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Pillsbury Executive Compensation Update, Spring/Summer 2013 (PDF)

"[N]ew tax laws enacted in 2012 require the design and purpose of current and future deferred compensation to be reviewed. Further, as companies become more global, it has become necessary to understand how foreign laws may impact these arrangements.... [This publication] explore[s] new developments regarding global stock plans compliance issues, and the legislative impact on the taxation of stock options and other forms of equity compensation, as well as how the 2012 tax law makes deferred compensation a more attractive benefit."

Pillsbury Law Firm Requests IRS Clarification of Foreign Investment Reporting Rules for Pension Plans (PDF)

3 pages. Excerpt: In order to diversify their investments, many U.S. qualified retirement plans invest a portion of their trust assets in foreign investment funds. In past years, it has generally been assumed that these investments are not reportable on [the Report of Foreign Bank and Financial Accounts, or 'FBAR'], as long as the plan has a minority interest in the fund. In October 2008, however, the IRS added language to the FBAR instructions stating that 'financial accounts' reportable on FBAR include mutual funds. We understand that certain IRS officials are taking the position that the term 'mutual funds,' for this purpose, includes offshore hedge funds and private equity funds. We believe that this reading is overly broad.

Executive Order Seeks to Limit Stock Buy Backs and Executive Compensation for Underperforming Defense Contractors

"[EO 14372] directs the Secretary to ensure contracts and contract renewals executed after March 8, 2026, contain a new clause aligned with the EO. Contractors subject to the new clause must have executive incentive compensation plans that reward on time deliveries and investments in production capacity rather than achievement of short-term financial metrics. If the DoW determines ... that a contractor does not sufficiently prioritize, invest in or establish acceptable production rates, contractor compensation and executive incentive plans will be scrutinized."

New Year, New Benefits: Trump Accounts Offer a New Opportunity for Employer-Sponsored Benefits

"Trump Accounts present a meaningful new benefits opportunity for employers through tax-free employer contributions under Section 128 and pre-tax employee contributions through Section 125 cafeteria plans. Although Trump Accounts cannot receive contributions before July 4, 2026, employers interested in the benefit can begin evaluating budget considerations, program design, trustee coordination and nondiscrimination rules."

From Paychecks to Perks: Navigating New OBBBA Rules on Compensation

"While many of these changes only become effective in 2026, proactive employers should begin planning now to address these changes, communicating these changes to employees and modifying plan documents and pay practices to accommodate these changes.... [A table] summarizes the key compensation and benefits provisions of the OBBBA and provides practical guidance to employers for implementing the OBBBA's mandates."

Equity Compensation Primer: ISOs v. NSOs

"Many early-stage companies give employees, consultants, advisors, board members and other service providers an opportunity to own a stake in the company through the grant of compensatory stock options.... This article explains why companies grant options to service providers and summarizes the key differences between the two types of options: incentive stock options (ISOs) and non-qualified stock options (NSOs)."

DOL Withdraws 2022 Crypto Guidance: What It Means for 401(k) Plan Fiduciaries

"The [DOL's] withdrawal of its 2022 crypto guidance signals a significant policy shift, but fiduciary obligations under [ERISA] remain unchanged. Plan fiduciaries should anticipate renewed participant interest in crypto, despite continued regulatory uncertainty and operational hurdles."

IRS Eases Form 1095-C Burden for Employers

"While the PBRA and ERIA provide some relief for employers, there are a few remaining unknowns that may make implementation of the PBRA method complicated for employers deciding how to meet the Form 1095 obligations for the 2024 plan year."

IRS Proposes New Rules to Implement Expanded $1 Million Limit on Deductible Pay

"The proposed regulations provide clarity on the application of the deduction limit to a broader group of covered employees. Notably, 'covered employee' was formerly limited to five executive officers, plus former covered executive officers. Under the expanded definition, the next five highest-compensated employees are included, even if they are not executive officers, do not work directly for the publicly held corporation, or were employed for only part of the year."

