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Victor Flores

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On December 15, 20211, the Securities and Exchange Commission (“SEC”) issued proposed rules that would significantly impact Rule 10b5-1 trading plans. Among other things, the proposed rules impose new conditions on the availability of the affirmative defense to insider trading afforded by 10b5-1 plans, require quarterly disclosure of the adoption, modification and termination of trading plans by directors, officers and issuers and require identification of transactions made pursuant to such plans on Forms 4 and…

On Nov. 29, 2021, the staff of the U.S. Securities and Exchange Commission (SEC)’s Office of the Chief Accountant and the Division of Corporation Finance released Staff Accounting Bulletin No. 120 (SAB 120), which is effective immediately and provides guidance on how to properly recognize and disclose the compensation cost for “spring-loaded” awards made to executives of public companies subject to reporting requirements under US securities laws. SAB 120 describes spring-loaded awards as share-based compensation…

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…

In recent years, some companies have started offering their stock-based awards to more of their “rank and file” employees or have made one-time or periodic, broad-based grants in connection with special occasions. In addition, many private emerging growth companies, which tend to make grants to their general employee population, have also started granting RSUs instead of options to their employees as the company gets closer to an initial public offering. If you fall within this…

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…