Proxy advisory firms Institutional Shareholder Services (“ISS”) and Glass Lewis (“GL”) each published their annual policy updates for 2023, which updates made certain changes relating to executive compensation.[1] As a general matter, the changes are incremental to the existing policies and do not significantly change the rubric by which ISS and GL review compensation programs. … Continue Reading
In September 2022, Deputy Attorney General Lisa Monaco delivered remarks unveiling the Department of Justice’s revised corporate crime guidance to “prioritize and prosecute corporate crime.” She reiterated that the number one priority for the DOJ is “individual accountability.” To that end, Monaco emphasized that the DOJ will “reward” companies that claw back compensation from executives … Continue Reading
You do not need a Lexis or Westlaw subscription to know that major cases and significant judgments have sometimes hinged on the meaning of a single word, or the placement of a single Oxford comma. We have a recent case to add to the list: Weinberg v. Waystar, Inc., et al., which was an executive … Continue Reading
Terminating a CEO “for cause” requires that the board of directors (“Board”) of the employer focus on two questions – What is the applicable standard for cause? Do the facts and circumstances satisfy this applicable standard? The consequences of a “for cause” termination can be severe, with the former executive forfeiting equity awards, having to … Continue Reading
As discussed here, the IRS’s initial interpretation of a new excise tax under Section 4960 of the Internal Revenue Code could catch for-profit employers who set up foundations, trusts, PACs, and other tax-exempt entities off guard. The tax is 21% of certain compensation paid to the top five highest paid employees of the tax-exempt entity. … Continue Reading
The Department of the Treasury and the Internal Revenue Service recently released Notice 2019-09 (the “Notice”), which provides interim guidance under Section 4960 of the Internal Revenue Code. Section 4960 was added to the Internal Revenue Code as part of the tax reform legislation that was enacted on December 22, 2017. Very generally, Section 4960 … Continue Reading
The Internal Revenue Service (the “IRS”) has issued Notice 2017-75 (the “Notice”), which provides certain limited relief from the strict requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), in order to pay income taxes on deferrals attributable to services performed before 2009 that are required to be included … Continue Reading
As we have previously reported (see here and here), bills to expand the scope of Section 162(m) and/or to narrow or eliminate the exceptions under Section 162(m) have been proposed in recent years, but have not become law. Recently, a new coalition named “Take On Wall Street” that is comprised of lawmakers (including Senator Elizabeth … Continue Reading
The Dodd-Frank Wall Street Reform and Consumer Protection Act became law on July 21, 2010, introducing a variety of executive compensation-related regulations, including with respect to shareholder say-on-pay voting and independence requirements for members of the compensation committees and their advisers. Almost five years following the enactment of the Dodd Frank Act, the rules enacting … Continue Reading
Earlier this month, the Office of Chief Counsel of the Internal Revenue Service released a Memorandum clarifying the impact of a correction of a Code Section 409A operational failure before the date of vesting of nonqualified deferred compensation but during the year of vesting. In the Chief Counsel Memorandum, the IRS clarified that such a correction, … Continue Reading
Proxy advisory firms Institutional Shareholder Services, or ISS, and Glass Lewis released their 2015 executive compensation proxy voting updates that may be particularly relevant for public companies that intend to submit new or amended equity compensation plans for stockholder approval in the coming proxy season. Overall, the updated guidelines suggest that ISS and Glass Lewis … Continue Reading
On June 10, 2014, the IRS issued Revenue Ruling 2014-18, which holds that nonqualified stock options, as well as stock-settled stock appreciation rights (SARs), do not constitute nonqualified deferred compensation subject to taxation under Code Section 457A as long as they are exempt from the requirements of Code Section 409A. This ruling reaffirms interim guidance … Continue Reading
On February 26, 2014, U.S. Congressman Dave Camp released a comprehensive tax reform proposal that includes several provisions intended to limit or restrict executive compensation. Congressman Camp’s proposal includes the elimination of tax deductions for commission payments and qualified performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”); … Continue Reading
Companies that compensate their employees with annual or long-term awards of restricted property such as restricted stock grants should take note of the final regulations relating to property transferred in connection with the performance of services under Internal Revenue Code Section 83 issued by the Internal Revenue Service on February 25, 2014 (the “Final Regulations”). These … Continue Reading
In early August, U.S. Senators Jack Reed and Richard Blumenthal introduced the “Stop Subsidizing Multimillion Dollar Corporate Bonuses Act” (S. 1476) in the U.S. Senate. The proposed bill would significantly expand the scope of Section 162(m) of the Internal Revenue Code. Section 162(m) currently limits the deductibility of compensation paid in excess of $1 million … Continue Reading
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