senate Bill S5197

2013-2014 Legislative Session

Relates to the oversight of executive compensation and to trust governance

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to corporations, authorities and commissions
May 14, 2013 referred to corporations, authorities and commissions

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S5197 - Bill Details

See Assembly Version of this Bill:
A7338
Current Committee:
Senate Corporations, Authorities And Commissions
Law Section:
Not-for-Profit Corporation Law
Laws Affected:
Amd §102, add §712-a, N-PC L; add §8-1.9, EPT L

S5197 - Bill Texts

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

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BILL NUMBER:S5197

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 Genera]
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, 2014.

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

                                  5197

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 14, 2013
                               ___________

Introduced by Sens. MARCELLINO, RANZENHOFER -- (at request of the Attor-
  ney General) -- read twice and ordered printed, and when printed to be
  committed  to  the  Committee on Corporations, Authorities and Commis-
  sions

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:

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

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

S. 5197                             2

ANY ENTITY THAT HAS MADE PAYMENTS TO, OR  RECEIVED  PAYMENTS  FROM,  THE
CORPORATION  OR AN AFFILIATE OF THE CORPORATION FOR PROPERTY OR SERVICES
IN AN AMOUNT WHICH, IN ANY OF THE LAST THREE FISCAL YEARS,  EXCEEDS  THE
LESSER  OF  TWENTY-FIVE THOUSAND DOLLARS OR TWO PERCENT OF SUCH ENTITY'S
CONSOLIDATED  GROSS  REVENUES.    FOR  PURPOSES  OF  THIS  SUBPARAGRAPH,
"PAYMENT" DOES NOT INCLUDE CHARITABLE CONTRIBUTIONS.
  (21)  "RELATIVE" OF AN INDIVIDUAL MEANS THE (I) SPOUSE, DOMESTIC PART-
NER AS DEFINED BY SECTION TWENTY-EIGHT  HUNDRED  FIVE-Q  OF  THE  PUBLIC
HEALTH  LAW, CHILD, GRANDCHILD, BROTHER OR SISTER (WHETHER BY THE WHOLE-
OR HALF-BLOOD) OF THE INDIVIDUAL; AND (II) THE SPOUSE OR DOMESTIC  PART-
NER  OF A CHILD, GRANDCHILD, BROTHER OR SISTER (WHETHER BY THE WHOLE- OR
HALF-BLOOD) OF THE INDIVIDUAL.
  (22) "KEY EMPLOYEE" MEANS ANY PERSON WHO IS IN A POSITION TO  EXERCISE
SUBSTANTIAL INFLUENCE OVER THE AFFAIRS OF THE CORPORATION, AS REFERENCED
IN   26  U.S.C.  S4958(F)(1)(A)  AND  FURTHER  SPECIFIED  IN  26  CFR  S
53.4958-3(C) AND (D), OR SUCCEEDING PROVISIONS.
  (23) "TOTAL COMPENSATION" MEANS: (I) ANY COMPENSATION, WHETHER PAID OR
