funding rules of ERISA.  He is regularly featured in Chambers USA for his work in employee benefits and executive compensation and in Best Lawyers for his ERISA-related practice. He is nationally recommended by The Legal 500 and was named a “Leading Lawyer” in 2017, in addition to being ranked in Super Lawyers.   Mr. Rabitz’s writing on current legal topics and issues has appeared in numerous publications, including, Tax Management Compensation Journal, Pension & Benefits Daily, Derivatives: Financial Products Report, The Hedge Fund Law Report, and he has been quoted in such publications as The Wall Street Journal, Financial Times, Institutional Investor, Barron’s, Bloomberg, Hedge Fund Law Report, International Business Times and Law 360. In 2015, he received the Burton Award for excellence in legal writing.

Prior to private practice, Mr. Rabitz pioneered and led the ERISA, executive compensation and benefits legal function at Lehman Brothers and served in a similar capacity at Barclays Capital. He also worked as part of a dedicated team of ERISA and compensation lawyers at Goldman Sachs earlier in his career. Prior to joining Dechert, Mr. Rabitz was a partner at a national leading law firm.

 


Steve has 30 years of experience in the human resource consulting field and specializes in coordinating the HR aspects of mergers, acquisitions and spin-offs. Steve is a NY-based principal in our Human Resource Transaction Services practice and works on transactions with a full array of private equity and strategic clients.

Steve has significant experience supporting clients on HR issues in the Technology sector including the following recent projects:

  • Advising a global software and systems company with the spin off of a major subsidiary
  • Assisting a PE firm in the acquisition of the cloud outsourcing division of a major eservices company.
  • Assisting a data storage company with HRIS, payroll, benefits and compensation integration for a major global acquisition.

Steve has been with PwC for 25 years, including 20 years in New York and five years in London. Prior to joining PwC, Steve qualified as an actuary with a leading UK firm of actuaries. Steve is a fellow of the UK Institute of Actuaries, a Certified Compensation Professional and holds an MBA from the University of Manchester.

Recent thought leadership includes chapters in books by PEI on HR due diligence and PE portfolio compensation.