A07338 Summary:

BILL NO    A07338 

SAME AS    SAME AS S05197

SPONSOR    Englebright (MS)

COSPNSR    Brennan

MLTSPNSR   

Amd S102, add S712-a, N-PC L; add S8-1.9, EPT L

Relates to the oversight of audits and executive compensation and to trust
governance.
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A07338 Actions:

BILL NO    A07338 

05/10/2013 referred to corporations, authorities and commissions
01/08/2014 referred to corporations, authorities and commissions
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A07338 Votes:

There are no votes for this bill in this legislative session.
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A07338 Memo:

BILL NUMBER:A7338

TITLE OF BILL:  An act to amend the not-for-profit corporation law, in
relation to executive compensation oversight; and to amend the
estates, powers and trusts law, in relation to trust governance

PURPOSE OR GENERAL IDEA OF BILL:

To amend the Not-for-Profit Corporation Law (N-PCL) and the. Estates
Powers and Trusts Law (EPTL) to enhance the oversight of executive
compensation of New York's charitable corporations and trusts.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 adds new definitions to section 102 of the Not-for-Profit
Corporation Law to implement provisions of the bill.

Sections 2 creates a new section 712-a of the Not-for-Profit
Corporation Law to require that compensation is fair, reasonable, and
commensurate with services provided, and that boards of larger
nonprofits follow particular procedures in determining that
compensation meets this standard.

Section 3 creates a new section 8-1.9 of the Estates, Powers and
Trusts Law to make applicable to charitable trusts the new
requirements concerning executive compensation, that are made
applicable to charitable corporations.

Section 4 is the effective date.

JUSTIFICATION:

For the public to maintain trust in the nonprofit sector, it must have
confidence that executive compensation is fair, reasonable,
commensurate with services, and set independently. Although nonprofit
board members and trustees are subject to general fiduciary
principles, New York statutes are virtually silent on boards' and
trustees' responsibilities for overseeing executive compensation.
There should be clear statutory standards to ensure active and
independent review of compensation by boards and trustees, including
requirements that they affirmatively determine that compensation paid
to key employees is fair, reasonable and commensurate with services
provided, that no individuals with an interest in the compensation
participate in the compensation process, and that boards adhere to
statutory criteria when making compensation determinations.

The Act seeks to achieve these goals while appropriately tailoring its
requirements to nonprofits' size. The board, or a committee of the
board, of any charity required to register with the Attorney General
pursuant to Article 7-A of the Executive Law will be required to
review and approve the compensation of the organization's principal
executive officer. Boards or board committees of those organizations
with annual revenues above $2 million will, in addition, be required
to review and approve total compensation paid to the top five highest
compensated employees whose compensation exceeds $150,000, determine
that such compensation is fair and reasonable in relation to
compensation paid to individuals serving in similar roles at


corporations of similar size, and document the basis for compensation
determinations.

PRIOR LEGISLATIVE HISTORY:

New bill.

FISCAL IMPLICATIONS:

There is no fiscal impact on the state,

EFFECTIVE DATE:

This act shall take effect January 1, 2015.
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A07338 Text:

                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                         7338

                              2013-2014 Regular Sessions

                                 I N  A S S E M B L Y

                                     May 10, 2013
                                      ___________

       Introduced  by  M.  of  A.  ENGLEBRIGHT,  BRENNAN  -- (at request of the
         Department of Law) -- read once  and  referred  to  the  Committee  on
         Corporations, Authorities and Commissions

       AN ACT to amend the not-for-profit corporation law, in relation to exec-
         utive  compensation  oversight;  and  to amend the estates, powers and
         trusts law, in relation to trust governance

