On September 13, 2018, the SEC withdrew two no-action letters issued in 2004 to two proxy advisory firms. Some folks (like me!) are hopeful that the withdrawal of these no-action letters is a first step (albeit a small step) towards proxy advisory firm reform. If you would like to learn more about this topic, please see our Firm’s client alert entitled “Proxy Advisory Firm Guidance Withdrawn by the SEC,” which our Firm published this morning. Continue Reading Possible Small Step Towards Proxy Advisory Firm Reform?
Tomorrow I am speaking on “Trends in Designing Performance-Based Equity Awards” at the HC&B Total Rewards Summit in Houston, Texas. Discussion points include: (i) applicable forms of equity incentives conducive to performance-based awards, (ii) the more common performance metrics used to drive behavior, (iii) typical payout levels and performance periods, (iv) total shareholder return formulas, (v) administrative issues associated with accelerated vesting provisions upon retirement, (vi) maximizing capital gains with 83(b) elections, and (vii) recent revisions to Section 162(m) and the likely impact upon performance-based designs. Hope to see you there! Continue Reading HC&B Total Rewards Summit
Though relative Total Shareholder Return (“TSR”) programs offer no direct line of sight for the executive to chase the business goal, such programs continue to remain the most common metric within an issuer’s performance-based equity program. In designing these programs, a common question is how payouts could be adjusted if the issuer’s stockholders realize negative returns and lose money during the measurement period. The answer to that question is this “Tip of the Week.” Continue Reading Tip of the Week: Addressing Negative Returns in a Relative Total Shareholder Return Program
We previously posted on grandfather treatment under the Tax Cuts and Jobs Act (the “Act”), as clarified by Notice 2018-68. This post is an extension of our prior post and is intended to highlight that an issuer’s PFO is subject to a slightly different analysis with respect to Grandfather Treatment (defined below). Continue Reading Different Grandfather Analysis Applies to PFOs under Section 162(m) and Notice 2018-68
Determining the “date of grant” of an equity award is important if the issuer desires accurate accounting charges and compliance with applicable tax laws. Though such determination is typically straight forward, there are three common situations where identifying the date of grant could become more complex. Addressing these three factual scenarios is this “Tip of the Week.” Continue Reading Tip of the Week: Determining the Grant Date of Equity Awards
Privately-held companies anticipating an IPO have a unique “one-time” opportunity to design their compensatory programs in a way that creates flexibility after the company becomes publicly-traded. Please join us on September 13, 2018, at 10:00 CT where we will discuss various design structures, including: (i) emerging growth company considerations relevant to compensation structures, (ii) thoughts from institutional shareholders, (iii) equity incentive plan designs that can help to preserve the share reserve of the equity plan long after the effectiveness of the S-1 registration statement, (iv) design issues with respect to executive contracts, and (v) other compensatory issues (e.g., co-registration rights, rollover of profits interests, etc.). Click here to register: Planning for an IPO: Compensation Considerations (Phase I of II). And as always, our monthly webinar series is FREE. Continue Reading Planning for an IPO: Compensation Considerations
The purpose of this post is to discuss select design considerations when structuring change-in-control bonus arrangements for key employees. Continue Reading Tip of the Week: Select Design Thoughts in Change-in-Control Pay
The purpose of this post is to highlight certain action items that a publicly-traded company should consider in order to help it preserve compensatory deductions. The timing of this post is triggered by Notice 2018-68 that was issued by the IRS on August 21, 2018. Continue Reading Preserving the Deduction: Certain 162(m) Action Items Triggered by Notice 2018-68
Just a quick note. Today the IRS issued guidance on Section 162(m) of the Internal Revenue Code of 1986 (“Section 162(m)”), as curtailed by the Tax Cuts and Jobs Act of 2017 (i.e., the Act essentially eliminated the performance-based exception to the $1mm deduction limit under Section 162(m), except with respect to certain grandfathered plans). The IRS guidance comes in the form of Notice 2018-68. Later this week we will provide our thoughts on design considerations that should be considered by publicly-traded corporations intent on maximizing the deductibility of their compensation.
The purpose of this post is to remind the reader to carefully think about the number of shares that should be registered under a Form S-8 Registration Statement. As highlighted in this post, the number of shares to register is likely larger than the number of shares available under the issuer’s equity incentive plan. Continue Reading Tip of the Week: Number of Shares to Register under a Form S-8