Archives: Executive Compensation

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Proposed Changes to § 409a Regulations: Greater Clarity and Better Planning Alternatives

Andrew Liazos and Allison Wilkerson wrote this bylined article on Tax Code Section 409A’s deferral and payment requirements for nonqualified deferred com­pensation plans. Recent IRS Section 409A guidance makes “several helpful changes that employers will want to consider and take advantage of,” the authors wrote, and they warned employers that they ignore final IRS “at … Continue Reading

District Court Dismisses Shareholder Claim that Equity Award Share Withholding Triggers Section 16(b) Liability

A US District Court recently dismissed a claim that an insider’s election to satisfy an income tax obligation by having shares withheld from the delivery of an award constituted a non-exempt sale of shares back to the issuer for purposes of Section 16(b) of the Exchange Act, unless the share withholding was required, rather than … Continue Reading

Proposed 457(f) Regulations: Opportunities and Challenges

The 2016 proposed regulations significantly expanded 457(f) plan sponsors’ ability to permit elective deferrals, use noncompetition agreements and make larger severance payments than otherwise permitted under 409A without immediate taxation to participants. In a recent presentation, Ruth Wimer, Mary Samsa and Joseph Urwitz discuss the surprising opportunities with respect to tax-exempt and governmental entities’ “ineligible … Continue Reading

Upcoming Employee Benefits Innovators Roundtable Series!

McDermott will be holding its annual Employee Benefits Innovators Roundtable Series this month. The roundtables offer experienced benefits professionals an opportunity to discuss cutting-edge, topical employer-driven benefit programs with their peers and members of McDermott’s employee benefits team. We are meeting in four locations this year. Join us in one of the following cities: May … Continue Reading

Understanding Equal Pay Laws and Avoiding and Defending Pay Equity Claims

The federal government’s focus on pay equity and pay data, and the passage of groundbreaking equal pay laws in a number of states, has been one of the biggest employment law developments of 2016. Litigation involving pay equity claims has also risen in the past year. Given the increased focus on pay equity from these … Continue Reading

Key UK Employment Law Events in 2017 and Beyond

Current indications are that 2017 may be a fairly static year as regards to employment law. Whilst it is anticipated the government will trigger Article 50 to start Brexit negotiations, these are likely to last for at least two years, and existing employment laws are unlikely to feel any ripple effect from leaving the European … Continue Reading

Understanding Equal Pay Laws and Avoiding and Defending Pay Equity Claims

The federal government’s focus on pay equity and pay data, and the passage of groundbreaking equal pay laws in a number of states, has been one of the biggest employment law developments of 2016. Litigation involving pay equity claims has also risen in the past year. Given the increased focus on pay equity from these … Continue Reading

Proposed Changes to 409A Regulations Provide Greater Clarity and Planning Alternatives

On June 22, 2016, the Internal Revenue Service (IRS) issued proposed regulations to modify and clarify existing regulations under Section 409A of the Internal Revenue Code. The proposed changes were in response to practitioner comments and the IRS’s experience with Section 409A after the issuance of the final regulations in 2007. Overall, the proposed modifications are … Continue Reading

Section 409A Considerations in Light of Tax Rate Reform

The recent presidential election has tax professionals busy analyzing predicted (and hoped for) tax reform proposals, including the potential reduction in the top marginal rates for individuals. It is unclear whether and when rates will be reduced, and how soon thereafter rates may creep up again, but tax rate proposals invariably lead to discussions relating to … Continue Reading

A Critical Assessment of the Reporting and Disclosure Rules Applicable to Executive Compensation

On November 9, 2016 Andrew Liazos presented at the New York City Bar. He discussed innovative approaches used by public companies during the 2016 proxy season for disclosing executive compensation practices. Andrew addressed the changes in practices for disclosing director compensation in light of director pay lawsuits and CEO pay ratio disclosures that were made … Continue Reading

An Overview of the New Section 457(f) Regulations

On June 22, 2016, the Internal Revenue Service (IRS) issued proposed regulations under Section 457(f) of the Internal Revenue Code of 1986, as amended (Code). These long-awaited regulations were first previewed in IRS Notice 2007-62. In that Notice, the IRS announced its intention to issue proposed regulations that would harmonize the rules for deferred compensation plans of tax-exempt organizations (and state … Continue Reading

