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 […]
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As reported in Part 3 of our 2014 End of Year Plan Sponsor “To Do” List, employers that sponsor deferred compensation programs should take action to ensure that deferral elections that apply to compensation that will be earned in 2015 are made by December 31, 2014. As a general rule, Section 409A requires that compensation […]
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Institutional Shareholder Services Inc. (“ISS”), a leading proxy advisory firm, recently proposed a new “scorecard” approach to evaluating public company equity plans (the “Equity Plan Scorecard”). Under the new approach, ISS will recommend a “for” or “against” vote based on a company’s Equity Plan Scorecard. Pursuant to the proposal, a company’s Equity Plan Scorecard score […]
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Institutional Shareholder Services Inc. (“ISS”), a leading proxy advisory firm, recently launched a new data verification portal to assist it in verifying the information it uses in evaluating public company equity compensation plans. Public companies that file their proxy statements after September 8, 2014 (and that have an equity plan proposal on their proxy ballot), […]
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The IRS recently announced a Section 409A compliance initiative project. The IRS audit project will focus on approximately 50 employers, all of whom were previously identified for employment tax audits. The IRS indicated that it will focus its examination on: (i) initial deferral elections; (ii) subsequent deferral elections; (iii) distributions; and (iv) application of the […]
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Many start-up companies reward their employees with restricted stock subject to time-based (or performance-based) vesting restrictions. What we sometimes find is that the start-up company and the employee do not fully appreciate the tax implications of a restricted stock award and the potential benefits of a timely filed Section 83(b) election. Section 83 of the […]
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The IRS recently released final regulations (“Final Regulations”) clarifying the conditions that constitute a substantial risk of forfeiture for purposes of Section 83 of the Internal Revenue Code. As some of you know, Section 83 generally provides that property transferred in connection with the performance of services will be not be taxed until the date […]
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As some of you know, Section 409A of the Code contains a very helpful exception for “short-term deferrals.” More specifically, Section 409A provides that a payment will not be considered “nonqualified deferred compensation” if the employer makes payment to the employee no later than the 15th day of the third month following the end of […]
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As reported in Part 1 of our End of Year Plan Sponsor “To Do” Lists, Section 162(m) of the Internal Revenue Code limits the deduction a public company may take for compensation payable to “covered employees” to $1,000,000 per year. “Performance-based compensation” that meets the requirements of Section 162(m) is not subject to this limitation. […]
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