Benefits Bryan Cave

Benefits BCLP

executive compensation

Main Content

The Good, the Bad, and the Tax-Exempt Organization: The New Tax Bill’s Effect on Benefits and Compensation Offered by Institutions of Higher Education

January 23, 2018

Authors

Meredith Jacobowitz and Brian Berglund

The Good, the Bad, and the Tax-Exempt Organization: The New Tax Bill’s Effect on Benefits and Compensation Offered by Institutions of Higher Education

January 23, 2018

by: Meredith Jacobowitz and Brian Berglund

On December 22, President Trump signed “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (“Bill”) into law. The Bill was previously named the much-shorter “Tax Cuts and Jobs Act,” but was changed after a senator pointed out that the name violated an obscure Senate rule.

The new employee benefit and executive compensation provisions in the Bill affect both individuals and employers. The good news for colleges and universities is that the harshest employee benefit provisions directed at colleges and universities were not included in the final Bill. The bad news is that the executive compensation and fringe benefit changes directed at tax-exempt organizations are unfavorable to institutions of higher education.

THE GOOD: CHANGES EXCLUDED FROM THE FINAL BILL

The House passed a version of the Bill that would have repealed the exclusion from income for

Read More

Code Section 409A…Here Today but Possibly Gone Tomorrow and Other Proposed Changes in the Tax Cuts and Jobs Act

November 9, 2017

Authors

Jennifer Stokes and Serena Yee

Code Section 409A…Here Today but Possibly Gone Tomorrow and Other Proposed Changes in the Tax Cuts and Jobs Act

November 9, 2017

by: Jennifer Stokes and Serena Yee

Last week the House unveiled its tax overhaul plan, the Tax Cuts and Jobs Act (“Act”).  The Act’s proposals related to employee benefits and compensation are as follows:

Nonqualified Deferred Compensation

Perhaps one of the most talked about aspects of the Act (at least among benefits practitioners) is the demise of Code section 409A and the creation of its replacement, Code section 409B.

Under the proposed Code section 409B regime, nonqualified deferred compensation would be defined broadly to include any compensation that could be paid later than the March 15 following the taxable year in which the compensation is no longer subject to a substantial risk of forfeiture, but with specific carve-outs for qualified retirement plans and bona fide vacation, leave, disability, or death benefit plans.  Stock options, stock appreciation rights, restricted stock units, and other phantom equity are included expressly in the definition of nonqualified deferred compensation.

All

Read More

Just Push Pause: Revisiting Proposed Regulations

February 21, 2017

Authors

Katharine Finley and Brian Berglund

Just Push Pause: Revisiting Proposed Regulations

February 21, 2017

by: Katharine Finley and Brian Berglund

On January 20, 2017, President Trump signed an executive order entitled “Regulatory Freeze Pending Review” (the “Freeze Memo“).  The Freeze Memo was anticipated, and mirrors similar memos issued by Presidents Barack Obama and George W. Bush during their first few days in office.  In light of the Freeze Memo, we have reviewed some of our recent posts discussing new regulations to determine the extent to which the Freeze Memo might affect such regulations.

TimeoutThe Regulatory Freeze

The two-page Freeze Memo requires that:

  • Agencies not send for publication in the Federal Regulation any regulations that had not yet been so sent as of January 20, 2017, pending review by a department or agency head appointed by the President.
  • Regulations that have been sent for publication in the Federal Register but not yet published be withdrawn,
    Read More
  • ISS Updates Proxy Voting Guidelines for 2017

    December 9, 2016

    Authors

    Serena Yee and Denise Erwin

    ISS Updates Proxy Voting Guidelines for 2017

    December 9, 2016

    by: Serena Yee and Denise Erwin

    vote-do-not-useLast month, Institutional Shareholder Services (ISS) published updates to its proxy voting guidelines effective for meetings on or after February 1, 2017.  Key compensation-related changes include the following:

    Non-Employee Director Compensation Programs

    In the case of management proposals seeking shareholder ratification of non-employee director compensation, ISS will review such proposals on a case-by-case basis utilizing the following factors:

    • Amount of director compensation relative to similar companies
    • Existence of problematic pay practices relating to director compensation
    • Director stock ownership guidelines and holding requirements
    • Vesting schedules for equity awards
    • Mix of cash and equity-based compensation
    • Meaningful limits on director compensation
    • Availability of retirement benefits or perquisites
    • Quality of director compensation disclosure

    To the extent the equity plan under which non-employee director grants are awarded is on the ballot, ISS will consider whether it warrants

    Read More

    Good News! New 409A Regulations (Yes, Really!) – Part 5: If it Ain’t Broke, Don’t Fix It (and Other Minor Changes)

    August 2, 2016

    Authors

    Chris Rylands and Katharine Finley

    Good News! New 409A Regulations (Yes, Really!) – Part 5: If it Ain’t Broke, Don’t Fix It (and Other Minor Changes)

    August 2, 2016

    by: Chris Rylands and Katharine Finley

    Good NewsOn the TV show Futurama, the aged proprietor of the delivery company Planet Express, Professor Hubert J. Farnsworth, had a habit of entering a room where the other characters were gathered and sharing his trademark line, “Good news, everyone!”  Of course, his news was rarely good.  More often, it was the beginning of some misadventure through which the other characters would inevitably suffer, often to great comedic effect.  So we can forgive you for thinking that we may be standing in his shoes when we tell you that new 409A regulations are good news, but really, hear us (read us?) out.

