Dallas Bar Association
HEADNOTES
Focus Tax Law & Employee Benefits
December 2009 Volume 33 Number 12
Kim Askew Honored With MLK Award by Mike Keliher
At the DBA Annual Meeting Nov. 6, members elected Ike Vanden Eykel (seated) as the 2010 president. Other members of the executive committee include (left to right) Barry Sorrels, president-elect; Christina Melton Crain, immediate past president; Paul K. Stafford, first vice president; Sally Crawford, second vice president; and Wesley Young, secretary/treasurer. See article on page 6.
TARP Trends By Nellie Strong
T
he rules of executive compensation are changing. With severely contracted liquidity in the global credit markets and insolvency threats to investment banks and other institutions, the United States government passed the Emergency Economic Stabilization Act of 2008 on October 3, 2008, to strengthen the financial sector. This Act established the Troubled Asset Relief Program, allowing the Department of Treasury to purchase up to $700 billion of troubled assets from financial institutions. To participate in TARP, financial institutions had to agree to comply with strict new limits on executive compensation. During the period that a financial institution participates in TARP, the following restrictions apply: (1) The financial institution’s compensation structure must exclude any incentives for its five most highly-paid executives (referred to as the “senior executive officers”) to take unnecessary and excessive risks that threaten the value of the financial institution. In addition, the compensation structure cannot encourage manipulation of the reported earnings of the financial institution to enhance the compensation of any of its employees. To satisfy these requirements, the financial institution must establish a compensation committee that reviews and evaluates the compensation structure at least every six months. The committee must also provide a narrative description of how the financial institution is meeting these requirements in the annual
Compensation Committee Report required by securities law. (2) Any bonus, retention award or incentive compensation paid to a senior executive officer and any of the next 20 most highlycompensated employees must be subject to a provision for recovery or “clawback” by the financial institution if the award was based on statements of earnings, revenues, gains or other criteria that are later found to be materially inaccurate. (3) The financial institution may not make any golden parachute payments to a senior executive officer or any of the next five most highly-compensated employees. For purposes of the Act, a golden parachute payment includes any payment to the executive upon his termination from the financial institution for any reason, or any payment due to a change of control of the financial institution. (4) The financial institution may not pay or accrue any bonus, retention award or incentive compensation to the most highlycompensated employee (and up to the 20 next most highly-compensated employees, depending on how much assistance the financial institution received). However, long-term restricted stock that does not fully vest while the financial institution participates in TARP and is not more than a third of the total amount of the executive’s annual compensation may still be granted. (5) The financial institution must adopt an excessive or luxury expenditures policy, provide this policy to the Treasury Departcontinued on page 12
Inside 8 Changing Employment? What about your 401(k) balance? 10 Reducing the Income Tax Cost of Debt Cancellations 14 Tech Toys for Lawyers
A
s the nation watched last summer, Kim Askew testified at Justice Sonia Sotomayor’s confirmation hearings. Askew, the 2010 recipient of the DBA’s Martin Luther King, Jr. Justice Award, was at the hearing representing the American Bar Association in her capacity as chair of the ABA Standing Committee on the Federal Judiciary. “That moment was an embodiment of Martin Luther King’s dream,” said Ms. Askew. “Dr. King dreamed of a society in which a Black woman raised in the segregated south might be the lawyer testifying at the hearKim Askew ing of a Hispanic woman as she was confirmed to the highest court in our country.”
The DBA MLK Justice Award
Since 1993, the Dallas Bar Association has honored local heroes whose lives inspire and reflect the values of education, religion, community, and service embodied in the sermons and speeches of Dr. Martin Luther King, Jr. While born into a segregated world, Ms. Askew’s career and achievements embody the positive ideals of the society Dr. King envisioned. “Kim Askew is a truly incredible and remarkable person,” commented Ike Vanden Eykel, DBA’s 2010 president. “She has already done more in her career than most people dream of doing in a lifetime, and she is not even close to being finished. When she speaks, people listen—and do so carefully. Ms. Askew is known across our country as a leader. That she is a role model for those who come behind her goes without saying.”
Positive Influences in Formative Years
Askew, the eldest of four girls, was born in Savannah, Georgia, when “separate but equal” was still the law of the day. Her home embraced the civil rights leader’s policy of non-violent resistance to segregation. “My parents followed the work of Dr. King, knew when he was jailed, and talked about developments of the day at the dining room table. They actively participated in the civil rights struggle. They translated Dr. King’s messages of justice, equality and peace to us as children,” stated Ms. Askew. “We heard Dr. King’s words regarding ‘living together as brothers’ throughout my childhood.” Ms. Askew’s family lived at the forefront of desegregation. They were one of the first families of color to move into a formerly segregated neighborhood. In seventh grade, Ms. Askew was bused as part of a desegregation scheme. She recalls that it was the parents, not the students, who were most hostile. The children learned to get along. Throughout these tumultuous times, Ms. Askew’s parents focused her on the importance of education and the need to excel. “My mother firmly believed that education was the great equalizer.”
Becoming a Lawyer
Ms. Askew experienced in her formative years what Dr. King referred to as the “human rights revolution.” Early on she saw that lawyers had the power to shape the lives of people and their times. Lawyers were leading advocates of civil rights in the Savannah community. Ms. Askew reflects that “Dr. King often spoke of justice. I came to understand that lawyers helped to bring about justice and I started to believe that I could make a difference as a lawyer.” She attended Knoxville College, graduating summa cum laude, and went on to Georgetown Law School. Upon graduating, she moved to Dallas to clerk for the late Judge Jerry Buchmeyer. Ms. Askew began her career with Hughes & Hill, which is now part of her continued on page 9