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Executive benefits

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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." (
GOP Health Plan Would Boost Deductibility of Executive Compensation for Health Insurers
"By repealing this $500,000 deduction limit, nonpublic health insurers will be able to fully deduct executive compensation beginning in 2018 and publicly traded health insurers will be treated the same as all other public companies under Section 162(m) of the tax code. That provision generally limits compensation deductions to $1 million for the CEO and the other three highest-paid employees (excluding the CFO) and excludes performance-based pay." (Willis Towers Watson)
Compensation Committee Actions and Disclosure: What to Address in Your February/March Meeting
"To satisfy Code 162(m), within the first 90 days of the performance period, the compensation committee must approve performance goals for the period and certify that the company has achieved the performance goals it had established for prior periods (2016 for short-term incentive plans and 2014-2016 for many long-term plans). Generally, the incentive plan payout for the recently completed year [2016] must be made by March 15, to comply with Code Section 409A." (Winston & Strawn LLP)
10 Ways Stock Compensation Can Make You Happier
"[1] Wealth creation ... [2] A sense of anticipation ... [3] A feeling of being special ... [4] ESPP participation and discount ... [5] Control over when you receive income and pay taxes ... [6] Donations and gifts of company stock ... [7] Being an owner in your company ... [8] New friends ... [9] Feelings of financial security ... [10] Mindfulness and meaningfulness." (
Massachusetts Introduces Highest Paid Employee-Ratio Legislation as Illinois Creates Pay Ratio Fee
"[L]egislators in ... Massachusetts and Illinois introduced new pay ratio measures, with Massachusetts becoming the first state to eschew use of the SEC's pay ratio calculation in favor of a pay ratio which focuses on comparing a company's highest paid employee to median U.S. employee pay.... [This] brings the number of states which have introduced or passed pay ratio legislation to five, not including the cities of San Francisco and Portland, Oregon." (HR Policy Association)
[Guidance Overview] 2017 Compliance Checklist for Qualified Plans Not Subject to ERISA (PDF)
20 pages. "The Compliance Checklist incorporates requirements for governmental and nonelecting church plans, non-ERISA 403(b) plans, 457 plans and nonqualified executive benefit plans, and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made." (Prudential)
Another Federal Court Affirms Enforceability of Restrictive Covenants in Electronically Delivered Equity Award Agreements
"The court easily rejected plaintiffs' argument that they had never checked a box stating they 'agreed to' or 'accepted or acknowledged' the terms of the agreements. The court observed that they had checked a box affirming that they 'read' the documents, and the documents explicitly advised them that the non-competes were a condition of accepting the stock award. The court also found the plaintiffs' contention that they did not recall reading the documents, irrelevant." [ADP, LLC v. Lynch, Nos. 16-3617, 16-01111 (3d Cir. Jan 17, 2017; not precedential)] (Winston & Strawn LLP)
Tax Season 2017: A Quick Take on What's New for Stock Comp
"In general, 2016 brought no major tax changes to consider.... However, developments over the past few years, such as changes in tax rates or amounts that are indexed yearly for inflation, continue to affect tax-return reporting.... The 2016 version of IRS Form 1099-B, which brokers issue for stock sales made during the tax year, closely resembles the version for the 2015 tax year. However, the 2014 version introduced some major changes that you should continue to keep in mind[.]" (
[Guidance Overview] IRS Chief Counsel Memo: No More Closing Agreements Under FICA 'Special Timing Rule'
"[Chief Counsel Memorandum AM2017-01] raises the stakes for employers that fail to apply the proper FICA taxation rules to nonqualified deferred compensation. An option previously available to those employers has been taken off the table. Under this option -- which required a formal 'Closing Agreement' with the IRS -- both employer and employee FICA taxes could be minimized by voluntarily paying those taxes for years as to which IRS assessments were otherwise barred under the Tax Code's three-year statute of limitations. Without this correction option, employers have an even greater incentive to apply the proper FICA taxation rules to their deferred compensation arrangements." (Spencer Fane)
