BenefitsLink logo
EmployeeBenefitsJobs logo

Subscribe to Newsletters

Search the News

Featured Jobs
Retirement Plan Compliance Director
Retirement Plan Administrator
Retirement Analyst
Search all jobs
Get the BenefitsLink app for iPhone and iPad LinkedIn

Benefits in the News > By Subject >

Executive benefits

View Recent Headlines Now Viewing Excerpts and
Recent Headlines

SEC Under Trump Slashes Rulemaking Agenda
"The list released July 20 has 33 items in the proposed and final rule stages ... Missing from the docket are proposed Dodd-Frank Act rules on the orderly liquidation of large broker-dealers and disclosure of the relationship between executive compensation and a company's financial showing, also known as pay versus performance. They were among 62 items in the pre-rule, proposed rule, and final rule stages on the fall 2016 agenda[.]" (Bloomberg BNA)
Public Company Summer/Fall To-Do List: 5 Steps Toward CEO Pay Ratio Disclosure
"[1] Form a team.... [2] Determine the message and audience.... [3] [G]ather, and process the data necessary to determine the median employee and the median employee's compensation.... [4] Decide how and where in the proxy statement to present the CEO Pay Ratio disclosure and prepare a mockup of the disclosure.... [5] Determine the corporate governance process and an appropriate timeline for completing the process." (Latham & Watkins)
Company Discretionary Offer of Voluntary Separation Agreements Did Not Create ERISA-Covered Severance Plan
"[T]he District Court found that having an administrative scheme by itself did not establish an informal ERISA-covered severance plan.... [T]he Court found that a reasonable person could not determine the class of intended beneficiaries, the intended benefits or the process to request VSA benefits. Accordingly, Quest did not create an informal ERISA plan." [Mance v. Quest Diagnostics Inc., No. 12-7361 (D.N.J. Feb. 21, 2017; unpub.)] (Jackson Lewis P.C.)
Executive Compensation: A Survey of Theory and Evidence
"[The authors] discuss evidence on the effects of executive pay, highlighting recent identification strategies, and suggest policy implications grounded in theoretical and empirical research. [This research] has two main goals.... [1] [T]ightly link the theoretical literature to the empirical evidence, and combine the insights contributed by all three views on the drivers of pay.... [2] [P]rovide a user-friendly guide to executive compensation, presenting shareholder value theories using a simple unifying model, and discussing the challenges and methodological issues with empirical research." (National Bureau of Economic Research [NBER])
Reminder on CEO Pay Ratio Disclosure for 2018
"[T]he process for a company to identify its median employee, calculate that employee's annual total compensation, calculate the pay ratio, and prepare any accompanying narrative disclosure can be a significant and time-intensive undertaking. Since a repeal or delay of the pay ratio rule appears increasingly less likely, [the authors] recommend that companies continue to prepare or, for those that have not yet started, begin the process of preparing the methodology they will use to develop their CEO pay ratio disclosure ... In addition, companies may want to consider the impact on its workforce of disclosing the compensation of the company's median employee." (Ropes & Gray LLP)
Does a High CEO Pay Ratio Harm Company Value?