         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section  1. Subparagraph 6 of paragraph (a) of section 102 of the not-
    2  for-profit corporation law is amended, and five  new  subparagraphs  19,
    3  20, 21, 22 and 23, are added to read as follows:
    4    (6)  "Director"  means  any  member of the governing board of a corpo-
    5  ration, whether designated as director, trustee, manager,  governor,  or
    6  by  any  other title. The term "board" means "board of directors" OR ANY
    7  OTHER BODY CONSTITUTING A "GOVERNING BOARD" AS DEFINED IN THIS SECTION.
    8    (19) AN "AFFILIATE" OF A CORPORATION MEANS ANY ENTITY  CONTROLLED  BY,
    9  IN CONTROL OF, OR UNDER COMMON CONTROL WITH SUCH CORPORATION.
   10    (20)  "INDEPENDENT DIRECTOR" MEANS A DIRECTOR WHO: (I) IS NOT, AND HAS
   11  NOT BEEN WITHIN THE LAST THREE YEARS, AN EMPLOYEE OF THE CORPORATION  OR
   12  AN AFFILIATE OF THE CORPORATION, AND DOES NOT HAVE A RELATIVE WHO IS, OR
   13  HAS  BEEN WITHIN THE LAST THREE YEARS, A KEY EMPLOYEE OF THE CORPORATION
   14  OR AN AFFILIATE OF THE CORPORATION; (II) HAS NOT RECEIVED, AND DOES  NOT
   15  HAVE A RELATIVE WHO HAS RECEIVED, IN ANY OF THE LAST THREE FISCAL YEARS,
   16  MORE  THAN  TEN  THOUSAND DOLLARS IN DIRECT COMPENSATION FROM THE CORPO-
   17  RATION OR AN AFFILIATE OF THE CORPORATION (OTHER THAN REIMBURSEMENT  FOR
   18  EXPENSES  REASONABLY  INCURRED  AS A DIRECTOR OR REASONABLE COMPENSATION
   19  FOR SERVICE AS A DIRECTOR AS PERMITTED BY PARAGRAPH (A) OF  SECTION  202
   20  (GENERAL AND SPECIAL POWERS)); AND (III) IS NOT A CURRENT EMPLOYEE OF OR
   21  HAVE  A  SUBSTANTIAL FINANCIAL INTEREST IN, AND DOES NOT HAVE A RELATIVE
   22  WHO IS A CURRENT OFFICER OF OR HAS A SUBSTANTIAL FINANCIAL INTEREST  IN,
   23  ANY  ENTITY  THAT  HAS  MADE PAYMENTS TO, OR RECEIVED PAYMENTS FROM, THE

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD10820-01-3
       A. 7338                             2

