Compensation Guidance for TARP Companies
The U.S. Department of the Treasury issued interim final regulations interpreting the restrictions imposed on executive compensation by the American Recovery and Reinvestment Act of 2009 (ARRA) and their interaction with previous iterations of Troubled Asset Relief Program (TARP) guidance. These regulations resolve many gray areas, generally in favor of TARP participants. For example, the rules eliminate President Obama’s proposed $500,000 cap on pay, clarify that commissions are not prohibited bonus payments and expand the definition of stock-based compensation that can be granted in lieu of other incentive compensation. |
FASB Decides to Recodify U.S. Accounting Standards
At its June 3 meeting, the Financial Accounting Standards Board (FASB) voted to approve the “FASB Accounting Standards Codification” as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The codification project required a structural overhaul to change from a standards-based model to a topically based model. The codification was launched on July 1, 2009, and takes effect for interim and annual periods ending after Sept. 15, 2009, when it will supersede all existing accounting standard documents. DB Plan Sponsors 2010 Funding Valuation Elections
Before finalizing their 2009 funding valuation interest rate elections, many defined benefit (DB) plan sponsors would like to know what flexibility they will have for their 2010 elections. For calendar-year plans, the 2009 elections are generally due by Sept. 30, 2009. PBGC Proposes Regulations for Determining Guaranteed Benefits for Service Members on Active Duty
The Pension Benefit Guaranty Corporation (PBGC) has proposed making it easier for military service members to qualify for guaranteed benefits if their pension plan terminates. Currently, the PBGC guarantees the pension benefit only if the participant satisfies all conditions for entitlement by the plan’s termination date. New Legislative Focus on Executive Compensation and Risk
On July 31, the House passed the Corporate and Financial Institution Compensation Fairness Act (H.R. 3269), which was proposed by House Financial Services Committee Chairman Barney Frank (D-Mass.). The act would require say-on-pay, mandate independence for compensation committees and compensation consultants, and establish new disclosure requirements for incentive-based compensation. Health Care Reform Debate to Continue During August Recess
As Congress enters its August recess, health care reform legislation remains in flux. In July, four of the congressional committees responsible for moving the legislation approved proposals. Despite this progress, however, obstacles threaten to block the legislative path to reform, including escalating concern about costs — now and in the future — and dissent among House Democrats. Lawmakers plan to discuss the proposals with their constituents over the August recess, and constituents’ views will affect the negotiations when they return. Accounting for Change: New FASB Standards’ Ripple Effects on M&A
We can count mergers and acquisitions (M&A) activity as one more casualty of the credit crisis: During the last 12 months, deals have sharply declined in volume and size. As a result, an important change in the M&A landscape has not received the attention it would have attracted just a couple of years ago. Pension Freezes Continue Among Fortune 1000 Companies in 2009
From 2008 to 2009, the number of Fortune 1000 firms sponsoring a frozen defined benefit (DB) pension plan increased by 4 percent. The freeze rate has remained relatively constant over the last two years, as plan sponsors continue to seek ways to lower expenses, especially in the current economic downturn. Comprehensive Analysis of the Annual Social Security Statement and Implications For Communications With Participants in Employer-Sponsored Retirement Plans
The testimony of Mark J. Warshawsky, Ph.D., Director of Retirement Research at Watson Wyatt Worldwide, before the Department of Labor ERISA Advisory Council on Promoting Retirement Literacy and Security by Streamlining Disclosures to Participants and Beneficiaries, July 23, 2009. Retirement Prospects Dim for Many
Near-Retirees
For many workers, defined contribution (DC) plans and individual retirement accounts (IRAs) are their main savings vehicles. This trend gives employees greater responsibility for accumulating sufficient wealth to see them through retirement. Are workers, especially those approaching the end of their working career, saving enough? An analysis of account balances for near-retirees suggests widespread financial unreadiness for retirement looming, even before the stock and housing markets tumbled. Investing in Retirement Accounts: Observed Patterns of Asset Allocation
Wealth accumulations in defined contribution (DC) retirement plans hinge on the investment portfolio and contribution rates. Yet a new Watson Wyatt analysis suggests that many DC portfolios fall short of optimal asset allocation. Plan sponsors and policymakers hoping to help workers balance their portfolios more effectively need to know how asset allocations vary among households with different economic and demographic characteristics.
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