"[E]ven when controlling for the portion of pay linked to stock performance, the relationship between CEO pay ratio and stock price remains strong.... [On] average, a company with a CEO-worker pay ratio at the 85th percentile has a return on assets 13% higher than that of a firm at the median." (CFO)
CEO Pay Packages See Largest Increase Since 2013
"Over the study period, a growing number of companies started granting performance-based long-term incentives (LTI) to their chief executives, reaching 81.5 percent of Equilar 500 companies in 2016. Meanwhile, the prevalence of CEOs receiving time-based stock options fell to a five-year low of 50 percent in 2016." (Society for Human Resource Management [SHRM])
SEC Commissioner Addresses Prospects for CEO Pay Ratio
"In terms of delaying effectiveness of the rule, [Commissioner Piwowar] stated that public commentary would determine whether that alternative is feasible in light of the associated costs and benefits of implementing the rule. Though the latest comment period on the rule has ended, he urged interested parties to continue to submit comment letters describing specific reasons why the rule is burdensome, as well as proposed fixes. During the latest comment period, the SEC received approximately 180 unique comments, with 150 of those comments in favor of the rule." (Dorsey)
CEO Pay Packages See Largest Increase Since 2013
"The healthcare sector reported the largest CEO pay packages in 2016 at a median $13.3 million. Median value of stock awards climbed more than 9% between 2015 and 2016, and 43% since 2012. On average, CEOs received about 32% of total reported compensation in cash, 65% in equity and 3% in other compensation in 2016." (Meridian Compensation Partners, LLC)
IRS Addresses Back-to-Back Arrangement's Failure to Comply with Section 409A
"The back-to-back arrangement involved a foreign investment fund, the ultimate service recipient (USR), and its investment manager, the intermediate service recipient (ISR). The fund and its manager were parties to a deferred compensation arrangement (the USR plan) under which the manager deferred some of its management and performance fees. The manager sponsored a deferred compensation arrangement for its employees (the ISR plan). Under the plans, the deferral elections and payment events triggering payments from the fund to the manager were coordinated with the deferral elections and payment events triggering payments from the manager to its employees. The IRS concluded that the USR plan did not meet the requirements of Section 409A." (Thomson Reuters Practical Law)
New York Appellate Court Issues Decision on Executive Compensation Order and Regs
"[T]he four-Justice majority concluded that 'limit on administrative costs and executive compensation paid for by state funds and state-authorized payments, [does not] violate the separation of powers doctrine.' In contrast, the Court said that DOH exceeded its authority by imposing the soft cap and restricting executive compensation paid from non-state dollars.... As a result, there is now a conflict between the Appellate Division's Third Department and Second Department, which previously upheld Governor Cuomo's Executive Order and DOH's implementing regulations." [LeadingAge New York, Inc. v. Shah No. 523308 (N.Y. App. Div. June 22, 2017)] (Greenberg Traurig)
An Open or Closed Section 409A Case (PDF)
"One unresolved issue that has caused significant concern among practitioners is whether a failure to timely distribute an amount of deferred compensation in a taxable year that becomes time-barred by the statute of limitations for tax assessments (a 'closed' year) continues to result in liability under Section 409A in a subsequent taxable year that is not time-barred (an 'open' year). This article briefly describes the applicable law and available guidance, illustrates the issue in an example, and provides two plausible analyses that result in dramatically divergent tax results." (Groom Law Group, via Bloomberg Law Pension & Benefits Daily)
New York Court Addresses State's Limits on Executive Compensation and Administrative Costs of State-Funded Providers
"The [New York State Appellate Division, Third Department] affirmed the decision of the court below and upheld the 'hard' cap imposed by the [Department of Health (DOH)] -- capping state dollars for executive compensation at $199,000 -- but determined that the DOH exceeded its authority with respect to the 'soft' cap -- regulating executive compensation from all sources of funding. This decision is in conflict with earlier decisions rendered by the Appellate Division, Second Department upholding the soft cap as well as the hard cap, and sets up a possible appeal to the New York State Court of Appeals." [LeadingAge New York, Inc. v. Shah No. 523308 (N.Y. App. Div. June 22, 2017)] (Cadwalader, Wickersham & Taft LLP)
[Official Guidance] Text of IRS Chief Counsel Memorandum: Application of Section 409A to Back-to-Back Arrangement (PDF)