    1  CORPORATION OR AN AFFILIATE OF THE CORPORATION FOR PROPERTY OR  SERVICES
    2  IN  AN  AMOUNT WHICH, IN ANY OF THE LAST THREE FISCAL YEARS, EXCEEDS THE
    3  LESSER OF TWENTY-FIVE THOUSAND DOLLARS OR TWO PERCENT OF  SUCH  ENTITY'S
    4  CONSOLIDATED  GROSS  REVENUES.    FOR  PURPOSES  OF  THIS  SUBPARAGRAPH,
    5  "PAYMENT" DOES NOT INCLUDE CHARITABLE CONTRIBUTIONS.
    6    (21) "RELATIVE" OF AN INDIVIDUAL MEANS THE (I) SPOUSE, DOMESTIC  PART-
    7  NER  AS  DEFINED  BY  SECTION  TWENTY-EIGHT HUNDRED FIVE-Q OF THE PUBLIC
    8  HEALTH LAW, CHILD, GRANDCHILD, BROTHER OR SISTER (WHETHER BY THE  WHOLE-
    9  OR  HALF-BLOOD) OF THE INDIVIDUAL; AND (II) THE SPOUSE OR DOMESTIC PART-
   10  NER OF A CHILD, GRANDCHILD, BROTHER OR SISTER (WHETHER BY THE WHOLE-  OR
   11  HALF-BLOOD) OF THE INDIVIDUAL.
   12    (22)  "KEY EMPLOYEE" MEANS ANY PERSON WHO IS IN A POSITION TO EXERCISE
   13  SUBSTANTIAL INFLUENCE OVER THE AFFAIRS OF THE CORPORATION, AS REFERENCED
   14  IN  26  U.S.C.  S4958(F)(1)(A)  AND  FURTHER  SPECIFIED  IN  26  CFR   S
   15  53.4958-3(C) AND (D), OR SUCCEEDING PROVISIONS.
   16    (23) "TOTAL COMPENSATION" MEANS: (I) ANY COMPENSATION, WHETHER PAID OR
   17  ACCRUED,  BY  OR  ON  BEHALF  OF THE CORPORATION OR ANY AFFILIATE OF THE
   18  CORPORATION FOR SERVICES RENDERED TO, ON BEHALF OF, OR AT THE REQUEST OF
   19  THE CORPORATION,  INCLUDING  BUT  NOT  LIMITED  TO  SALARY,  BONUS,  AND
   20  DEFERRED  COMPENSATION;  AND  (II)  ANY  BENEFIT  HAVING  MONETARY VALUE
   21  PROVIDED BY OR ON BEHALF OF THE CORPORATION  OR  ANY  AFFILIATE  OF  THE
   22  CORPORATION,  INCLUDING  BUT  NOT  LIMITED TO HOUSING ALLOWANCES, LIVING
   23  EXPENSES,  PERQUISITES,  FRINGE  BENEFITS,  EMPLOYER  CONTRIBUTIONS   TO
   24  DEFINED CONTRIBUTION RETIREMENT PLANS AND OTHER RETIREMENT BENEFITS.
   25    S  2.  The  not-for-profit  corporation law is amended by adding a new
   26  section 712-a to read as follows:
   27  S 712-A. EXECUTIVE COMPENSATION OVERSIGHT.
   28    (A) NO CORPORATION SHALL PAY TOTAL COMPENSATION  TO  ANY  EMPLOYEE  IN
   29  EXCESS  OF THAT WHICH IS FAIR, REASONABLE AND COMMENSURATE WITH SERVICES