The 'Average' Non-Qualified Defined Contribution Plan (PDF)
"[A] recent review of 200 medium-to-large company non-qualified defined contribution plan design features ... found: 94 different types of eligibility provisions; 124 different company contribution allocation formulas; 95 plans with unique lineups of mutual funds as investment alternatives with 25 including company stock; 61 different vesting schedules." (NQDCSolutions, LLC)
Reconsider the Ratio: SEC Acting Chair Calls Pay Ratio Rule into Question
"[Dr. Piwowar] asked for companies to submit detailed comments to the SEC within the next 45 days [describing] challenges that they have faced when preparing to comply with the pay ratio rule, and he asked for suggestions as to how to remedy the situation.... Dr. Piwowar [also] directed the SEC staff to 'reconsider the implementation of the rule based on any comments submitted and to determine as promptly as possible whether additional guidance or relief may be appropriate.' " (Bradley Arant Boult Cummings LLP)
[Guidance Overview] IRS Updates Golden Parachute Audit Guide
"The [2017 Audit Techniques Guide (ATG)] is the first update released since the release of the IRS's initial 2005 ATG ... The ATG includes: [1] an overview of the rules and the consequences of potential adjustments in the audit; [2] the documentation an IRS agent should review as background regarding a corporation's golden parachute payments; and [3] the nine steps involved in a parachute examination, including an examination flow chart. The 2017 ATG expands and updates the list of documents for IRS examiners to review in connection with a golden parachute examination." (Orrick)
Acting SEC Chair Signals Possible Delay in Implementation of Pay Ratio Rule
"Under current rules, the CEO pay ratio rule became effective this year, with the first disclosure of the pay ratio [to be] reported in 2018 proxies.... Despite the likely lack of near-term relief, Mr. Piwowar's statement remains significant and provides hope for delay or ultimate repeal of the CEO pay ratio." (Meridian Compensation Partners, LLC)
[Official Guidance] Text of Acting SEC Chairman's Request for Public Comments on Pay Ratio Rule
"[It] is my understanding that some issuers have begun to encounter unanticipated compliance difficulties that may hinder them in meeting the reporting deadline. In order to better understand the nature of these difficulties, I am seeking public input on any unexpected challenges that issuers have experienced as they prepare for compliance with the rule and whether relief is needed. I welcome and encourage the submission of detailed comments, and request that any comments be submitted within the next 45 days." (Acting Chairman Michael S. Piwowar, U.S. Securities and Exchange Commission [SEC])
[Official Guidance] Text of SEC Chairman's Request for Public Comments on Pay Ratio Rule
"[It] is my understanding that some issuers have begun to encounter unanticipated compliance difficulties that may hinder them in meeting the reporting deadline. In order to better understand the nature of these difficulties, I am seeking public input on any unexpected challenges that issuers have experienced as they prepare for compliance with the rule and whether relief is needed. I welcome and encourage the submission of detailed comments, and request that any comments be submitted within the next 45 days." (U.S. Securities and Exchange Commission [SEC])
[Guidance Overview] IRS Publishes Audit Techniques Guide for Golden Parachute Payments
"The Guide includes 'Nine Steps to Perform in a Parachute Examination' and a 'Golden Parachute Payments Corporate Form 1120 Examination Flow Chart,' which provides assistance in determining whether Section 280G is applicable to a public corporation.... The Guide also gives auditors a list of documents to review in connection with golden parachute payment issues, which also may be helpful to practitioners as they consider the reporting and documentation of change in control payments[.]" (Winston & Strawn LLP)
San Francisco, Rhode Island Unveil Newest Pay Ratio Surtax Measures
"[In] San Francisco, the yet-to-be-drafted bill which was announced on January 24 would target publicly-traded companies that file compensation disclosures with the SEC.... [T]he Rhode Island House Bill, H. 5141, would subject companies with a pay ratio exceeding 100 to 1 to a 10% surtax and a 25% surtax for ratios exceeding 250 to 1." (HR Policy Association)