10 pages. "Treas. Reg. Section 1.409A-3(i)(6) provides that the amount of the payment under the ultimate service recipient plan may not exceed the amount of the payment under the intermediate service recipient plan. Therefore, the USR Plan fails to meet the requirements of section 409A because the USR Plan provision providing for a payment to Taxpayer in the event of a Participant's separation from service before vesting is an impermissible payment event." [CCM 201725027, Mar. 6, 2017, published online June 23, 2017.] (Internal Revenue Service [IRS])
Proposed Changes to Section 409A Regs: Greater Clarity and Better Planning Alternatives (PDF)
"Since its inception, the IRS has issued significant guidance under Section 409A, including close to 400 pages of final regulations and a number of other notices. However, the law in this area continues to evolve, and the most recent proposed regulations provided under Section 409A are intended to clarify and modify certain issues that posed problems for employers." (McDermott Will & Emery, via The Practical Tax Lawyer)
Intricate Mix of Restricted Stock, Performance Shares, and Stock Options in LTI Vehicles
"While the rise of restricted stock/RSUs and performance shares, along with the relative decline of stock options, has been well documented for many years, ... stock options have not disappeared but are often being granted to supplement full-value awards such as restricted stock and performance shares, especially in long-term incentives (LTIs) designed for executives." (
Trump Tax Proposal Could Create Compensation-Related Opportunities
"A change in value of corporate tax deductions could, with proper tax planning, provide opportunities for substantial savings on compensation plans and arrangements. In the short term, potential savings would be possible from tax deductions on annual cash bonus payments and retirement plan contributions, while the long-term impact could involve significant changes to the structuring of compensation plans." (Skadden, Arps, Slate, Meagher & Flom LLP)
Beyond the 403(b): Things to Know About Deferred Comp for Executives of Non-Profit Organizations
"[1] First, there are two types of 457 plans: 457(b) plans and 457(f) plans.... [2] You (usually) can't roll to an IRA.... [3] The assets belong to the organization.... [4] The normal 'reasonable compensation' rules still apply.... [5] DOL notification is required." (E is for ERISA)
[Discussion] How Best to Collect FICA Due from Retiring Employee
"Client has an executive with SERP type benefit that will vest upon his upcoming retirement. As a result, he will recognize significant Medicare taxes on the present value of the future SERP benefits in 2017. (Executive is already maxed out on SS taxes for 2017, so no amount owed there.) Question: what's the best way to collect those taxes from the executive? In the month he retirees, he will only work a short portion of the month and will not net enough regular wages to cover the significant Medicare taxes due. Can he simply write a check to the employer to cover the remaining FICA taxes due? Would it be possible and better to withhold the full amount needed from pay for the month prior to the retirement month?" (BenefitsLink Message Boards)
Shareholder Proposals on Executive Compensation Decrease in 2017
"Through May 31, 2017, 330 shareholder proposals had gone to a vote. Thus far, the most common proposals have involved climate change, the environment, and sustainability. Together with proposals requiring reports on lobbying payments and policies, political contributions, holy land principles, and gender diversity and equality proposals, these 'political' proposals accounted for nearly one-half of the proposals so far. Proposals on executive compensation failed even to make the top ten." (Winston & Strawn LLP)
Why Proper Disclosure of Executive Perks Is Important (PDF)
"Between 2009 and 2014, [MDC Parners Inc.] disclosed in its proxy statements some, but not all, of the perquisites paid to [former CEO, Miles S. Nadal] and on his behalf. The estimated $11.285 million worth of perquisites that MDC failed to disclose included private aircraft usage, club memberships, cosmetic surgery, yacht- and sports car-related expenses, jewelry, charitable donations, pet care, and personal travel expenses.... The SEC not only took action against MDC as an issuer, but also against Nadal individually since his compensation was not fully disclosed.... The SEC penalties may not be MDC's or Nadal's only legal problem." (King & Spalding)
[Discussion] Tax Treatment of 'Supplemental Compensation' to Owner After Retirement
"One of the owners is retiring. The company has decided to pay him $50,000 per year for 10 years after retirement. If he dies during that time, the payments would continue to his spouse. The accountant says it will be taxable income but not subject to FICA or FUTA. Is that right?" (BenefitsLink Message Boards)
FASB Issues Helpful Guidance on Accounting for Equity-Based Compensation
"The ASU should reduce the instances that an entity is required to apply modification accounting to a share-based payment award.... The ASU streamlines the application of modification accounting by stating that when making a change to the terms or conditions of a share-based payment award, a company should apply modification accounting to the award, unless each of [three] conditions is met[.]" (Winston & Strawn LLP)
CEO Pay Disclosure: Preparing for Compliance or Hoping for a Delay?