   30  PROVIDED TO THE CORPORATION.
   31    (B) THE BOARD OR A DESIGNATED  COMPENSATION  COMMITTEE  OF  THE  BOARD
   32  COMPRISED  SOLELY  OF  INDEPENDENT  DIRECTORS OF ANY CORPORATION THAT IS
   33  REQUIRED TO REGISTER WITH THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A  OF
   34  THE  EXECUTIVE  LAW SHALL REVIEW AND APPROVE THE TOTAL COMPENSATION PAID
   35  TO THE PRINCIPAL EXECUTIVE OFFICER OF  THE  CORPORATION,  AND  DETERMINE
   36  THAT  SUCH  COMPENSATION IS NOT IN EXCESS OF THAT WHICH IS FAIR, REASON-
   37  ABLE AND COMMENSURATE WITH SERVICES PROVIDED TO THE CORPORATION.
   38    (C) IF, IN THE PRIOR FISCAL YEAR, ANY CORPORATION THAT IS REQUIRED  TO
   39  REGISTER  WITH  THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A OF THE EXECU-
   40  TIVE LAW HAD, OR IN THE CURRENT FISCAL YEAR REASONABLY EXPECTS TO  HAVE,
   41  ANNUAL  REVENUES  IN  EXCESS OF TWO MILLION DOLLARS, THE BOARD OR DESIG-
   42  NATED COMPENSATION COMMITTEE OF THE BOARD COMPRISED SOLELY OF  INDEPEND-
   43  ENT  DIRECTORS SHALL, IN ADDITION TO THOSE DUTIES SET FORTH IN PARAGRAPH
   44  (B) OF THIS SECTION:
   45    (1) REVIEW THE TOTAL COMPENSATION PAID TO THE CORPORATION'S  TOP  FIVE
   46  HIGHEST  COMPENSATED  EMPLOYEES  WHO  ARE  OFFICERS OR KEY EMPLOYEES AND
   47  WHOSE COMPENSATION EXCEEDS ONE HUNDRED FIFTY THOUSAND DOLLARS,  OR  SUCH
   48  GREATER AMOUNT AS THE ATTORNEY GENERAL MAY SET BY REGULATION;
   49    (2) DETERMINE THAT THE TOTAL COMPENSATION PAID TO ANY SUCH EMPLOYEE IS
   50  NOT  IN  EXCESS  OF THAT WHICH IS FAIR, REASONABLE AND COMMENSURATE WITH
   51  SERVICES PROVIDED TO THE CORPORATION.  IN MAKING THIS DETERMINATION, THE
   52  BOARD, OR COMPENSATION  COMMITTEE,  SHALL  AT  A  MINIMUM  CONSIDER  THE
   53  FOLLOWING  FACTORS:  (I) THE TOTAL COMPENSATION PROVIDED TO THE EMPLOYEE
   54  BY THE CORPORATION AND ALL AFFILIATES OF THE CORPORATION; (II)  RELEVANT
   55  DATA  ON  THE  TOTAL COMPENSATION PAID TO INDIVIDUALS SERVING IN SIMILAR
   56  POSITIONS AT CORPORATIONS OF SIMILAR SIZE,  TYPE,  PURPOSE,  AND  SCOPE;
       A. 7338                             3

