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Sinead Kelly

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California nonresident board members of companies based in California may soon be subject to income tax in California, regardless of whether they perform services within the state, if a newly proposed tax regulation is adopted. The proposed regulation — new section 17951-8 of Title 18 of the California Code of Regulations — released by the Franchise Tax Board of California on September 24, 2020, treats the compensation of a California nonresident, non-employee director of a…

Large companies doing business in San Francisco may soon be subject to an additional tax if voters approve the so-called “Overpaid Executive Gross Receipts Tax” this coming November. Joining a minority of municipal governments that have imposed an “executive pay ratio tax” on the heels of the SEC’s CEO pay ratio disclosure rules, the San Francisco Board of Supervisors recently approved a ballot initiative for this November’s election that calls for the imposition of a…

In an apparent follow-up to its General Legal Advice Memorandum dated May 18, 2020 (GLAM 2020-004), the IRS has issued an internal procedural update that (1) extends the application of the administrative waiver of late employment tax deposit penalties for stock options to stock-settled restricted stock units (“RSUs”) and stock appreciation rights (“SARs”) and (2) shortens the waiver’s deposit period by one day to align with current SEC securities open-market transaction settlement rules. The internal…

The IRS has issued a General Legal Advice Memorandum (GLAM 2020-004) that could increase the audit risk and exposure for late deposit penalties for companies granting stock-settled restricted stock units (“RSUs”) and either (i) not making their next-day employment tax withholding deposits with the IRS within one day of when they request their transfer agent to transfer shares underlying the RSU award to the employee or (ii) not treating the fair market value of the…

Glass Lewis, a proxy advisor, recently unveiled its new Equity Compensation Model (“ECM”), which is reportedly intended to provide company issuers and investors with access to the process it uses to evaluate whether it will provide a favorable recommendation for shareholder approval of equity compensation plan proposals.  Historically, Glass Lewis has been less than transparent regarding the actual criteria and methodology it uses to make its recommendations on equity plan proposals. Companies and investors will…

The California Consumer Privacy Act (“CCPA”) takes effect on January 1, 2020 and imposes a wide range of new requirements for the collection and processing of personal data of California residents. Under the CCPA, “consumer” is defined broadly as a natural person who is a California resident. Assembly Bill 25 (“AB 25”), signed into law on October 11, 2019, provides a temporary and limited reprieve for employee data by establishing an exemption to the CCPA’s…

The Tenth Circuit has affirmed the district court’s dismissal of a plaintiff shareholder’s claim that withholding shares to satisfy taxes on a restricted stock unit (RSU) violated Exchange Act Section 16(b) (see Olagues v. Muncrief, No. 18-5018 (10th Cir. 2019)).  As we outlined last year in a blog on the lower court’s decision, the plaintiff’s claim was based on the non-exempt acquisition of shares by two executives within six months of the date that shares…

Public companies seeking shareholder approval of a new or amended equity plan on or after February 1, 2019 should consider some key updates by Institutional Shareholder Services (“ISS”) to its Equity Compensation Plans FAQs. Although the updates leave ISS’s general equity plan scorecard (“EPSC”) methodology framework intact, there are some noteworthy changes: CIC Vesting Factor. The change in control (CIC) vesting factor has been revised to provide EPSC points based on whether the company discloses the vesting treatment…

On December 7th, the IRS issued Notice 2018-97 to provide initial guidance on the new private company income inclusion deferral regime enacted under Code Section 83(i) as part of the 2017 Tax Cuts and Jobs Act (“Section 83(i)”). Under the deferral regime, eligible employees of eligible privately-held companies may elect to defer payment of federal income taxes due on exercise of stock options or settlement of restricted stock units (“RSUs”) for up to five years…

Institutional Shareholder Services (ISS) on November 21, 2018 issued “preliminary” FAQs addressing a few, but not insignificant, changes to its compensation policies for 2019.  Unfortunately, these FAQs did not provide much-anticipated guidance on performance awards, following the Tax Cuts and Jobs Act’s elimination of the “qualified performance-based compensation” exception to the general deductibility disallowance under Section 162(m) of the Internal Revenue Code for compensation exceeding $1 million payable to “covered employees” of publicly traded companies. …