"The final Pay Ratio Disclosure rule requires public companies in the U.S. to disclose the ratio of CEO pay to median employee pay with their 2018 proxy statements, with reporting based on fiscal year 2017 pay.... As companies consider their approach to pay ratio calculations, it's time to think through an overall strategy.... Employees generally question their pay appropriateness, so it's important for you to be prepared if they react strongly to the pay ratio and the median employee pay figure used to calculate it." (Willis Towers Watson)
[Discussion] Final DOL Rule for Disability Claims as Applied to Top Hat Plans
"I am confident that nonqualified top hat plans will need to address the final rule, specifically when disability is a payment trigger, but is the rule applicable if disability only accelerates vesting and is not a payment trigger? What if the plan only contains disability respective to the cancellation of a deferral election?" (BenefitsLink Message Boards)
How Do I Count My Performance Share Awards? Let Me Count the Ways
"[T]here are 16 different purposes for which a company must count its performance share awards, some of which are the same, but many of which are different. When a company or compensation committee awards performance shares or performance share units, the number of shares delivered to the participant generally depends upon the degree of satisfaction of the performance goals set forth in the award agreement." (Winston & Strawn LLP)
Providing Voluntary Separation Agreements to Some Employees Did Not Create an Informal ERISA Severance Plan
"A sales manager sued her former employer following her involuntary termination of employment, asserting that she was entitled to severance benefits because the employer's practice of providing voluntary separation agreements (VSAs) to some departing employees created an informal ERISA plan. But the court ruled in favor of the employer, concluding that, although there was a document outlining the employer's process for executing VSAs, without additional evidence indicating that the employer intended to create an ongoing benefit arrangement the employer's practice and the process document were not enough to create an ERISA plan." [Mance v. Quest Diagnostics Inc., No 12-7361 (D.N.J. Feb. 21, 2017)] (Thomson Reuters / EBIA)
Severance Plans and ERISA
"[Y]ou may want to make your severance plan subject to ERISA.... [I]ncentive plans generally would become subject to ERISA as an employee pension benefit plan, while severance plans generally would be subject to ERISA as employee welfare benefit plans. In fact, ERISA contains numerous advantages for the employer/plan sponsor[.]" (Winston & Strawn LLP)
2017 Executive Compensation Trends and Developments
"[The survey] and its results are intended to provide an overview of the current environment and signal the direction in which companies are moving with respect to executive compensation and corporate governance practices. This survey features responses from 118 companies across a diverse range of industries, covering topics such as annual and long-term incentive plan designs, Say on Pay, the CEO pay ratio, and more." (Meridian Compensation Partners, LLC)
SEC Charges CEO With Failing to Disclose Perks to Shareholders
"[T]he SEC's investigation found that without disclosing information to investors as required, MDC Partners paid for [the CEO's] personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery, and a wide range of other perks ... [totaling] an additional $11.285 million in perks beyond his disclosed benefits and $500,000 annual allowances. He has since resigned and returned $11.285 million to the company." (U.S. Securities and Exchange Commission [SEC])
Further Clarification on Director Independence in Litigation
"During the last five years, while plaintiffs and the Delaware courts have been expanding the litigation risks for the compensation decisions of non-employee directors, the Delaware courts also have been expanding their scrutiny of the disinterested status of directors.... [In] many (and, probably, soon to be more) of the recent cases that involve executive or director compensation, the independence of non-employee directors is at the core of many of the defendants' motions to dismiss." (Winston & Strawn LLP)
ACA Repeal and Replacement, Take Two: Impact on Stock Compensation
"The AHCA would eliminate the Net Investment Income Tax: a 3.8% Medicare surtax on investment income, including capital gains, dividends, and interest. Meanwhile, an amendment to the House bill would delay until 2023 the repeal of the Additional Medicare Tax (0.9%) on ordinary income ... Currently ... companies must withhold the 0.9% additional Medicare tax on any type of pay, including that from stock compensation ... when an employee's wages for the year are more than $200,000. While the legislation would remove that requirement, it would not do so until after 2022." (
2017 Proxy Analysis: A New Normal Meets a New Reality
"Executive pay practices settled in to a new normal in 2016, characterized by modest pay increases, continued emphasis on performance-oriented compensation, and annual and long-term incentive (LTI) plan design features and metrics consistent with those of recent years.... Overall, CEO compensation levels increased modestly, as base salary and target bonus increased 2% and 3%, respectively, consistent with the rate of increases in 2015.... Target long-term incentive values ... increased 4% in 2016, compared to 9% in 2015." (Willis Towers Watson)
