Covington represents companies, executives, and directors on a wide range of executive compensation matters. As experienced advisers to companies of all sizes in many different industries, we keep up with market practices and recent trends. Our clients include Ametek, Blue Cross and Blue Shield of Florida, Honeywell, IBM, Major League Baseball, the National Basketball Association, the National Football League, Norfolk Southern, Textron, Trustmark, Union Pacific, United Technologies, Verizon, and Vulcan Materials.
We help our clients design incentive programs and equity compensation arrangements to attract and retain top-level talent. We also advise on a variety of benefit programs for executives and directors, including charitable awards, executive medical benefits, and transportation on company aircraft.
Employment & Change in Control Agreements
We negotiate employment, separation, and consulting agreements on behalf of employers and executives. The arrangements we create deliver tax-efficient compensation and benefits. We develop industry-appropriate non-competition and confidentiality provisions designed to withstand legal challenges.
We have extensive experience designing change in control provisions and security arrangements for key executives. Our clients include large public companies and smaller companies that anticipate a takeover or public offering. We have secured government approvals for a variety of innovative arrangements, including:
- “Pension parachutes” and retention bonuses paid from tax-qualified plans;
- Trusts that protect executive medical benefits following a change in control; and
- “QSERPs” that permit companies to pay supplemental executive retirement benefits from pension trusts.
Deferred Compensation
Covington advises on the full spectrum of deferred compensation arrangements. Our lawyers design performance awards, elective deferral arrangements, supplemental executive retirement programs (SERPs), and deferred benefits such as post-employment medical and life insurance.
We helped to shape the requirements for deferred compensation plans under section 409A of the tax code by filing extensive comments on behalf of our clients, and we have assisted employers as they restructure their compensation programs to comply with these rules. We create a variety of arrangements to protect the deferred compensation of key executives, including rabbi trusts, secular trusts, split-dollar life insurance, corporate-owned life insurance, and more novel security arrangements.
Equity Compensation
Covington frequently advises on equity-based programs, including statutory and nonstatutory options, restricted stock, stock appreciation rights, and hypothetical investment rights such as phantom stock and restricted stock units. Our clients range from start-ups with only a few employees to Fortune 100 companies.
Working closely with Covington’s corporate and securities lawyers, we advise clients on equity compensation issues with an appreciation for tax treatment, disclosure requirements, and financial accounting consequences. We have helped clients resolve a number of difficult issues in connection with their equity compensation programs. For example:
- We have designed equity compensation programs for partnerships, limited liability companies, and other pass-through entities;
- We have advised on equity arrangements for employees of foreign affiliates and joint ventures; and
- We have assisted companies with tax, securities, and corporate governance issues arising from option grant practices.
Compensation for Tax-Exempt Organizations
Covington has extensive experience with compensation arrangements for the executives and directors of trade associations, section 501(c)(3) organizations, sports leagues, and other tax-exempt organizations. We advise tax-exempt employers on the special issues that affect their compensation programs, including private benefit and inurement issues, intermediate sanctions, section 457 deferred compensation restrictions, and public disclosure requirements.
The National Geographic Society, the American Petroleum Institute, the National Football League, the Investment Company Institute, and the Eugene and Agnes E. Meyer Foundation are a few of the many tax-exempt organizations we represent on employee benefit and executive compensation matters.
Compensation Committees
Corporate governance experts agree that outside directors need access to independent expert advisers, including independent legal counsel. Covington’s executive compensation lawyers help compensation committees negotiate the maze of securities regulations, disclosure requirements, tax laws, stock exchange listing standards, Sarbanes-Oxley restrictions, and financial accounting rules governing directors’ and executives’ compensation. In addition to counseling corporate boards and compensation committees, we assist outside directors with especially sensitive undertakings, such as internal investigations and the hiring and separation of top-level executives.
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