Earlier this year the Financial Accounting Standards Board released Accounting Standards Update No. 2016-09 (the “ASU”) to improve the accounting treatment of certain stock-based compensation payments. Among other updates, the ASU modifies the manner in which employers withhold on stock-based compensation awards. Under the current accounting rules, one requirement for favorable equity (rather than liability) […]
In a case of first impression in the Ninth Circuit, the Court held that the Booz Allen Hamilton, Inc. Stock Rights Plan (“SRP”) was not subject to ERISA because its primary purpose was not to provide deferred compensation or other retirement benefits. As background, ERISA applies to “employee welfare benefit plans” and “employee pension benefit […]
Last summer the Internal Revenue Service updated its Audit Techniques Guide (“ATG”) for nonqualified deferred compensation arrangements. While the ATG provides little instruction on how the IRS will review nonqualified deferred compensation arrangements for compliance with Section 409A of the Code, it provides a helpful reminder of some of the other rules applicable to nonqualified […]
The $1,000,000 limitation on deductions imposed by Section 162(m) of the Internal Revenue Code applies to “covered employees.” In Notice 2007-49, the IRS defined the term “covered employees” as follows: “The IRS will interpret the term “covered employee” for purposes of § 162(m) to mean any employee of the taxpayer if, as of the close of […]
Who doesn’t love a good checklist? I know I do. In the rapidly changing world of employee benefits and executive compensation law, checklists can be particularly helpful to make sure important issues don’t fall through the cracks. To help folks stay apprised of changes in the law, changes they might need to make to their […]
As explained in a prior blog post, an employee who timely files a Section 83(b) election will be taxed on the fair market value of property transferred (typically restricted stock) to him or her in exchange for services on the date of grant rather than as the stock vests. In addition, by making a Section […]
As reported in a prior blog post, public company employers that are adopting or amending equity-based compensation plans should consider adding a separate annual limit on director equity awards. In a recent Delaware Chancery Court opinion (Calma v. Templeton), the Chancery Court refused to grant the board of directors of Citrix Systems, Inc. the protection […]
On May 1, the IRS released a Chief Counsel Memorandum that clarifies the IRS’ position with respect to the correction of deferred compensation arrangements outside of the IRS’ formal Section 409A correction programs. In the Memorandum the IRS analyzed a retention bonus that was granted in year 1, vested in year 3, and to the […]
The IRS recently released final regulations clarifying two aspects of the “performance-based compensation” exception to the $1,000,000 limit on deductible compensation paid to covered employees under Section 162(m) of the Internal Revenue Code. Proposed regulations issued in 2011 provided that in order to qualify awards as “performance-based compensation” a shareholder approved equity plan must specify […]
Section 409A, the provision of the Internal Revenue Code that regulates the time and form of payment of nonqualified deferred compensation, contains a helpful exception for “short-term deferrals.” Specifically, Section 409A provides that a payment will not be considered nonqualified deferred compensation if the employer makes the payment on or prior to the 15th day […]