[Guidance Overview] To Defer or Not to Defer? Same-Year Deferral Options under Section 409A
"[If] anticipated tax-reform efforts result in lowering individual tax rates, individuals may wish to defer 2017 income into later years.... [D]eferral elections with respect to calendar year compensation ... are generally required to be made by December 31 of the calendar year that precedes the year in which the services for such compensation are first performed. However, under certain circumstances, it is permissible under Section 409A to make an initial deferral election after the calendar year has commenced." (Morgan Lewis)
CHOICE Act Targets Fiduciary Rule, Dodd-Frank Rollback
"Passage of the CHOICE Act by the House Financial Services Committee could signal a further blow to conflict of interest regulations adopted by the Obama administration.... The legislation is sweeping and would undo or replace much of the Dodd-Frank Wall Street reforms adopted by Democrats when they held significant majorities in the wake of the 2008-09 financial crisis." (planadviser)
Anatomy of Incentive Compensation (PDF)
"The purpose of any incentive plan is to motivate employees to behave in certain ways. The key to success is to carefully identify the employees to target, the desired behavior, the best way to motivate that behavior and any constraints based on the company's situation." [The article provides a checklist of items for consideration in designing a plan and a chart of various forms of incentive compensation.] (Husch Blackwell)
IRS Ruling Underscores Need for NQDC Plans to Diligently Adhere to Special FICA Rules
"In the Chief Counsel Memorandum released earlier this year, the IRS indicated that it will not enter into closing agreements with employers that fail to subject NQDC to FICA taxes as required under the special timing rule in Section 3121(v)(2) of the tax code and the taxable years in which FICA taxation should have occurred are statutorily closed.... The application of the special timing rule in Section 3121(v)(2) is exceedingly complex, and ... it is not uncommon for employers to make mistakes." (Willis Towers Watson)
Follow-Up on Incentive Plans and ERISA
"Whether an arrangement gives rise to the 'systematic' deferral of payment to termination or beyond depends on the facts and circumstances of the arrangement. Some of the relevant circumstances for the determination are: [1] Whether [the] arrangement's design results in a high percentage of bonus payouts being made at or near recipients' retirement age; [2] Whether the employer communicates the plan to employees as an arrangement intended to provide retirement or deferred income; [3] Whether the arrangement allows for payments of unvested amounts upon employment termination; [4] The length of the payout period; and [5] Whether the bonus payments, by operation of the plan, are made to another type of retirement account such as an IRA. Federal court decisions have produced different results based on the facts of the particular case." (Winston & Strawn LLP)
Senate Confirms Jay Clayton as SEC Chairman
"Jay Clayton was approved Tuesday by the Senate to serve as chairman of the Securities and Exchange Commission. Mr. Clayton was approved by a 61-37 vote, with several Democrats supporting him. Commissioner Michael Piwowar has been serving as acting chairman since Mary Jo White departed in January." (Pensions & Investments)
Trump's Tax Reform Principles Could Affect Stock Compensation
"The proposals merely cut off the current top tax brackets, which could mean that anyone currently in the brackets between 25% and the new top bracket would get stuck paying a higher rate both on ordinary income and on short- and long-term capital gains.... Aside from the most senior executives, individuals with stock compensation tend to be in that income range." (
Could Your Incentive Plan Be Subject to ERISA?
"Many incentive or bonus plans make payments or deliver stock within 2-1/2 months after the end of the year the participant became vested in order comply with the short-term deferral exception of Code Section 409A. However, some incentive plans provide for accumulations, multi-year periods, and mandatory deferrals. These plans may unwittingly become subject to ERISA's requirements." (Winston & Strawn LLP)
Unexpected Risks of Early Exercise ISOs
"Companies that permit the grant of early exercise incentive stock options (ISOs) do so primarily to limit the impact of the alternative minimum tax (AMT). However, due to fairly counterintuitive tax regulations, structuring options in this fashion can expose optionees to negative tax consequences in the event of a disqualifying disposition. This [article] reviews the tax effects of early exercise ISOs and compares the tax results to alternate structures." (Dorsey & Whitney LLP)
[Guidance Overview] How a 'Substantial Risk of Forfeiture' Operates Under Various Kinds of Nonqualified Plans
