2019 EMPLOYEE BENEFITS AND EXECUTIVE COMPENSATION SYMPOSIUM

OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. 2-1

HANDLING HIGH ROLLERS

BEST PRACTICES FOR DRAFTING EXECUTIVE

COMPENSATION AGREEMENTS

Mark Beatty – CBS Corporation

John A. Morrison – Ogletree Deakins

Cameron Williams – CDK Global Inc.

1

Presenters

Mark Beatty (CBS Corporation), John A. Morrison (Atlanta), and Cameron Williams (CDK Global Inc.)

Handling High Rollers: Best Practices for Drafting Executive Compensation Agreements

www.ogletree.com

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Agenda

Initial Considerations

Types of Compensation

Termination and Severance

Protective Covenants

Public Company Issues

Other Considerations

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Initial Considerations

• Term of the agreement

– Fixed term

– No termination date

– Automatic renewals

– Expiration of the agreement

• Position, duties, and reporting

• Outside activities

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Types of Compensation

• Base salary

– Discretionary increases

– Automatic increases

– Reduction of base salary

– Good reason considerations

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Types of Compensation

• Short-Term Incentive Compensation

– Signing bonus

– Retention bonus

– Annual incentive bonus

– Discretionary or performance-based bonus

– Impact of termination of employment

– Implications of Code Section 409A

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Types of Compensation

• Long-Term Incentive Compensation

– Public or private company

– Cash, equity, or both

– Performance goals and performance period

– Impact of termination of employment

– Implications of Code Section 409A

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Types of Compensation

• Equity Awards

– Public or private company

– Type of equity

Stock options (ISOs, NQSOs), restricted stock, RSUs, stock appreciation rights

Profits interests

Phantom stock

– Vesting: time-based or performance-based

– Section 83(b) elections

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Types of Compensation

• Perquisites and Employee Benefits

– Paid time off

– Relocation expenses

– Club membership

– Other fringe benefits (car allowance, financial planning, life insurance coverage, etc.)

– Health and welfare benefits

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Termination and Severance

• Types of termination

– For cause

– Without cause

– Resignation for good reason

– Resignation without good reason

– Death

– Disability

– Retirement

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Termination and Severance

• Definitions of cause, good reason, disability

– Notice and cure periods

• Accrued amounts

• Severance benefits

• Release of claims

• Impact of Section 409A

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Termination and Severance

• Impact of a Change in Control

– Definition of change in control

– Single trigger; double trigger

– Enhanced cash severance

– Accelerated vesting of equity awards

– Public company considerations

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Termination and Severance

• Golden Parachute Tax Provisions

– Full gross-up

– Modified gross-up

– Safe harbor cutback

– Valley provision

– No provision

– Private companies: shareholder approval

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Protective Covenants

• Confidentiality

• Intellectual property

• Non-compete

• Non-solicitation

• Non-disparagement

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Protective Covenants

• Key considerations

– Scope, duration, geographic location, remedies

– Enforcement problems

– State law implications

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Public Company Issues

• Board and Compensation Committee approvals

• Compensation consultants

• Institutional investor guidelines

• Reporting and disclosure

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Other Considerations

• Clawbacks

• Arbitration provisions

• Governing law and venue

• Indemnification

9

Presenters

Mark Beatty (CBS Corporation), John A. Morrison (Atlanta), and Cameron Williams (CDK Global Inc.)

Handling High Rollers: Best Practices for Drafting Executive Compensation Agreements

www.ogletree.com

Mark Beatty is SVP, Executive Compensation & Benefits for CBS Corporation. In this role,

Mark has oversight of several centralized HR functions, including executive compensation,

retirement plans, health and welfare benefits and global stock plan administration. Prior to

joining CBS’s HR department, Mark worked in CBS’s Legal department where he primarily

focused on the design and compliance of the company’s nonqualified and equity-based incentive

compensation plans and agreements, including the provision of related tax and securities advice.

Before joining CBS, Mark was an associate attorney with LeBeouf Lamb, Stoel Rives and

Shearman & Sterling.

John A. Morrison

Shareholder  ||  Atlanta, New York Ci�

Mr. Morrison is a member of the employee benefits and executive

compensation group. His practice encompasses all aspects of executive

compensation and employee benefits, focusing on the design and

analysis of executive compensation arrangements and related corporate

governance and disclosure ma�ers.  Mr. Morrison also has extensive

experience advising on executive compensation and employee benefit

issues in connection with mergers and acquisitions; corporate

restructurings; and financings, including change of control and

retention agreements and golden parachute excise tax mitigation

strategies.

Prior to joining Ogletree, Mr. Morrison practiced in New York for more

than �� years, the last �� years with Shearman & Sterling LLP.

Mr. Morrison has extensive experience advising

�e design, implementation and tax structuring of executive

compensation arrangements, including short and long-term

incentive arrangements (cash and equi� based); deferred

compensation and supplemental executive retirement arrangements

(including related insurance arrangements); change of control

protections; employment, consulting and termination arrangements;

and restrictive covenant agreements.

Tax and regulatory compliance ma�ers, including federal and state

withholding taxes; IRC Section ���A; IRC Section ���(m); IRC

Section ���G; IRC Section ��(b); Sarbanes-Oxley; and Dodd-Frank.

Advising Boards, compensation commi�ees and management on

corporate governance and fiduciary ma�ers, including developing

governance policies and internal controls; preparing governing

documents for Boards and compensation commi�ees; and advising

on developing “best practices”.

Design and implementation of non-employee director compensation

arrangements.

Development and preparation of executive compensation and

benefits related disclosure in public filings, including proxy

statements; annual and quarterly reports; and other periodic filings.

Cross border compensation ma�ers, such as global incentive

compensation arrangements, including compliance aspects under

U.S. tax and employment laws; employment, consulting and

severance arrangements; and global mobili� ma�ers.

Advising management and private equi� fund managers on the

design and implementation of compensation arrangements,

including carried interest and other forms of manager and

investment professional participation in private equi� funds.

Audits and inquiries from government regulators.

Education

J.D., magna cum laude, New York Law School, ����

B.A., State Universi� of New York at Stony Brook, ����

Admi�ance to Practice

New York

Georgia

Cameron Williams is Vice President, Counsel for CDK Global. CDK is the leading global

provider of IT solutions to the automotive industry. Cam’s practice focuses on providing broad

in-house legal support for CDK’s corporate segment including securities and corporate

governance, executive compensation, benefits and employment, and ethics and compliance.

Before joining CDK, Cam was an associate with Taft and Proskauer Rose.