Settlement of Calma v. Templeton Provides Guidance on Setting Director Pay

Greg Gautam • October 19, 2016

In response to recent lawsuits by the plaintiffs’ bar, I have previously posted about why public company employers may wish to consider adding a separate annual limit on non-employee director equity awards. Just last month the Delaware Chancery Court approved a settlement of Calma v. Templeton , a case in which Calma challenged the size of director equity awards granted under Citrix’s shareholder-approved equity compensation plan.  Among other things, the settlement provides what some practitioners believe to be a reasonable framework for structuring director compensation programs on a go-forward basis.  Key provisions of the settlement are as follows:

  • Citrix agreed to amend its equity compensation plan to incorporate a $795,000 cap on the value of equity awards that may be granted to any one non-employee director in any one year.  In addition, Citrix agreed to include the amendment as a proxy proposal at its 2017 annual meeting of shareholders.
  • Beginning in 2017, Citrix agreed to provide enhanced proxy disclosures that describe: (i) the company’s compensation philosophy and rationale underlying the director compensation program; (ii) the process by which decisions concerning non-employee director compensation are made (including a description of the role and analysis provided by the compensation committee’s compensation consultant); and (iii) the specific annual awards granted to the non-employee directors in that particular year.
  • Citrix will amend its compensation committee charter to provide that the compensation committee will be responsible for: (i) conducting an annual review and assessment of all compensation (both cash and equity) paid to each non-employee director; (ii) engaging a compensation consultant to advise the committee relative to the compensation (both cash and equity) that will be paid to non-employee directors, which shall include analysis as to the amount and type of compensation paid and comparative data deemed appropriate by such consultant.
  • Payment by Citrix of $425,000 in legal fees and expenses to counsel for Calma.

Although many public companies already follow a process similar to the process set forth above, some companies (including new public companies) do not.  Accordingly, public companies may wish to review the Calma v. Templeton settlement and compare their processes for establishing director compensation to those described in the settlement.

Employee burnout: what it is and how to prevent it

By Mardy Gould • May 24, 2024
Employee burnout has become an epidemic in today’s modern workplace. So much so that the World Health Organization (WHO) officially recognizes it as an “occupational phenomenon.”1 While many used to consider mounting workplace stress an individual employee problem, these days, it’s become an employer’s responsibility to prevent burnout before it hurts productivity and business performance—not to mention your employees’ physical and mental health. Luckily, you can prevent burnout from affecting your workforce in several ways. This article will explore the causes and signs of employee burnout and the steps you can take to create a positive work environment where employees feel safe from toxic stress levels.

Form 720 and PCORI fee FAQs

By Mardy Gould • May 23, 2024
If you're a small business owner, you may have heard of the acronym PCORI and the fees that come with it. But what is PCORI, and how does it apply to your organization? Under the Affordable Care Act (ACA), sponsors of self-insured health plans must pay a fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI). PCORI is an independent organization the ACA created to conduct research to help healthcare consumers make better decisions for their specific needs and outcomes. It also performs research related to clinical effectiveness. Employers offering a self-insured medical reimbursement health plan, such as a health reimbursement arrangement (HRA), must pay this fee by July 31 each year via Form 7201. This fee was initially set to expire in 2019, but Congress extended it through September 30, 20292, due to the Further Consolidated Appropriations Act of 20203.
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