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Many Companies Need to Amend for 162(m) by Year End
Winston & Strawn LLP [Guidance Overview] Oct. 20, 2009 2 pages. Excerpt: Many companies will need to amend their employment agreements, equity plans and awards, and other incentive plans and agreements by December 31, 2009, to preserve the deductibility ofperformance-based awards and amounts under Code Section 162(m) [the $1 million limit on public companies' ability to deduct compensation payments to their named executive officers] in light of Rev. Rul. 2008-13.... Companies generally do not need to review or revise arrangementswith employees who are not subject to Code Sec. 162(m) ? and are highly unlike ever to become subject to Code Sec. 162(m). However, a company should cast its net broadly, because Code Sec. 162(m) applies in the year the award or other compensation becomes taxable ? and deductible by the corporation ? which may be several years in the future, after certain employees have been promoted. |
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