DOL Expands Investment Advice Subject to Fiduciary Liability

"Plan sponsors should review their services agreements and reach out to their financial services providers to ensure that they come into compliance with the new rule, including full disclosure of any potential conflicts of interest. Plan sponsors should also monitor requests for employee data and other communications between their service providers and their employees and other plan participants -- in particular, communications sent out when an employee is retiring or otherwise separating from service or a participant becomes eligible to take a distribution of benefits for any other reason."

DOL Ups Its Game on Cybersecurity Program Oversight, Begins Audits

"In light of the DOL's cybersecurity audit initiative, employers and fiduciaries should act now to ... [1] Review internal cybersecurity programs ... [2] Analyze service providers' cybersecurity programs and update service contracts ... [3] Review participant messaging around cybersecurity awareness and the importance of monitoring retirement plan accounts."

Year-End Stimulus Bill Permits Extension of FFCRA Leave

"Covered employers are permitted to extend partially paid FFCRA leave and to claim a payroll tax credit for qualifying leave taken through March 31, 2021. FFCRA rights expire on December 31, 2020, for employees of covered companies who do not voluntarily elect to extend the benefits. Employers must still accommodate employees with disabilities and comply with employee protections mandated by state and local laws."

Legal Considerations When an Employee Dies

"When an employee dies -- regardless of the cause -- employers often want to immediately help the employee's family financially in their time of grief, but a number of administrative, legal, and tax-related issues must be considered before an employer pays final compensation and benefits to the beneficiaries or estate of the deceased employee."

Finding the Proper Balance of Legal and Consulting Advice for Compensation Committees

"[1] Making room for advisors inside and outside the boardroom.... [2] Going beyond benchmarking and peer group practice.... [3] Advance modeling of disclosures."

IRS Issues FAQs and Form 7200 for Advance Payment of COVID-19 Employer Tax Credits

"The IRS has issued FAQs regarding the tax credits for the sick and family leave and employee retention tax credits which provide guidance on eligibility and instructions for claiming the credits. The guidance sets forth the information employers should collect and retain to substantiate eligibility for the qualified sick and family leave tax credits. The IRS has issued Form 7200 to allow qualifying employers to file in advance to receive the refundable tax credits for qualified sick and family leave and the employee retention tax credit."

ERISA Class Claims Shifted to Defined Benefit Plans in 2019

"[S]ponsors of defined benefit plans should be wary of adding mandatory arbitration provisions to their plan documents.... [A]n individual participant's arbitration proceeding alleging a fiduciary breach ... could affect the entire plan even in the absence of a class action -- fiduciaries would be subject to the mostly unappealable decision of an arbitrator without the benefit of the more limited exposure otherwise available with individual arbitration."

Reducing Exposure to 401(k) Plan Class Action Litigation

"If the board of directors adopts a 401(k) plan, the plan document does not name the company plan sponsor as a named fiduciary but instead names, for example, a benefits committee (comprising subject matter expert employees), and the board exercises no discretion regarding the membership of the committee, the administration of the plan or its investments, then the board has best positioned itself to argue that it is not a plan fiduciary subject to a claim of a breach of fiduciary duties. Not only that, but it has prudently set into motion the best governance practices for the plan."

The State of Play on Clawbacks and Forfeitures Based on Misconduct

"[B]ecause implementation of the proposed Dodd-Frank clawback rules may never be finalized, companies are beginning to implement or update executive compensation recoupment and forfeiture rules on their own based on investor sentiment, good governance principles, and recent events at CBS (and other #MeToo moments), Nissan, Equifax and other examples of supervisory failure."

IRS Issues Partial Guidance on Repeal of Performance-Based Exception in Section 162(m)

"[Notice 2018-68] offers a question that concludes that if a plan permits amendments at any time that eliminate future earning credits, only the account balance credited as of November 2, 2017 is grandfathered. Any later earnings on these amounts are not grandfathered, unless that right to earnings is expressly reserved. But this cannot be the correct conclusion."

A New Era in Compensatory Equity Offerings?

"The elimination of the comment period means that the SEC did not issue any guidance (transition or otherwise) on the practical implications of the amendment to Rule 701(e). However, the SEC's release provides that, if the effective date of the final rule ... occurs during an issuer's ongoing 12-month testing period, the issuer may rely on the increased $10 million disclosure threshold immediately."