ACCRUED, BY OR ON BEHALF OF THE CORPORATION  OR  ANY  AFFILIATE  OF  THE
CORPORATION FOR SERVICES RENDERED TO, ON BEHALF OF, OR AT THE REQUEST OF
THE  CORPORATION,  INCLUDING  BUT  NOT  LIMITED  TO  SALARY,  BONUS, AND
DEFERRED COMPENSATION;  AND  (II)  ANY  BENEFIT  HAVING  MONETARY  VALUE
PROVIDED  BY  OR  ON  BEHALF  OF THE CORPORATION OR ANY AFFILIATE OF THE
CORPORATION, INCLUDING BUT NOT LIMITED  TO  HOUSING  ALLOWANCES,  LIVING
EXPENSES,   PERQUISITES,  FRINGE  BENEFITS,  EMPLOYER  CONTRIBUTIONS  TO
DEFINED CONTRIBUTION RETIREMENT PLANS AND OTHER RETIREMENT BENEFITS.
  S 2. The not-for-profit corporation law is amended  by  adding  a  new
section 712-a to read as follows:
S 712-A. EXECUTIVE COMPENSATION OVERSIGHT.
  (A)  NO  CORPORATION  SHALL  PAY TOTAL COMPENSATION TO ANY EMPLOYEE IN
EXCESS OF THAT WHICH IS FAIR, REASONABLE AND COMMENSURATE WITH  SERVICES
PROVIDED TO THE CORPORATION.
  (B)  THE  BOARD  OR  A  DESIGNATED COMPENSATION COMMITTEE OF THE BOARD
COMPRISED SOLELY OF INDEPENDENT DIRECTORS OF  ANY  CORPORATION  THAT  IS
REQUIRED  TO REGISTER WITH THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A OF
THE EXECUTIVE LAW SHALL REVIEW AND APPROVE THE TOTAL  COMPENSATION  PAID
TO  THE  PRINCIPAL  EXECUTIVE  OFFICER OF THE CORPORATION, AND DETERMINE
THAT SUCH COMPENSATION IS NOT IN EXCESS OF THAT WHICH IS  FAIR,  REASON-
ABLE AND COMMENSURATE WITH SERVICES PROVIDED TO THE CORPORATION.
  (C)  IF, IN THE PRIOR FISCAL YEAR, ANY CORPORATION THAT IS REQUIRED TO
REGISTER WITH THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A OF  THE  EXECU-
TIVE  LAW HAD, OR IN THE CURRENT FISCAL YEAR REASONABLY EXPECTS TO HAVE,
ANNUAL REVENUES IN EXCESS OF TWO MILLION DOLLARS, THE  BOARD  OR  DESIG-
NATED  COMPENSATION COMMITTEE OF THE BOARD COMPRISED SOLELY OF INDEPEND-
ENT DIRECTORS SHALL, IN ADDITION TO THOSE DUTIES SET FORTH IN  PARAGRAPH
(B) OF THIS SECTION:
  (1)  REVIEW  THE TOTAL COMPENSATION PAID TO THE CORPORATION'S TOP FIVE
HIGHEST COMPENSATED EMPLOYEES WHO ARE  OFFICERS  OR  KEY  EMPLOYEES  AND
WHOSE  COMPENSATION  EXCEEDS ONE HUNDRED FIFTY THOUSAND DOLLARS, OR SUCH
GREATER AMOUNT AS THE ATTORNEY GENERAL MAY SET BY REGULATION;
  (2) DETERMINE THAT THE TOTAL COMPENSATION PAID TO ANY SUCH EMPLOYEE IS
NOT IN EXCESS OF THAT WHICH IS FAIR, REASONABLE  AND  COMMENSURATE  WITH
SERVICES PROVIDED TO THE CORPORATION.  IN MAKING THIS DETERMINATION, THE
BOARD,  OR  COMPENSATION  COMMITTEE,  SHALL  AT  A  MINIMUM CONSIDER THE
FOLLOWING FACTORS: (I) THE TOTAL COMPENSATION PROVIDED TO  THE  EMPLOYEE
BY  THE CORPORATION AND ALL AFFILIATES OF THE CORPORATION; (II) RELEVANT
DATA ON THE TOTAL COMPENSATION PAID TO INDIVIDUALS  SERVING  IN  SIMILAR