    1  (III)  THE EMPLOYEE'S QUALIFICATIONS AND PERFORMANCE; AND (IV) THE OVER-
    2  ALL FINANCIAL CONDITION OF THE CORPORATION;
    3    (3)  MAKE  AND  KEEP  A  CONTEMPORANEOUS WRITTEN RECORD DESCRIBING THE
    4  BASIS FOR SUCH DETERMINATION; AND
    5    (4) APPROVE BY NOT LESS THAN A MAJORITY VOTE  THE  TOTAL  COMPENSATION
    6  PAID TO EACH SUCH EMPLOYEE.
    7    (D) ANY REVIEW AND APPROVAL REQUIRED BY PARAGRAPHS (B) AND (C) OF THIS
    8  SECTION  SHALL  OCCUR  WHENEVER  THE  TERM OF EMPLOYMENT, IF ANY, OF THE
    9  EMPLOYEE IS RENEWED OR EXTENDED, AND WHENEVER SUCH COMPENSATION IS MATE-
   10  RIALLY CHANGED. IF A CORPORATION CONTROLS ONE OR MORE CORPORATIONS,  THE
   11  BOARD  OR  COMPENSATION  COMMITTEE  OF  THE  CONTROLLING CORPORATION MAY
   12  CONDUCT SUCH REVIEW AND APPROVAL ON  BEHALF  OF  ANY  CONTROLLED  CORPO-
   13  RATION.
   14    (E)  IF  THE  BOARD  OR  COMPENSATION COMMITTEE RETAINS A COMPENSATION
   15  CONSULTANT TO ASSIST IN THE PERFORMANCE OF  ITS  RESPONSIBILITIES,  SUCH
   16  CONSULTANT SHALL REPORT DIRECTLY TO THE BOARD OR COMPENSATION COMMITTEE.
   17  THE  BOARD  OR  COMPENSATION COMMITTEE SHALL BE DIRECTLY RESPONSIBLE FOR
   18  THE APPOINTMENT, COMPENSATION AND OVERSIGHT OF THE WORK OF SUCH CONSULT-
   19  ANT, AND SHALL APPROVE THE COMPENSATION PEER GROUP THAT THE COMPENSATION
   20  CONSULTANT RECOMMENDS BE USED TO DEVELOP COMPARABLE DATA.
   21    (1) PRIOR TO RETAINING ANY SUCH CONSULTANT, THE BOARD OR  COMPENSATION
   22  COMMITTEE  SHALL DETERMINE THAT THE CONSULTANT IS INDEPENDENT AND QUALI-
   23  FIED TO RENDER ADVICE CONCERNING COMPENSATION; PROVIDED THAT NO CONSULT-
   24  ANT MAY BE DETERMINED INDEPENDENT IF SUCH CONSULTANT OR  ANY  FIRM  THAT
   25  EMPLOYS  SUCH  CONSULTANT  HAS  (A)  RECEIVED DIRECTLY OR INDIRECTLY ANY
   26  PAYMENT, FEE OR OTHER COMPENSATION FROM THE CORPORATION OR ANY AFFILIATE
   27  OF THE CORPORATION WITHIN THE PRECEDING TWO YEARS, OTHER THAN REASONABLE
   28  AMOUNTS PAID FOR COMPENSATION CONSULTING SERVICES, OR (B)  ANY  BUSINESS
   29  OR  PERSONAL  RELATIONSHIP  WITH THE CORPORATION OR ANY AFFILIATE OF THE
   30  CORPORATION, OR ANY OF THEIR OFFICERS, DIRECTORS, TRUSTEES,  OR  EMPLOY-
   31  EES,  THAT  MAY  INTERFERE WITH THE ABILITY OF THE CONSULTANT TO PROVIDE
   32  OBJECTIVE ADVICE TO THE BOARD OR COMPENSATION COMMITTEE.
   33    (2) NOTHING IN THIS PARAGRAPH SHALL BE CONSTRUED TO REQUIRE THE  BOARD
   34  OR  COMPENSATION  COMMITTEE  TO  IMPLEMENT  OR ACT CONSISTENTLY WITH ANY
   35  RECOMMENDATIONS PROVIDED BY THE COMPENSATION CONSULTANT; OR  AFFECT  THE
   36  ABILITY  OR OBLIGATION OF MEMBERS OF THE BOARD OR COMPENSATION COMMITTEE
   37  TO EXERCISE THEIR OWN JUDGMENT IN FULFILLMENT OF  THEIR  DUTIES  TO  THE
   38  CORPORATION,  INCLUDING  THOSE DUTIES PRESCRIBED BY SECTION 717 (DUTY OF
   39  DIRECTORS AND OFFICERS).
   40    (F) ONLY INDEPENDENT DIRECTORS MAY  PARTICIPATE  IN  DELIBERATIONS  OR
   41  VOTING RELATING TO MATTERS SET FORTH IN THIS SECTION.
   42    S  3.  The  estates,  powers and trusts law is amended by adding a new
   43  section 8-1.9 to read as follows:
   44  S 8-1.9 TRUST GOVERNANCE
   45    (A) FOR PURPOSES OF THIS SECTION:
   46    (1) A "TRUST" MEANS A TRUST CREATED SOLELY FOR CHARITABLE PURPOSES, OR
   47  A TRUST THAT CONTINUES SOLELY FOR SUCH PURPOSES AFTER ALL NON-CHARITABLE
   48  INTERESTS HAVE TERMINATED.
   49    (2) "CHARITABLE PURPOSE" MEANS ANY RELIGIOUS, CHARITABLE,  EDUCATIONAL
   50  OR BENEVOLENT PURPOSE.
   51    (3)  "KEY  EMPLOYEE" MEANS ANY PERSON WHO HAS RESPONSIBILITIES, POWERS
   52  OR INFLUENCE OVER THE  TRUST  SIMILAR  TO  THOSE  OF  AN  OFFICER  OF  A
   53  NOT-FOR-PROFIT  CORPORATION,  OR  IS OTHERWISE IN A POSITION TO EXERCISE
   54  SUBSTANTIAL INFLUENCE OVER THE AFFAIRS OF THE TRUST, AS REFERENCED IN 26
   55  U.S.C. S4958(F)(1)(A) AND FURTHER SPECIFIED IN 26 CFR S53.4958-3(C)  AND
   56  (D), OR SUCCEEDING PROVISIONS.
       A. 7338                             4

