On December 19, 2009, the American Recovery and Reinvestment Act of 2009’s (ARRA) COBRA health insurance subsidy was expanded. Under ARRA, individuals involuntarily terminated from an employer covered under COBRA may be eligible to pay a reduced amount equal to 35% of their usual COBRA extended coverage premium. The extension, included in the Department of Defense Appropriations Act, 2010, increases the time that individuals may take advantage of the subsidies from nine to 15 months and extends the deadline to enter the program from December 31, 2009 to February 29, 2010. Additionally, the revision permits individuals to make retroactive premium payments to restore coverage and eligibility in the program.
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BNA has published an article by Adam Carter of The Employment Law Group® law firm on the Computer Fraud and Abuse Act in the most recent edition of the Workplace Law Report. The article, entitled “Combating Claims of Computer Fraud and Abuse,” discusses recent cases and techniques for defending against claims brought under the Act. A copy of the article is available here.
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On Sept 28, 2009, Tone N. Grant, the former president of Refco Inc., filed a petition for a writ of certiorari. The petition questions the way a lower court handled evidence concerning documents that were given to the Securities and Exchange Commission. During an SEC investigation, Grant voluntarily turned over numerous documents. Contained in those documents were notes from a meeting that Grant attended which the government claims shows his involvement in the scheme. In 2008, Grant was sentenced to 10 years in prison for his apparent role in a scheme which hid $430 million in trading losses from investors, the public, and government.
The petition presents two questions for the Court: (1) whether the lower court violated Grant’s 5th Amendment right to due process when it refused to allow testimony that Grant knowingly handed over the notes, showing a consciousness of innocence; (2) whether a defendant should be held to a more demanding standard when presenting evidence of a consciousness of innocence (as opposed to evidence of consciousness of guilt presented by the prosecution). According to Grant, the prosecution deliberately mislead the jury by arguing that his “claim of intentional production was made up and without factual support, despite knowledge that Mr. Grant had sought to prove that very fact with testimony that has been excluded on the prosecutor’s objection.”
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On October 1, 2009, the Senate Finance Committee, by a vote of 14-8, approved an amendment proposed by Sen. Blanche Lincoln (D., Ark.) which would lower the current executive pay tax deduction from $1 million to $500,000. The amendment was made to the proposed America’s Healthy Future Act of 2009 and includes deferred remuneration and previous existing contracts.
Sen. Lincoln reasons that the proposed legislation will serve as a windfall to the insurance industry and therefore the deduction for executive compensation should be reduced to ensure that revenue stays within the company to lower premiums. For the reduction to apply to an insurer, the company must receive 25% of its gross premium income from plans that meet the minimum creditable coverage requirements in the proposed Act.
However, there is still ambiguity because the definition of minimum creditable coverage as defined by the Act does not apply to individual, small group and other group private health insurance. That is left to each state’s insurance commission.
This amendment is consistent with last year’s amendments to IRC § 162(m)(5) which lowered the tax deduction of executives of companies receiving T.A.R.P. monies from $1 million to $500,000. Perhaps we are seeing the start of a new trend.
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Today, the Obama administration is scheduled to announce proposals that would give shareholders more input on executive compensation and ensure that corporate compensation committees have more independence when determining executive pay. The first proposal, known as the “Say on Pay” proxy resolution would require all publicly traded companies to allow an annual, nonbinding vote for shareholders to decide on proposed executive compensation measures. Additionally, the “Say on Pay” program provides that shareholders maintain the right to vote on the compensation for the top five company executives. The second proposal which seeks legislation similar to the Sarbanes-Oxley Act, would give more authority and more exacting standards to corporate compensation committees, including the ability to hire independent compensation consultants and outside counsel.
For more information on executive compensation, visit The Employment Law Group® law firm’s Executive Counsel Practice at http://www.employmentlawgroup.net/PracticeAreas/Executive-Compensation.asp.
The House has approved H.R. 1664, the Pay for Performance Act of 2009, to restrict executive compensation at companies that have received funds from the Troubled Assets Relief Program (TARP). The decision to impose additional limitations on executive payouts follows a massive public outcry about the $165 million that American International Group, a recipient of nearly $200 billion in bailout funds, has issued in payouts to its executives in the last month. The bill, which amends the executive compensation provisions of the Emergency Economic Stabilization Act of 2008, would bar recipients of TARP funds from paying any bonus that is “unreasonable or excessive” or that is not “directly based on performance-based measures.” The bill also calls for financial institutions subject to the new compensation requirements to submit an annual report to the Treasury Secretary stating how many executives received or will receive total compensation above specified dollar amounts during the fiscal year. To learn more about The Employment Law Group® law firm’s Executive Counsel Practice, go to http://www.employmentlawgroup.net/PracticeAreas/Executive-Compensation.asp.
Today, Congress approved H.R. 1424 (“Emergency Economic Stabilization Act”) which authorizes the Federal Government to purchase and insure certain types of assets to stabilize the economy and protect taxpayers’ interests. The bailout bill also includes a provision limiting executive compensation. In particular, the bill prohibits financial institutions from making golden parachute payments to senior executives and prohibits companies from paying certain financial incentives to senior executive officers. To read the bailout bill, go to http://thomas.loc.gov/. For information about The Employment Law Group® law firm’s executive counsel practice, click here.