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On September 27, 2023 and November 21, 2023, the Securities and Exchange Commission (SEC) issued additional Compliance & Disclosure Interpretations (CDIs) clarifying certain technical aspects of the pay versus performance (PVP) disclosure rules under Item 402(v) of Regulation S-K[1]. These CDIs are intended to supplement the CDIs covering PVP disclosure that were issued by the SEC on February 10, 2023.[2] By way of background, covered public companies must comply with the PVP disclosure rules beginning…

On August 16, 2022, President Biden signed the Inflation Reduction Act (“IRA”) into law. One of the new provisions the IRA introduced is the stock buyback excise tax under Code section 4501, which applies as of January 1, 2023 and was designed to target large corporations that implement stock buybacks. Background Code section 4501 imposes a 1% excise tax on the value of covered corporation stock that is repurchased by the covered corporation or a…

On December 14, 2022, the SEC adopted final rules amending Rule 10b5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”), which provides an affirmative defense to insider trading for trades made under a written plan adopted when not aware of material nonpublic information (“MNPI”). The final rules add several new conditions for the availability of the affirmative defense and require new quarterly and Form 4 disclosures regarding the Rule 10b5-1 trading arrangements of…

On December 16, 2022, Institutional Shareholder Services (“ISS”) released its updated FAQs on Equity Compensation Plans, which will apply to its “Equity Plan Scorecard” evaluation of equity plan proposals in shareholder meetings held on or after February 1, 2023. Under the Equity Plan Scorecard, ISS scores a proposed equity plan based on factors relating to (i) plan “cost” under a “Shareholder Value Transfer” model, (ii) plan features and (iii) company grant practices. Although the only…

In welcome news, Delaware recently amended its General Corporation Law (DGCL) to increase flexibility for delegating share award granting authority. The amendments became effective on August 1, 2022. The changes expand the elements of granting share awards that a board of directors may delegate, including, and most notably, the authority to determine the terms and conditions of the awards. If a board of directors wants to take advantage of the increased flexibility provided by the…

After months of partisan bickering and Senate inaction, Congress finally passed another round of COVID-19 relief legislation as part of the Consolidated Appropriations Act, 2021, P.L. 116-260, (“CAA”), which was signed into law on December 27, 2020. We provide a summary of the tax-related CAA provisions and key modifications to the Paycheck Protection Program (“PPP”), before discussing President Biden’s tax agenda for 2021. The CAA’s tax provisions focus primarily on providing economic relief to taxpayers…

Department of Labor (DOL) issued final regulations establishing new safe harbors for the electronic delivery of required retirement plan disclosures under ERISA. As background, retirement plan administrators must deliver required disclosures using methods that are reasonably calculated to ensure actual receipt of documents by plan participants.  Under prior guidance from 2002, the DOL created a safe harbor electronic delivery method for required disclosures. But the 2002 safe harbor is only available with respect to employees…

Now that we have had a couple of weeks to digest the IRS’s guidance in Notice 2018-68 on the Tax Cuts and Jobs Act’s (TCJA’s) amendments to Code Section 162(m), it’s a good time to take a closer look at the “grandfathering” rule. As a reminder, the TCJA (i) eliminated the “performance-based compensation” exception to Section 162(m)’s $1 million limit on the deductibility of covered employee compensation, (ii) expanded and made permanent the group of…

Almost all plan documents contain some level of administrative provisions outlining how the plan is intended to operate (e.g., number of committee members, quorum, etc.).  Plan sponsors often view these provisions as “boilerplate” with little or no meaning.  In actuality, these are substantive provisions of the plan and failure to follow those provisions can have substantial consequences. The Consequences Failure to follow the terms of the plan document is a potential qualification issue under IRS…

Join Baker McKenzie for a two-part webinar series to examine how the Tax Cuts and Jobs Act impacts compensation and benefits arrangements maintained by both public and private companies and what actions your company needs to take. PART 1: From the PRIVATE Company’s Perspective | January 9, 2018 We will discuss the provisions with the biggest impact on private companies, including the introduction of a new income tax deferral regime for options and RSUs relating to “qualified stock.” PART 2:…