    1    (4)  AN  "AFFILIATE"  OF  A  TRUST  MEANS ANY ENTITY CONTROLLED BY, IN
    2  CONTROL OF, OR UNDER COMMON CONTROL WITH SUCH TRUST.
    3    (5) "INDEPENDENT TRUSTEE" MEANS A TRUSTEE WHO: (I) IS NOT, AND HAS NOT
    4  BEEN  WITHIN THE LAST THREE YEARS, AN EMPLOYEE OF THE TRUST OR AN AFFIL-
    5  IATE OF THE TRUST, AND DOES NOT HAVE A RELATIVE  WHO  IS,  OR  HAS  BEEN
    6  WITHIN THE LAST THREE YEARS, A KEY EMPLOYEE OF THE TRUST OR AN AFFILIATE
    7  OF  THE  TRUST;  (II) HAS NOT RECEIVED, AND DOES NOT HAVE A RELATIVE WHO
    8  HAS RECEIVED, IN ANY OF THE LAST THREE FISCAL YEARS, MORE THAN TEN THOU-
    9  SAND DOLLARS IN DIRECT COMPENSATION FROM THE TRUST OR  AN  AFFILIATE  OF
   10  THE TRUST (OTHER THAN REIMBURSEMENT FOR EXPENSES OR THE PAYMENT OF TRUS-
   11  TEE  COMMISSIONS  AS PERMITTED BY LAW AND THE GOVERNING INSTRUMENT); AND
   12  (III) IS NOT A CURRENT EMPLOYEE  OF  OR  HAVE  A  SUBSTANTIAL  FINANCIAL
   13  INTEREST IN, AND DOES NOT HAVE A RELATIVE WHO IS A CURRENT OFFICER OF OR
   14  HAVE  A  SUBSTANTIAL  FINANCIAL  INTEREST  IN,  ANY ENTITY THAT HAS MADE
   15  PAYMENTS TO, OR RECEIVED PAYMENTS FROM, THE TRUST OR AN AFFILIATE OF THE
   16  TRUST FOR PROPERTY OR SERVICES IN AN AMOUNT WHICH, IN ANY  OF  THE  LAST
   17  THREE  FISCAL  YEARS, EXCEEDS THE LESSER OF TWENTY-FIVE THOUSAND DOLLARS
   18  OR TWO  PERCENT  OF  SUCH  ENTITY'S  CONSOLIDATED  GROSS  REVENUES.  FOR
   19  PURPOSES  OF  THIS  SUBPARAGRAPH,  "PAYMENT" DOES NOT INCLUDE CHARITABLE
   20  CONTRIBUTIONS.
   21    (B)(1) FOR PURPOSES OF THIS  PARAGRAPH,  "TOTAL  COMPENSATION"  MEANS:
   22  (A)  ANY  COMPENSATION,  WHETHER PAID OR ACCRUED, BY OR ON BEHALF OF THE
   23  TRUST OR ANY AFFILIATE OF THE TRUST FOR SERVICES RENDERED TO, ON  BEHALF
   24  OF, OR AT THE REQUEST OF THE TRUST OR AN AFFILIATE OF THE TRUST, INCLUD-
   25  ING BUT NOT LIMITED TO SALARY, BONUS, AND DEFERRED COMPENSATION; AND (B)
   26  ANY  BENEFIT HAVING MONETARY VALUE PROVIDED BY OR ON BEHALF OF THE TRUST
   27  OR ANY AFFILIATE OF THE TRUST, INCLUDING BUT NOT LIMITED TO  HOUSING  OR
   28  VEHICLE  ALLOWANCES,  LIVING  EXPENSES,  PERQUISITES,  FRINGE  BENEFITS,