S. 5197                             3

POSITIONS  AT  CORPORATIONS  OF  SIMILAR SIZE, TYPE, PURPOSE, AND SCOPE;
(III) THE EMPLOYEE'S QUALIFICATIONS AND PERFORMANCE; AND (IV) THE  OVER-
ALL FINANCIAL CONDITION OF THE CORPORATION;
  (3)  MAKE  AND  KEEP  A  CONTEMPORANEOUS WRITTEN RECORD DESCRIBING THE
BASIS FOR SUCH DETERMINATION; AND
  (4) APPROVE BY NOT LESS THAN A MAJORITY VOTE  THE  TOTAL  COMPENSATION
PAID TO EACH SUCH EMPLOYEE.
  (D) ANY REVIEW AND APPROVAL REQUIRED BY PARAGRAPHS (B) AND (C) OF THIS
SECTION  SHALL  OCCUR  WHENEVER  THE  TERM OF EMPLOYMENT, IF ANY, OF THE
EMPLOYEE IS RENEWED OR EXTENDED, AND WHENEVER SUCH COMPENSATION IS MATE-
RIALLY CHANGED. IF A CORPORATION CONTROLS ONE OR MORE CORPORATIONS,  THE
BOARD  OR  COMPENSATION  COMMITTEE  OF  THE  CONTROLLING CORPORATION MAY
CONDUCT SUCH REVIEW AND APPROVAL ON  BEHALF  OF  ANY  CONTROLLED  CORPO-
RATION.
  (E)  IF  THE  BOARD  OR  COMPENSATION COMMITTEE RETAINS A COMPENSATION
CONSULTANT TO ASSIST IN THE PERFORMANCE OF  ITS  RESPONSIBILITIES,  SUCH
CONSULTANT SHALL REPORT DIRECTLY TO THE BOARD OR COMPENSATION COMMITTEE.
THE  BOARD  OR  COMPENSATION COMMITTEE SHALL BE DIRECTLY RESPONSIBLE FOR
THE APPOINTMENT, COMPENSATION AND OVERSIGHT OF THE WORK OF SUCH CONSULT-
ANT, AND SHALL APPROVE THE COMPENSATION PEER GROUP THAT THE COMPENSATION
CONSULTANT RECOMMENDS BE USED TO DEVELOP COMPARABLE DATA.
  (1) PRIOR TO RETAINING ANY SUCH CONSULTANT, THE BOARD OR  COMPENSATION
COMMITTEE  SHALL DETERMINE THAT THE CONSULTANT IS INDEPENDENT AND QUALI-
FIED TO RENDER ADVICE CONCERNING COMPENSATION; PROVIDED THAT NO CONSULT-
ANT MAY BE DETERMINED INDEPENDENT IF SUCH CONSULTANT OR  ANY  FIRM  THAT
EMPLOYS  SUCH  CONSULTANT  HAS  (A)  RECEIVED DIRECTLY OR INDIRECTLY ANY
PAYMENT, FEE OR OTHER COMPENSATION FROM THE CORPORATION OR ANY AFFILIATE
OF THE CORPORATION WITHIN THE PRECEDING TWO YEARS, OTHER THAN REASONABLE
AMOUNTS PAID FOR COMPENSATION CONSULTING SERVICES, OR (B)  ANY  BUSINESS
OR  PERSONAL  RELATIONSHIP  WITH THE CORPORATION OR ANY AFFILIATE OF THE
CORPORATION, OR ANY OF THEIR OFFICERS, DIRECTORS, TRUSTEES,  OR  EMPLOY-
EES,  THAT  MAY  INTERFERE WITH THE ABILITY OF THE CONSULTANT TO PROVIDE
OBJECTIVE ADVICE TO THE BOARD OR COMPENSATION COMMITTEE.
  (2) NOTHING IN THIS PARAGRAPH SHALL BE CONSTRUED TO REQUIRE THE  BOARD
OR  COMPENSATION  COMMITTEE  TO  IMPLEMENT  OR ACT CONSISTENTLY WITH ANY
RECOMMENDATIONS PROVIDED BY THE COMPENSATION CONSULTANT; OR  AFFECT  THE
ABILITY  OR OBLIGATION OF MEMBERS OF THE BOARD OR COMPENSATION COMMITTEE
TO EXERCISE THEIR OWN JUDGMENT IN FULFILLMENT OF  THEIR  DUTIES  TO  THE
CORPORATION,  INCLUDING  THOSE DUTIES PRESCRIBED BY SECTION 717 (DUTY OF
DIRECTORS AND OFFICERS).
  (F) ONLY INDEPENDENT DIRECTORS MAY  PARTICIPATE  IN  DELIBERATIONS  OR
VOTING RELATING TO MATTERS SET FORTH IN THIS SECTION.
  S  3.  The  estates,  powers and trusts law is amended by adding a new
section 8-1.9 to read as follows:
S 8-1.9 TRUST GOVERNANCE
  (A) FOR PURPOSES OF THIS SECTION:
  (1) A "TRUST" MEANS A TRUST CREATED SOLELY FOR CHARITABLE PURPOSES, OR
A TRUST THAT CONTINUES SOLELY FOR SUCH PURPOSES AFTER ALL NON-CHARITABLE
INTERESTS HAVE TERMINATED.
  (2) "CHARITABLE PURPOSE" MEANS ANY RELIGIOUS, CHARITABLE,  EDUCATIONAL
OR BENEVOLENT PURPOSE.
  (3)  "KEY  EMPLOYEE" MEANS ANY PERSON WHO HAS RESPONSIBILITIES, POWERS
OR INFLUENCE OVER THE  TRUST  SIMILAR  TO  THOSE  OF  AN  OFFICER  OF  A
NOT-FOR-PROFIT  CORPORATION,  OR  IS OTHERWISE IN A POSITION TO EXERCISE
SUBSTANTIAL INFLUENCE OVER THE AFFAIRS OF THE TRUST, AS REFERENCED IN 26