"This practice note discusses the concept of substantial risk of forfeiture (SRF) under sections 83, 409A, 457(f), 457A, and 3121(v)(2) of the Internal Revenue Code (I.R.C.) (referred to hereafter as Section 83, Section 409A, etc.) and the different consequences of the failure to achieve a SRF under each such section. SRF is the standard that the I.R.C. and Treasury Regulations apply to determine when an employee's or an independent contractor's deferred compensation (or transfer of compensatory property) vests, and therefore (depending upon the particular I.R.C. section) may be includable in income for the individual (or deductible for the employer or other controlled group member granting the compensation)." (Venable LLP)
Total CEO Pay in U.S. Companies Rose 6% in 2016
"[T]otal pay for CEOs increased 6% in 2016, up from the 4% median increase in 2015. Total pay as reported in the Summary Compensation Table in company proxy statements includes base salary; actual annual and long-term cash bonuses; the grant-date value of long-term incentives (LTIs) including stock options, restricted stock and long-term performance shares; the value of perquisites; earnings from deferred compensation; and the change in value of executive pensions." (Willis Towers Watson)
Wells Fargo Shows Its Claws
"Months after the revelations that Wells Fargo had engaged in highly questionable (some say illegal) practices, including creating fraudulent accounts, its board of directors has taken action to recoup some of the compensation from the bank's leaders during the time the nefarious schemes were ongoing." (HRE Daily)
Follow-Up on Litigation Over Non-Employee Director Stock Awards
"[T]he Delaware Chancery Court upheld the decision of Investors Bancorp directors' to award themselves restricted stock and stock options under a plan previously approved by the company's stockholders.... However, the Court indicated that it would not automatically waive through all non-employee director awards under shareholder approved equity compensation plans -- even plans with limits on awards to non-employee directors." (Winston & Strawn LLP)
Exempt Stock Compensation Limits May Increase
"Rule 701 under the Securities Act of 1933 currently provides a mechanism for non-public companies to offer and sell their securities for the purpose of providing compensation to their own employees without the need to register those securities.... [If] the company believes sales under the plan will exceed $5,000,000 in a coming 12-month period, the company must disclose risk factors and certain financial statements to the employee investors. The new legislation would double the $5,000,000 figure to $10,000,000 before a company would have to reveal financial information." (Seyfarth Shaw LLP)
Restricted Stock/RSUs and Tax Returns: Eight Costly Mistakes to Avoid
"Special issues on tax returns arise with restricted stock and restricted stock units (RSUs). Mistakes can be painful not only because they can cause you to overpay your taxes but also because they may draw unwanted attention from IRS auditors. (Ouch, right?) [This article provides] a brief review of the necessary tax documents and forms, followed by eight big tax-return mistakes to avoid with restricted stock and RSUs." (
Nonqualified Benefit Plans: One Size Does Not Fit All
"When consultants design SERPs solely for retirement income, because the decision-makers are concerned about retirement, they often make the mistake of designing a plan that fails its primary goal -- attracting, retaining and rewarding key talent.... Nonqualified benefit plans can be designed to pay out benefits at certain pre-set dates or life events while still employed. Benefits can be paid to accomplish goals other than retirement." (Advisor Magazine)
409A and the Reverse Haircut
"At what point would the potential diminution in compensation be so insufficient that its loss would not be material and therefore there would fail to exist a substantial risk of forfeiture? Or put differently, at what point would enough hair be returning to our hero's head that its loss would leave him wondering how he could go through the rest of his life so improperly coiffed? ... [B]ased on all of the facts and circumstances of this particular situation, [Chief Counsel Memorandum 201645012 said] that the 25% reverse haircut was a material incentive and that such materiality did create a substantial risk of forfeiture." (Benefits and Compensation with John Lowell)
States and Municipalities Propose CEO Pay Ratio Tax
"[T]he city of Portland, Oregon ... increases its corporate tax rate by 10% for a public company with a CEO pay ratio of 100:1 and by 25% for a public company with a CEO pay ratio of greater than 250:1.... Rhode Island and Minnesota currently have proposed tax rules that are substantially similar to the Portland tax provision. In other jurisdictions, the tax proposals range from the nominal ($2,500 annual filing fee in Illinois) to the material (potential as high as 25% corporate income tax rate in Connecticut) based on the level of a company's proxy-disclosed CEO pay ratio." (Meridian Compensation Partners, LLC)
An Executive's Guide to Defeating the SOX 304 Clawback (PDF)
"Section 304 of the Sarbanes-Oxley Act (SOX) grants the SEC the discretion to claw back the incentive-based compensation and stock sales of chief executive officers (CEO) and chief financial officers (CFO) after a restatement resulting from corporate misdeeds.... [This article examines] possible arguments and responses to an SEC investigation of alleged SOX 304 violations." [A companion article examines the SEC's burden of proof in SOX 304-related litigation and possible defenses.] (Paul Hastings LLP)
Proxy Reminders: Don't Forget 162(m) Compliance!
