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Sinead Kelly

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Amendment to Rule 701’s Enhanced Disclosure Threshold On July 18, 2018, the Securities and Exchange Commission (SEC) amended Rule 701(e) of the Securities Act of 1933, increasing from $5 million to $10 million the amount of securities that issuers may sell in reliance on Rule 701 during a 12-month period without triggering enhanced disclosure requirements. The amendment will become effective imminently upon its publication in the Federal Register. Background and Application of Rule 701’s Enhanced…

On May 11th, the staff of the SEC’s Division of Corporation Finance issued 45 Compliance and Disclosure Interpretations (CDIs), replacing previously published telephone interpretations on proxy rules and Schedule 14A. Most of the updates are non-substantive, as noted by the SEC, and therefore the updates are primarily helpful for consolidating the relevant guidance in one place. Twelve of the CDIs relate to Item 10 of Schedule 14A, which sets forth the disclosure rules when a…

The Financial Accounting Standards Board (FASB) recently approved the decision to apply ASC 718 — the accounting treatment that applies to equity awards granted to employees (and non-employee directors) — to equity awards granted to consultants and other individuals who are not employees. Applying ASC 718 to Non-Employees Previously, ASC 505-50 applied to equity awards that were granted to non employees.  Under ASC 505-50, the vesting date — rather than the grant date — is…

We have been following the progress of a number of plaintiff shareholder suits alleging Exchange Act Section 16(b) short swing profits based on “discretionary” share withholding on equity awards. Just under a year ago we were happy to report the first district court dismissal of one of these claims, although that case is currently on appeal to the Fifth Circuit. On January 26, 2018, a second such claim was thrown out via summary judgment, this…

On January 11, 2018, the IRS issued Notice 1036, which provides the percentage method tables for income tax withholding in 2018. Key developments include: The flat withholding rate on supplemental wages, such as equity awards, of $1 million dollars and under a year is now 22% – down from 25%. As anticipated, the mandatory supplemental withholding rate for compensation in excess of $1 million is now 37% – down from 39.6%. The backup withholding rate…

On December 13, 2017, the Delaware Supreme Court in In re Investors Bancorp, Inc. Stockholder Litigation issued a decision having significant ramifications on director compensation.  The case increases the risk of plaintiff stockholder claims against directors based on a breach of fiduciary duties where directors grant themselves equity awards pursuant to a plan providing the directors with general discretion to determine the amount, terms, and conditions of the awards – even if the plan includes a stockholder-approved limit in the plan on the size of the awards that may be granted to directors.

As of December 20, 2017, both the House of Representatives and the Senate have voted to approve the final version of the Tax Cuts and Jobs Act, in substantially the form released by the Conference Committee on December 15th. The bill is expected to be presented to the President for signature before Christmas, making US tax reform a reality for 2018.

U.S. tax reform continues to move through the Halls of Congress at a brisk pace. Yesterday the House approved the bill proposed by the House Ways and Means Committee. For a discussion of the compensation-related provisions of the House bill, please refer to our alert dated November 13, 2017. The current draft of the conceptual mark-up under review by the Senate Finance Committee (the “Senate Mark”) has been amended in a way that generally aligns…

If you have been following the progress of U.S. tax reform, you will know that one of the most significant proposed changes in the compensation arena is currently up in the air, with a conflict between the final bill approved last week by the House Ways and Means Committee and the conceptual mark-up now under review by the Senate Finance Committee (the “Senate Mark”). Specifically, the final House bill eliminated proposed changes that would have…

We know we are not supposed to get too excited about a proposed tax bill, but The Tax Cuts and Jobs Act, the amended version of which was released by the House on November 3, 2017, is no ordinary tax bill. Not only does it propose sweeping changes to the taxation of executive compensation and employee benefits, it aims to be effective as of January 1, 2018 – which means limited time to mobilize against…