S. 5197                             4

U.S.C. S4958(F)(1)(A) AND FURTHER SPECIFIED IN 26 CFR S53.4958-3(C)  AND
(D), OR SUCCEEDING PROVISIONS.
  (4)  AN  "AFFILIATE"  OF  A  TRUST  MEANS ANY ENTITY CONTROLLED BY, IN
CONTROL OF, OR UNDER COMMON CONTROL WITH SUCH TRUST.
  (5) "INDEPENDENT TRUSTEE" MEANS A TRUSTEE WHO: (I) IS NOT, AND HAS NOT
BEEN WITHIN THE LAST THREE YEARS, AN EMPLOYEE OF THE TRUST OR AN  AFFIL-
IATE  OF  THE  TRUST,  AND  DOES NOT HAVE A RELATIVE WHO IS, OR HAS BEEN
WITHIN THE LAST THREE YEARS, A KEY EMPLOYEE OF THE TRUST OR AN AFFILIATE
OF THE TRUST; (II) HAS NOT RECEIVED, AND DOES NOT HAVE  A  RELATIVE  WHO
HAS RECEIVED, IN ANY OF THE LAST THREE FISCAL YEARS, MORE THAN TEN THOU-
SAND  DOLLARS  IN  DIRECT COMPENSATION FROM THE TRUST OR AN AFFILIATE OF
THE TRUST (OTHER THAN REIMBURSEMENT FOR EXPENSES OR THE PAYMENT OF TRUS-
TEE COMMISSIONS AS PERMITTED BY LAW AND THE GOVERNING  INSTRUMENT);  AND
(III)  IS  NOT  A  CURRENT  EMPLOYEE  OF OR HAVE A SUBSTANTIAL FINANCIAL
INTEREST IN, AND DOES NOT HAVE A RELATIVE WHO IS A CURRENT OFFICER OF OR
HAVE A SUBSTANTIAL FINANCIAL INTEREST  IN,  ANY  ENTITY  THAT  HAS  MADE
PAYMENTS TO, OR RECEIVED PAYMENTS FROM, THE TRUST OR AN AFFILIATE OF THE
TRUST  FOR  PROPERTY  OR SERVICES IN AN AMOUNT WHICH, IN ANY OF THE LAST
THREE FISCAL YEARS, EXCEEDS THE LESSER OF TWENTY-FIVE  THOUSAND  DOLLARS
OR  TWO  PERCENT  OF  SUCH  ENTITY'S  CONSOLIDATED  GROSS  REVENUES. FOR
PURPOSES OF THIS SUBPARAGRAPH, "PAYMENT"  DOES  NOT  INCLUDE  CHARITABLE
CONTRIBUTIONS.
  (B)(1)  FOR  PURPOSES  OF  THIS PARAGRAPH, "TOTAL COMPENSATION" MEANS:
(A) ANY COMPENSATION, WHETHER PAID OR ACCRUED, BY OR ON  BEHALF  OF  THE
TRUST  OR ANY AFFILIATE OF THE TRUST FOR SERVICES RENDERED TO, ON BEHALF
OF, OR AT THE REQUEST OF THE TRUST OR AN AFFILIATE OF THE TRUST, INCLUD-
ING BUT NOT LIMITED TO SALARY, BONUS, AND DEFERRED COMPENSATION; AND (B)
ANY BENEFIT HAVING MONETARY VALUE PROVIDED BY OR ON BEHALF OF THE  TRUST