DOJ, FTC Issue Antitrust Guidance to Human Resources Professionals

On October 20, 2016, the United States Department of Justice Antitrust Division (DOJ) and Federal Trade Commission (FTC) issued joint Antitrust Guidance to Human Resource (HR) Professionals (the Guidance) involved in hiring and compensation decisions. The agencies issued the guidance to educate HR professionals about how the antitrust laws apply in the employment context. Read … Continue Reading

Transactions Update: Purchase Price or Compensation

Some companies have considered buying back stock from current and former employees when a liquidity event, such as a sale of the company or an IPO, is unlikely to occur. The attached presentation made by Mr. Liazos before the Executive Compensation Subcommittee of the ABA Tax Section addresses the tax issues to consider when structuring … Continue Reading

One Year Later: The Yates Memo, False Claims Act and Director & Executive Liability

On September 19 and 27, 2016, the US Department of Justice announced two False Claims Act settlements that required corporate executives to make substantial monetary payments to resolve their liability. How will director and executive liability be impacted by the Yates Memo and False Claims Act in an evolving health care climate? Read the full … Continue Reading

Section 457(f) Proposed Regulations – Not What We Expected (In a Good Way)

The very long awaited release of the new proposed regulations for Internal Revenue Code (the ‘‘Code’’) Section 457(f) plans arrived at the end of June and presents welcome and surprising new opportunities with respect to tax-exempt and governmental entities’ ‘‘ineligible nonqualified deferred compensation’’ arrangements. The Proposed Regulations present some unexpected and surprising opportunities with respect … Continue Reading

UK Employment Alert: Changes To The Taxation Of Termination Payments

The government has published its response to feedback received on its proposals to simplify the taxation of termination payments, expected to come into force in April 2018. The following table sets out the main proposals and the effect these will have on employers. Importantly, there is no change to the current £30,000 tax free allowance. … Continue Reading

Review of Section 409A Proposed Regulations

On June 22, 2016, the Internal Revenue Service (IRS) issued proposed changes to the regulations under the Internal Revenue Code (Code) §409A. The Code intends to clarify or modify a wide range of very restrictive rules pertaining to “nonqualified” deferred compensation plans as well as other types of compensation arrangements that may defer compensation. The … Continue Reading

Compensation and Proxy Litigation and the Latest Delaware Cases

The 2016 proxy season continues to illustrate that compensation issues remain at the forefront, especially where companies have activist investors. Private companies considering going public must wrestle with decreasing valuations, tax issues, stockholder litigation, and Delaware law. Litigation on compensation-related matters continues to evolve, requiring a firm grasp of Delaware law and past and current … Continue Reading

IRS Provides New 409A Guidance: New Proposed Regulations Provide Additional Clarity, Warn of Abusive Practices and Present Planning Opportunities

On June 21, 2016 the IRS issued proposed regulations to modify and clarify existing regulations under Section 409A of the Internal Revenue Code. Many of these changes resulted from practitioner comments and the IRS’ experience with Section 409A after issuing the final regulations. Overall, most of the proposed changes are favorable, and may provide some … Continue Reading

IRS Issues Regulations Affecting Compensation Arrangements at Tax-Exempt Organizations

On June 21, the IRS issued long awaited proposed regulations under Section 457 of the Internal Revenue Code that affect a broad range of compensation arrangements at tax exempt organizations. If a compensation arrangement is subject to Section 457(f), the employee is immediately taxed upon earning a vested right to receive “deferred compensation” that might … Continue Reading

IRS Regulations Provide That Certain Employees of Partnerships Now Have Self-Employment Status for Employee Benefit and Tax Purposes

The IRS and US Department of Treasury have issued final and temporary regulations which address benefit and self-employment tax issues regarding partners in a partnership which is the sole owner of a second, wholly owned legal entity. The regulations are intended to clarify that where the partners are separately working for the second legal entity, … Continue Reading

Special Executive Compensation Tax Issues in Corporate Transactions

In the corporate transactions context, it is increasingly important to be familiar with the key tax considerations relating to mergers and acquisitions, and how to minimize tax risks in such transactions. In the following presentation, Andrew Liazos, partner at McDermott Will & Emery, provides an overview of executive compensation tax issues to limit the effect of … Continue Reading

SEC Proposal on New Pay versus Performance Disclosure Rules

On April 29, 2015, the Securities and Exchange Commission (SEC), by a three-to-two vote, proposed new rules that would prescribe new mandatory pay-versus-performance disclosure. The proposed rule would include specific information showing the relationship between executive compensation ‘‘actually paid’’ and financial performance of the registrant. Click to read the full article from Pension & Benefits … Continue Reading
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