   29  EMPLOYER CONTRIBUTIONS TO  DEFINED  CONTRIBUTION  RETIREMENT  PLANS  AND
   30  OTHER RETIREMENT BENEFITS.
   31    (2) NO TRUST SHALL PAY TOTAL COMPENSATION TO ANY EMPLOYEE IN EXCESS OF
   32  THAT  WHICH  IS FAIR, REASONABLE AND COMMENSURATE WITH SERVICES PROVIDED
   33  TO THE TRUST.
   34    (3) THE TRUSTEES OR A DESIGNATED COMPENSATION COMMITTEE CONSISTING  OF
   35  ONE OR MORE INDEPENDENT TRUSTEES OF ANY TRUST THAT IS REQUIRED TO REGIS-
   36  TER WITH THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A OF THE EXECUTIVE LAW
   37  SHALL  REVIEW  AND  APPROVE THE TOTAL COMPENSATION PAID TO THE PRINCIPAL
   38  EXECUTIVE OFFICER OF THE TRUST, AND DETERMINE THAT SUCH COMPENSATION  IS
   39  NOT  IN  EXCESS  OF THAT WHICH IS FAIR, REASONABLE AND COMMENSURATE WITH
   40  SERVICES PROVIDED TO THE TRUST.
   41    (4) IF, IN THE PRIOR FISCAL YEAR, ANY TRUST THAT IS REQUIRED TO REGIS-
   42  TER WITH THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A OF THE EXECUTIVE LAW
   43  HAD, OR IN THE CURRENT FISCAL YEAR REASONABLY EXPECTS  TO  HAVE,  ANNUAL
   44  REVENUES  IN  EXCESS  OF TWO MILLION DOLLARS, THE TRUSTEES OR DESIGNATED
   45  COMPENSATION COMMITTEE CONSISTING OF ONE OR  MORE  INDEPENDENT  TRUSTEES
   46  SHALL,  IN  ADDITION  TO THOSE DUTIES SET FORTH IN SUBPARAGRAPH THREE OF
   47  THIS PARAGRAPH:
   48    (A) REVIEW THE TOTAL COMPENSATION PAID TO THE TRUST'S TOP FIVE HIGHEST
   49  COMPENSATED EMPLOYEES WHO  ARE  OFFICERS  OR  KEY  EMPLOYEES  AND  WHOSE
   50  COMPENSATION EXCEEDS ONE HUNDRED FIFTY THOUSAND DOLLARS, OR SUCH GREATER
   51  AMOUNT AS THE ATTORNEY GENERAL MAY SET BY REGULATION;
   52    (B) DETERMINE THAT THE TOTAL COMPENSATION PAID TO ANY SUCH EMPLOYEE IS
   53  NOT  IN  EXCESS  OF THAT WHICH IS FAIR, REASONABLE AND COMMENSURATE WITH
   54  SERVICES PROVIDED TO THE TRUST. IN MAKING THIS DETERMINATION, THE  TRUS-
   55  TEES OR COMPENSATION COMMITTEE SHALL AT A MINIMUM CONSIDER THE FOLLOWING
   56  FACTORS:  (I)  THE  TOTAL  COMPENSATION  PROVIDED TO THE EMPLOYEE BY THE
       A. 7338                             5