    The IRS released proposed changes to both the existing final regulations and the proposed income inclusion regulations.  And the news is mostly good.  Additionally, taxpayers can rely

    Read More

    Good News! New 409A Regulations (Yes, Really!) – Part 1: Firing Squad

    July 7, 2016

    Authors

    Chris Rylands and Katharine Finley

    Good News! New 409A Regulations (Yes, Really!) – Part 1: Firing Squad

    July 7, 2016

    by: Chris Rylands and Katharine Finley

    Good NewsOn the TV show Futurama, the aged proprietor of the delivery company Planet Express, Professor Hubert J. Farnsworth, had a habit of entering a room where the other characters were gathered and sharing his trademark line, “Good news, everyone!”  Of course, his news was rarely good.  More often, it was the beginning of some misadventure through which the other characters would inevitably suffer, often to great comedic effect.  So we can forgive you for thinking that we may be standing in his shoes when we tell you that new 409A regulations are good news, but really, hear us (read us?) out.

    The IRS released proposed changes to both the existing final regulations and the proposed income inclusion regulations.  And the news is mostly good.

    The changes are legion,

    Read More

    How a CFO May Be Subject to 162(m)

    November 17, 2015

    Authors

    Chris Rylands

    How a CFO May Be Subject to 162(m)

    November 17, 2015

    by: Chris Rylands

    CFOAfter the change in securities disclosure laws back in 2006, it was a common statement that the CFO of a public company was no longer covered by the $1 million deduction limit on non-performance based compensation under 162(m) of the tax code. This was (and is) because of a disconnect between the securities laws and the tax code.

    The tax code says that the chief executive officer and each of the next four most highly compensated officers whose compensation is required to be disclosed pursuant to the securities rules are “covered employees” for purposes of the $1 million limit. The 2006 changes in the securities rules changed the disclosure rules to require disclosure of compensation of the principal executive officer (usually the CEO), the principal financial officer (usually the CFO), and the three most highly

    Read More

    Dodd-Frank SEC Guidance Executive Compensation – Status

    November 2, 2015

    Authors

    benefitsbclp

    Dodd-Frank SEC Guidance Executive Compensation – Status

    November 2, 2015

    by: benefitsbclp

    With all the rulemaking required under the Dodd-Frank Act, it can sometimes be hard to keep up with the status of the various rules.  Below is a handy chart that details the current status of the various executive compensation rulemakings.  We plan to update this periodically for additional rulemakings, so be sure to come back and visit from time to time.

    Last Updated: November 2, 2015

    Provision Summary Status of SEC Rulemaking Say on Pay; Say on Golden Parachutes § 951 Requires advisory vote of shareholders on executive compensation and golden parachutes; advisory vote on frequency of say on pay

    • Final rule: adopted January 25, 2011; SEC Rel. No. 33-9178

    Compensation Committee Independence § 952(includes comp consultant conflicts) Requires stock exchanges to adopt listing standards that require:

    • compensation committee members to be “independent;”
    • each committee must   have the authority to engage
      Read More

    83(b) Elections

    September 5, 2014

    Authors

    Chris Rylands

    83(b) Elections

    September 5, 2014

    by: Chris Rylands

    Our sister blog, Start-Up Bryan Cave, recently posted about when and why to use the an 83(b) election.  The post has a good discussion of the advantages and disadvantages.

    One item it does not mention is the company’s deduction, which is taken if and when the 83(b) election is made.  In the absence of an election, the deduction occurs when the property vests.

    Of course, for the company to take the deduction, it has to know that the election has been made.  Even though the IRS rules require the recipient to give a copy to the company, another valuable planning point is to make sure that the agreement itself also requires the recipient to provide a copy of the election to the company.

    Read More

    Five Key Considerations When Drafting a Release

    July 2, 2014

    Authors

    Bill Wortel and benefitsbclp

    Five Key Considerations When Drafting a Release

    July 2, 2014

    by: Bill Wortel and benefitsbclp

    Employment Termination and ReleaseSeparation agreements almost always contain release provisions whereby one or both parties agree to waive claims that they may have against the other party; when the employee releases claims, he or she typically gains compensation or a benefit that he or she is not already entitled to receive.  In a world in which every terminated employee is a potential plaintiff, employers should have a good grasp on how to draft a valid and enforceable release in a separation agreement.  Here are five tips every employer should consider when drafting this type of a release.

    Tip No. 1:  Offer Valid Consideration

    In order to have a valid and enforceable release agreement, the employer must provide the employee with payments or benefits the employee is otherwise not entitled to receive.  Therefore,

    Read More
    The attorneys of Bryan Cave LLP make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.