[Guidance Overview] ISO and ESPP Reporting and Disclosure Requirements for Employers
"You must furnish an information statement on Form 3921 (ISO) or Form 3922 (ESPP), as applicable, to each employee (or former employee) by January 31, 2017; you must also file information returns with the [IRS] by February 28, 2017, if filing on paper, or March 31, 2017, if filing electronically." (Hanson Bridgett LLP)
Tax Reporting for Stock Compensation: Understanding Form W-2, Form 3922, and Form 3921
"Making sense of Form W-2 when stock compensation is reported ... Form 3922 for ESPPs and Form 3921 for ISOs ... Sell shares in 2016? The fun is just beginning." (
Employee Stock Plans: 2016 Year-End International Reporting Requirements
"This White Paper highlights some of the principal calendar and year-end reporting requirements for employee stock plans that U.S. companies most commonly encounter when offering these programs to their employees in selected jurisdictions worldwide.... A chart summarizing these items [is included]." (Jones Day)
IRS Updates Golden Parachute Payment Audit Tips
"The [2017 Golden Parachutes Payments (Audit Techniques) Guide (ATG)] specifies two additional types of documents reviewed by IRS examiners in golden parachute payment examinations, including: Information Statement (Schedules 14A and 14C).... Registration Statements (Forms S-4 and F-4).... The 2017 ATG specifies the interplay between I.R.C. Section 162(m) and golden parachute payments." (Bloomberg BNA)
Trends in Stock Compensation, ESPPs, and Participant Behavior
"Use of full-value awards continues to increase.... Use of stock options continues to decline.... Performance awards are for executives.... [Total shareholder return (TSR)] is the top metric for performance grants.... Dividend payments increase.... Payouts to retirees." (
CEO Pay Ratio Disclosure Not Affected by Freeze on Federal Regs
"Last Friday's Reince Priebus memo instructing the heads of federal executive departments and agencies to freeze certain regulatory activity does not affect the CEO pay ratio disclosure set to take effect for the 2018 proxy season because independent regulatory agencies like the Securities and Exchange Commission are exempt from its coverage." (Willis Towers Watson)
[Guidance Overview] ISO and ESPP Reporting and Disclosure Requirements for Employers
"You must furnish an information statement on Form 3921 (ISO) or Form 3922 (ESPP), as applicable, to each employee (or former employee) by January 31, 2017; you must also file information returns with the [IRS] by February 28, 2017, if filing on paper, or March 31, 2017, if filing electronically.... A $50 penalty per return may apply for a filing that occurs on or before 30 days after the filing deadline, increasing to $100 if the filing occurs after 30 days but on or before August 1, 2017. Thereafter, a $260 penalty may be assessed for each delinquent filing, subject to a maximum penalty of $3,193,000 per year or $1,064,000 for small businesses." (Hanson Bridgett LLP)
How Hard Is It to Achieve Target Incentive Payouts?
"5% of executives at companies that offered such programs achieved at least 'threshold' performance, meaning they qualified for at least a partial bonus. 'Target' performance was also achieved by a large majority -- 75% -- of executives at those companies. However, only 15% of them qualified for the maximum bonus stipulated in their incentive plan." (CFO)
[Guidance Overview] Text of IRS Audit Techniques Guide: Golden Parachute Payments (PDF)
10 pages. "The parachute examination can occur during the examination of either the corporation's or the individual's return. As the examination begins and throughout its course, [certain] items should be considered[.]" (Internal Revenue Service [IRS])
[Guidance Overview] That's a FAQ, Jack! New Interpretations from ISS
"On December 19, 2016, ISS issued updates to several of its key FAQs, including those on Equity Compensation Plans, Executive Compensation Policies, and also the explanation of ISS' Pay-for-Performance Mechanics. [This article summarizes] the specific updates under each FAQ and the P4P Mechanics." (
[Guidance Overview] Annual Reporting Requirements for Incentive Stock Options and Employee Stock Purchase Plans
"Returns for ISO and ESPP transactions must be submitted to the IRS on Form 3921 (for ISOs) and Form 3922 (for ESPPs).... [E]ven though Forms 3921 and 3922 may be found on the IRS website, you are not permitted to print and file these forms with the IRS; the IRS will only accept the official forms ordered from the IRS." (Orrick)

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