On April 21, 2017, the Trump Administration issued Executive Order 13789, which instructed the IRS to review all “significant tax regulations” issued on or after January 1, 2016 to identify as targets for modification, rescission or delayed effectiveness any regulations that (i) impose an undue financial burden on U.S. taxpayers; (ii) add undue complexity to the Federal tax laws; or (iii) exceed the statutory authority of the IRS. Having completed this review, earlier this month,…
Employees today are increasingly mobile and companies that grant equity or have deferred compensation programs are faced with complex withholding and reporting requirements in the various states. Employees who move between states before a taxable event occurs with respect to their equity or deferred compensation are often subject to tax in both their state of residence and states where they provided services, but no longer reside (i.e., states where they are considered a nonresident). States…
Companies preparing CEO pay ratio disclosure for the 2018 proxy season should not assume they will be able to rely on the Privacy Exemption with regard to gathering information about non-US employees. For a summary of the key provisions of the SEC’s final CEO pay ratio disclosure rule and the limited exemptions provided for non-US employees, see Baker McKenzie’s recent client alert. Invoking these exceptions will likely be difficult in practice. Companies should, however, generally be…
The state of Oregon recently enacted Oregon Administrative Rule (OAR) §441-035-0300, a new state “Blue Sky” securities law that makes it easier for an employer that is not publicly traded in the US to grant equity awards to its employees residing in Oregon. Background A company that is not publicly traded in the US — generally, a company whose stock is not registered under the Securities Act of 1933, such as US private companies or…
Last year the Department of Labor (DOL) finalized new disability claims procedure rules, effective January 1, 2018, to add more procedural safeguards and provide claimants access to more information. Covered Plans The new rules are not limited to disability plans. They apply to all ERISA welfare and pension plans that provide benefits based on a finding of disability (e.g., vesting or payment under pension, 401(k), and top hat plans or life insurance plans that require…
A recent Delaware Court of Chancery decision builds on prior case law and provides useful insight for companies seeking to establish an effective director compensation limit in order to avoid expensive stockholder litigation. In the case, In Re Investors Bancorp, Inc. Stockholder Litigation (2017 BL 111738, Del. Ch., No. 12327-VCS, 4/5/17), plaintiff stockholders claimed that directors breached their fiduciary duties by awarding themselves “grossly excessive compensation” under a plan that, though approved by stockholders, included…
The IRS recently issued guidance in Rev. Proc. 2017-28 addressing special rules that apply when employers seek a refund of FICA (social security and Medicare) taxes. This new guidance serves as a reminder to employers that special processes should be followed when seeking a refund of FICA taxes. Background As background, recall that FICA taxes are imposed on both the employer and the employee — half is paid directly by the employer and the other…
The establishment of prudent processes is a fundamental element of appropriately discharging fiduciary duties under ERISA. Where a committee acts as the primary plan fiduciary, a written committee charter will typically form the basis for all committee operations. The committee charter effectively provides the “by-laws” and operating guidelines that will govern how the committee discharges its obligations. The Charter’s Role Charters will typically address how committee members will be appointed and replaced, term limits, quorum,…
Many companies that are taking their stock plans out for shareholder approval this proxy season to replenish their share reserve are also amending their plans to accommodate recent changes in law, governance practices and new developments, such as the recent change that FASB adopted to the accounting rules for share-based awards (ASC 718) allowing withholding of shares to satisfy tax withholding rates at a rate higher than the minimum tax withholding rate without triggering liability…
In the world of comp lawyers, this is the time of year when every day’s to do list includes a review of one or more (sometimes, many more) equity award agreements in need of an annual update. In view of recent events in the world of plaintiff shareholders, one of the areas we’re homing in on this year is the award agreement’s tax withholding provision and its level of discretion around whether or not shares will be withheld for taxes.