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Corporate Counsel Connect collection

March 2015 edition

E-mail use during non-work time; Assessing public corruption risk; New ISS and Glass Lewis executive compensation guidelines

E-mail use during non-work time

According to a recent National Labor Relations Board (NLRB) decision, employers must allow employees with access to the employer's e-mail system to use that e-mail during non-work time to communicate with each other about workplace issues, including union organizing.

In Purple Communications, Inc., the NLRB explicitly overruled its Register Guard decision which relied too heavily on the use of employers' property rights in equipment and ignored the fact that e-mail has become an important means of workplace communication. Notably, the Purple Communications decision does not:

  • Limit an employer's ability to impose uniform and consistently enforced controls that are necessary to the efficient functioning of the e-mail system, including limits on audio/video files and the size of e-mail attachments.
  • Prevent employers from banning non-work use of their e-mail system if the employer can show that special circumstances make the ban necessary to maintain production or discipline.
  • Require employers to provide non-work e-mail access to employees who do not have work access.
  • Apply to e-mail access by non-employees or to other forms of electronic communication.

Employers should:

  • Review their electronic communications policies to ensure compliance with the law. For example, blanket bans on the use of work e-mail for non-work purposes are now presumptively unlawful.
  • Notify employees that there is no expectation of privacy when using the employer's e-mail system, even for non-work purposes.
  • Ensure that any restrictions (such as size limits for e-mail attachments) are necessary for the effective operation of the e-mail system and are consistently applied and enforced.
  • Ensure that monitoring and disciplinary actions do not discriminate against the exercise of Section 7 rights.
  • Train supervisors and managers to recognize that the use of work e-mail, including to communicate about workplace issues and to complain about the supervisors themselves, is permitted during non-work time.

For more information on key issues employers should consider when monitoring employee e-mail use, see Practice Note, Electronic Workplace Monitoring and Surveillance.

Assessing public corruption risk

US companies doing business abroad and foreign companies conducting business in the US should review the reports recently published by Transparency International (TI) and the Organisation for Economic Co-operation and Development (OECD) to help minimize the risk of violating the Foreign Corrupt Practices Act of 1977 (FCPA) and international anti-corruption laws.

TI's Corruption Perceptions Index (Index) annually scores and ranks countries according to perceived degrees of public corruption. The Index focuses on perceptions of corruption, rather than facts or data from corruption cases. Companies can use the 2014 Index to:

  • Evaluate a specific opportunity's risk of being tainted by bribery or corruption.
  • Draft location-based guidelines for seeking and engaging in business opportunities.

The OECD's Foreign Bribery Report (Report) summarizes the 427 foreign bribery cases that have been concluded since the OECD's Anti-Bribery Convention came into force. The Report describes patterns that emerged from the cases, for example:

  • Intermediaries were used in three out of four cases, including:
    • agents in 41% of cases (for example, local sales and marketing agents); and
    • corporate vehicles in 35% of cases (for example, subsidiary companies).
  • Management- or chief executive-level employees either authorized or were aware of the bribery in over half of the cases.
  • More than half of the companies that self-reported bribery to enforcement authorities became aware of the conduct through:
    • internal audits; or
    • acquisition due diligence.
  • Foreign bribery cases were resolved by settlement in 69% of cases.

Companies should analyze the Index and the Report to help inform their FCPA compliance and anti-corruption policies, as well as to assess the risk of specific business opportunities.

For resources to assist counsel in complying with anti-bribery and corruption laws and regulations, see the Bribery and Corruption Toolkit.

New ISS and Glass Lewis executive compensation guidelines

Public companies planning to adopt or amend equity plans before their upcoming annual meetings should review the new ISS and Glass Lewis proxy voting guidelines on executive compensation.

The most significant update for 2015 is ISS's new Equity Plan Scorecard for evaluating equity incentive plan proposals. ISS will consider a range of positive and negative factors in the following three categories, with each category assigned a different weight:

  • Plan cost. This is the total estimated cost of the equity plans relative to industry and market cap peers, measured by the company's estimated shareholder value transfer compared to peers.
  • Plan features. These include:
    • automatic single-trigger award vesting on a change in control;
    • discretionary vesting authority; and
    • minimum vesting period for grants.
  • Grant practices. These include:
    • the company's three-year burn rate relative to industry and market cap peers;
    • vesting requirements in most recent CEO equity grants and the proportion of those grants subject to performance conditions;
    • any company clawback policy; and
    • any post-exercise or post-vesting shareholding requirements.

ISS will recommend against a plan proposal if this analysis indicates that the plan is not in shareholders' interests, or if any of the following would apply:

  • Awards may vest under a liberal change in control definition.
  • The plan would allow repricing or cash buyouts of underwater options without shareholder approval.
  • The plan is a vehicle for problematic pay practices or a pay for performance disconnect.

Glass Lewis has updated its analysis of awards granted outside of existing incentive programs and added another focus area in reviewing say on pay proposals.

For a summary of the key corporate governance policy updates, see Corporate Governance & Capital Markets: ISS and Glass Lewis 2015 Proxy Voting Guidelines.

For more on ISS's and Glass Lewis's 2015 guidelines, see Legal updates, ISS Releases 2015 Proxy Voting Guideline Updates and Glass Lewis Releases 2015 Proxy Guidelines .

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