There will also be penalties for companies that have at least 50 full-time employees and some of them them opt to use the public exchanges instead of company-provided insurance.
Some new lawsuits are focusing on language in the statute that says subsidies are available for qualified individuals who purchase insurance through an exchange “established by the state.” Because many states did not create their own exchange but instead opted for the federally run exchange, these lawsuits claim that the statute precludes individuals who purchase insurance through a federally run exchange from receiving subsidies.
If the lawsuits are successful, it’s likely that fewer employees will opt to use federally run exchanges and therefore less likely that employers would be subject to penalties.
Many companies are using health-care reform as a catalyst to review and redesign their health-care programs in order to slow rising costs. For example, Akin Gump notes, UPS recently announced it is eliminating coverage for employee spouses who have other available coverage, and next year Trader Joe’s and Home Depot are dropping health insurance for part-time workers and steering them toward the state insurance exchanges.
6. Determine whether the CEO and board chair positions should be separated.
During the 2013 proxy season, calls for an independent board chair were the second-most-frequent shareholder proposals submitted to companies. Even though JPMorgan Chase managed to win highly publicized battles in each of the last two years against activists seeking to separate the posts, currently held by Jamie Dimon, board leadership structure will likely continue to be a top priority for activists in 2014, Akin Gump says.
7. Ensure appropriate board composition in light of increasing focus on director tenure and diversity.
Public-company boards are having difficulty refreshing their ranks. According to the latest Spencer Stuart Board Index, the boards of S&P 500 companies elected 339 new independent board members this past proxy season, down 11 percent from five years ago and 14 percent from 10 years ago. Last year they elected just 291 new directors, the smallest number in more than a decade.
Low director turnover is drawing the attention of activist investors and governance advocates who question whether aging boards are keeping pace with the rapid technological advances and other new challenges companies face, Akin Gump writes. Critics also charge that the limited availability of new board seats hampers opportunities for achieving greater racial and gender diversity on boards and compromises board oversight, since long-serving directors are more likely to align with management.
Recent academic research lends some credence to the critics’ position. According to one study, the value of companies rises as the average tenure of outside board members increases to nine years, after which company value begins to decline.