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Business Judgment, SEC Rulemaking, & Dodd-Frank | January 2012

All of us here at NFPCCmp;A hope everyone is having a great 2012 so far. Before we share some important, new articles with you, we have some exciting announcements:

– Brent Longnecker was named an NACD Governance Fellow and was asked by WorldatWork to help build some new course curriculum on pay,
– Chris Crawford has been elected to the WorldatWork Advisory Board,
– Josh Henke has been elected to the Houston Compensation & Benefits Board,
– Shane Krantz has been promoted to Director at Longnecker & Associates,
– Kevin Kuschel has been promoted to Director at Longnecker & Associates,
– Greg Whittaker has been promoted to Senior Consultant at Longnecker & Associates,

And last but not least, Longnecker & Associates was ranked #3 in Texas Monthly’s Best Companies to Work for in Texas competition!

Business Judgment Prevails
Brent Longnecker and Todd Henke
The latest news for Say on Pay lawsuits comes out of The United States District Court for the District of Oregon, which has ruled that a suit against the Umpqua bank directors arising out of a negative Say on Pay vote will be dismissed. The court determined that the plaintiffs failed to raise a reasonable doubt that the challenged compensation was reasonable exercise of the board’s business judgment — the first federal court decision to dismiss such an action. With the increasing possibility of more plaintiffs’ lawsuits in the future, perhaps this decision will echo loud and clear that the directors of companies are doing the best they can to fulfill their fiduciary roles for shareholders.

SEC Delays Rulemaking on Executive Compensation Yet Again
Reese Darragh of Compliance Week
Here’s a gift from the Securities and Exchange Commission to compliance officers and executive compensation committees to usher in the new year: The SEC recently updated its schedule for Dodd-Frank Act rulemaking for the year, and it has pushed back the deadline to propose and implement some of the rules on executive compensation, including the disclosure of pay-for-performance, pay ratios, the compensation clawback provision, and hedging activities by employees and directors.

Risk Chat: How Will Dodd-Frank Progress in 2012?
Eric Krell of Business Finance
Throughout 2011, I’m pretty sure I heard every possible Dodd-Frank implementation forecast possible. Here are just a few: the new law will require 10 times as much compliance work as Sarbanes-Oxley while squashing U.S. competitiveness and innovation; the new law will become to watered-down that it will stand no chance of preventing a second “Too Big to Fail” global financial meltdown; the new law will be overturned and zapped from existence. These theories sound grand, or scary, depending on your perspective (and politics, I suppose), but they are not much help from a practical perspective.

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