    1  TRUST AND ALL AFFILIATES OF THE TRUST; (II) RELEVANT DATA ON  THE  TOTAL
    2  COMPENSATION  PAID TO INDIVIDUALS SERVING IN SIMILAR POSITIONS AT TRUSTS
    3  OR CORPORATIONS OF SIMILAR SIZE, TYPE,  PURPOSE  AND  SCOPE;  (III)  THE
    4  EMPLOYEE'S  QUALIFICATIONS  AND PERFORMANCE; AND (IV) THE OVERALL FINAN-
    5  CIAL CONDITION OF THE TRUST;
    6    (C) MAKE AND KEEP A  CONTEMPORANEOUS  WRITTEN  RECORD  DESCRIBING  THE
    7  BASIS FOR SUCH DETERMINATION; AND
    8    (D)  APPROVE  BY  NOT LESS THAN A MAJORITY VOTE THE TOTAL COMPENSATION
    9  PAID TO EACH SUCH EMPLOYEE.
   10    (5) ANY REVIEW AND APPROVAL REQUIRED BY SUBPARAGRAPHS THREE  AND  FOUR
   11  OF  THIS  PARAGRAPH SHALL OCCUR WHENEVER THE TERM OF EMPLOYMENT, IF ANY,
   12  OF THE EMPLOYEE IS RENEWED OR EXTENDED, AND WHENEVER  SUCH  COMPENSATION
   13  IS  MATERIALLY CHANGED. IF A TRUST IS UNDER THE CONTROL OF ANOTHER TRUST
   14  OR A CORPORATION, THE TRUSTEES OR COMPENSATION COMMITTEE OF THE CONTROL-
   15  LING TRUST, OR THE BOARD OR DESIGNATED  COMPENSATION  COMMITTEE  OF  THE
   16  BOARD OF THE CONTROLLING CORPORATION, MAY PERFORM THE DUTIES REQUIRED BY
   17  THIS PARAGRAPH.
   18    (6)  IF  A  COMPENSATION  CONSULTANT  IS  RETAINED  BY THE TRUSTEES OR
   19  COMPENSATION COMMITTEE TO ASSIST IN THE PERFORMANCE OF  THEIR  RESPONSI-
   20  BILITIES,  SUCH  CONSULTANT  SHALL  REPORT  DIRECTLY  TO THE TRUSTEES OR
   21  COMPENSATION COMMITTEE. THE TRUSTEES OR COMPENSATION COMMITTEE SHALL  BE
   22  DIRECTLY  RESPONSIBLE FOR THE APPOINTMENT, COMPENSATION AND OVERSIGHT OF
   23  THE WORK OF SUCH CONSULTANT, AND SHALL  APPROVE  THE  COMPENSATION  PEER
   24  GROUP  THAT  THE  COMPENSATION  CONSULTANT RECOMMENDS BE USED TO DEVELOP
   25  COMPARABLE DATA.
   26    (A) PRIOR TO RETAINING ANY SUCH CONSULTANT, THE  TRUSTEES  OR  COMPEN-
   27  SATION  COMMITTEE SHALL DETERMINE THAT THE CONSULTANT IS INDEPENDENT AND
   28  QUALIFIED TO RENDER ADVICE CONCERNING  COMPENSATION;  PROVIDED  THAT  NO
   29  CONSULTANT  MAY BE DETERMINED INDEPENDENT IF SUCH CONSULTANT OR ANY FIRM
   30  THAT EMPLOYS SUCH CONSULTANT HAS (I) RECEIVED DIRECTLY OR INDIRECTLY ANY
   31  PAYMENT, FEE OR OTHER COMPENSATION FROM THE TRUST OR  ANY  AFFILIATE  OF
   32  THE  TRUST WITHIN THE PRECEDING TWO YEARS, OTHER THAN REASONABLE AMOUNTS
   33  PAID FOR COMPENSATION CONSULTING  SERVICES,  OR  (II)  ANY  BUSINESS  OR
   34  PERSONAL  RELATIONSHIP  WITH THE TRUST OR ANY AFFILIATE OF THE TRUST, OR
   35  ANY OF THEIR OFFICERS, DIRECTORS, TRUSTEES OR EMPLOYEES, THAT MAY INTER-
   36  FERE WITH THE ABILITY OF THE CONSULTANT TO PROVIDE OBJECTIVE  ADVICE  TO
   37  THE TRUSTEES OR COMPENSATION COMMITTEE.
   38    (B)  NOTHING  IN  THIS  SUBPARAGRAPH SHALL BE CONSTRUED TO REQUIRE THE
   39  TRUSTEES OR COMPENSATION COMMITTEE TO IMPLEMENT OR ACT CONSISTENTLY WITH
   40  ANY RECOMMENDATIONS PROVIDED BY THE COMPENSATION CONSULTANT;  OR  AFFECT
   41  THE ABILITY OR OBLIGATION OF THE TRUSTEES TO EXERCISE THEIR OWN JUDGMENT
   42  IN FULFILLMENT OF THEIR DUTIES TO THE TRUST AND ITS BENEFICIARIES.
   43    (7)  ONLY  INDEPENDENT  TRUSTEES  MAY  PARTICIPATE IN DELIBERATIONS OR
   44  VOTING RELATING TO MATTERS SET FORTH IN THIS SECTION.
   45    S 4. This act shall take effect January 1, 2014, provided that section
   46  two of this act and paragraph (b)  of  section  8-1.9  of  the  estates,
   47  powers and trusts law as added by section three of this act shall not be
   48  applicable  until  January 1, 2015 for any corporation or trust that had
   49  annual revenues of less than 10,000,000 dollars in the last fiscal  year
   50  ending prior to January 1, 2014.
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