"Section 162(m) generally limits a public company's tax deduction for compensation paid to the chief executive officer and its three other highest-paid officers (other than the chief financial officer) to $1 million per year. This deduction limitation does not apply to certain 'qualified performance-based compensation' if certain requirements under Section 162(m) are satisfied.... Timely establish performance goals and goal adjustments ... Use only performance goals approved by shareholders ... Do not exceed individual limits." (Morgan Lewis)
[Opinion] Business Roundtable Comment Letter to SEC on Implementation of Pay Ratio Rule
"[C]omplying with the CEO pay ratio rule is costly and burdensome for U.S. public companies of all sizes.... [T]his is particularly complicated and costly for a company with employees located in different jurisdictions throughout the world.... Despite the significant compliance costs, the CEO pay ratio fails to provide material information to investors about a company's compensation of its CEO or its employees and will not enhance investors' understanding of a company's compensation practices." (Business Roundtable [BRT])
[Opinion] Calculation of the CEO Pay Ratio Can Be Greatly Simplified
"Narrow the definition of 'employee' and 'employee of the registrant.' ... Clarify that prior-year data can be used to identify the median employee.... Clarify that companies can use base pay as a consistently applied compensation measure (CACM).... Make clear that the disclosure can be a 'reasonable estimate.' ... Allow registrants to use readily accessible records to determine employee classifications.... Permit broader use of 'reasonable estimates' as part of statistical sampling to greatly reduce the effort required for companies with global workforces." (Willis Towers Watson)
[Opinion] Text of Comment Letters to SEC on Reconsideration of Pay Ratio Disclosure Implementation
These letters have been submitted to SEC, in response to the Acting Chairman's request for public input on any unexpected challenges that issuers have experienced as they prepare for compliance with the rule and whether relief is needed. Deadline for submission of comments is March 23, 2017. (Securities and Exchange Commission [SEC])
Will ACA Repeal Efforts Impact Executive Pay Practices?
"The American Health Care Act [AHCA] proposes to repeal the $500,000 cap on the deduction health insurers can take for executive pay.... [The AHCA also] proposes to eliminate the additional 3.8 percent tax on net investment income of certain highly compensated individuals.... [The Act] proposes to eliminate the additional 0.9 percent Medicare tax on wages paid to certain highly compensated individuals." (Bloomberg BNA)
[Opinion] CalPERS Joins Other Investors in Continued Support of Pay Ratio Disclosure
"The Investor Statement on Pay Ratio Disclosure letter was signed by more than 100 organizations representing $3 trillion in collective assets under management. Other signatories include the New York City Pension Funds, Legal & General Investment Management, Standard Life Investments, and Washington State Investment Board.... 'As a long-term investor, CalPERS believes the Pay Ratio Rule provides important information for investors regarding CEO and employee compensation,' said Anne Simpson, [of CalPERS] ... 'It shines a light on how well a company is managing its human capital.' " (CalPERS)
[Official Guidance] Text of IRS Rev. Proc. 2017-28: Credit or Refund of FICA or Railroad Retirement Tax -- Employee Consents (PDF)
16 pages. "The purpose of this revenue procedure is to provide guidance to employers on the requirements for employee consent used by an employer to support a claim for credit or refund of overpaid taxes under the Federal Insurance Contributions Act (FICA) and the Railroad Retirement Tax Act (RRTA) ... This revenue procedure clarifies the basic requirements for both a request for employee consent and for the employee consent, including the requirement that an employee consent must include the basis for the claim for refund and be signed by the employee under penalties of perjury. In addition, this revenue procedure permits, but does not require, employee consent to be requested, furnished, and retained in an electronic format as an alternative to a paper format. It also contains guidance concerning what constitutes 'reasonable efforts' if employee consent is not secured in order to permit the employer to claim a refund of the employer share of overpaid FICA or RRTA taxes." (Internal Revenue Service [IRS])
Stock Compensation Would Be Affected by the Repeal and Replacement of Obamacare
"The AHCA seeks to eliminate most of the taxes introduced by the ACA, including the net investment income tax on capital gains, dividends, and interest (also known as the 3.8% surtax) and the additional Medicare tax (0.9%) on wages.... While it is paid with a taxpayer's annual tax return rather than by income withholding, the ACA's 3.8% surtax on investment income also can be triggered by stock compensation." (

Important word about authorship:
BenefitsLink® ( provides this page for you, containing selected hypertext links to pages on the web that our editors think will be useful or interesting to you. But BenefitsLink is not the author or publisher of those linked pages (except as expressly indicated). You should contact directly the author of any such linked pages for copyright or other information about their contents.
© 2017, Inc.
Privacy Policy