OR  ANY  AFFILIATE OF THE TRUST, INCLUDING BUT NOT LIMITED TO HOUSING OR
VEHICLE  ALLOWANCES,  LIVING  EXPENSES,  PERQUISITES,  FRINGE  BENEFITS,
EMPLOYER  CONTRIBUTIONS  TO  DEFINED  CONTRIBUTION  RETIREMENT PLANS AND
OTHER RETIREMENT BENEFITS.
  (2) NO TRUST SHALL PAY TOTAL COMPENSATION TO ANY EMPLOYEE IN EXCESS OF
THAT WHICH IS FAIR, REASONABLE AND COMMENSURATE WITH  SERVICES  PROVIDED
TO THE TRUST.
  (3)  THE TRUSTEES OR A DESIGNATED COMPENSATION COMMITTEE CONSISTING OF
ONE OR MORE INDEPENDENT TRUSTEES OF ANY TRUST THAT IS REQUIRED TO REGIS-
TER WITH THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A OF THE EXECUTIVE LAW
SHALL REVIEW AND APPROVE THE TOTAL COMPENSATION PAID  TO  THE  PRINCIPAL
EXECUTIVE  OFFICER OF THE TRUST, AND DETERMINE THAT SUCH COMPENSATION IS
NOT IN EXCESS OF THAT WHICH IS FAIR, REASONABLE  AND  COMMENSURATE  WITH
SERVICES PROVIDED TO THE TRUST.
  (4) IF, IN THE PRIOR FISCAL YEAR, ANY TRUST THAT IS REQUIRED TO REGIS-
TER WITH THE ATTORNEY GENERAL UNDER ARTICLE SEVEN-A OF THE EXECUTIVE LAW
HAD,  OR  IN  THE CURRENT FISCAL YEAR REASONABLY EXPECTS TO HAVE, ANNUAL
REVENUES IN EXCESS OF TWO MILLION DOLLARS, THE  TRUSTEES  OR  DESIGNATED
COMPENSATION  COMMITTEE  CONSISTING  OF ONE OR MORE INDEPENDENT TRUSTEES
SHALL, IN ADDITION TO THOSE DUTIES SET FORTH IN  SUBPARAGRAPH  THREE  OF
THIS PARAGRAPH:
  (A) REVIEW THE TOTAL COMPENSATION PAID TO THE TRUST'S TOP FIVE HIGHEST
COMPENSATED  EMPLOYEES  WHO  ARE  OFFICERS  OR  KEY  EMPLOYEES AND WHOSE
COMPENSATION EXCEEDS ONE HUNDRED FIFTY THOUSAND DOLLARS, OR SUCH GREATER
AMOUNT AS THE ATTORNEY GENERAL MAY SET BY REGULATION;
  (B) DETERMINE THAT THE TOTAL COMPENSATION PAID TO ANY SUCH EMPLOYEE IS
NOT IN EXCESS OF THAT WHICH IS FAIR, REASONABLE  AND  COMMENSURATE  WITH
SERVICES  PROVIDED TO THE TRUST. IN MAKING THIS DETERMINATION, THE TRUS-

S. 5197                             5

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

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