Client Alert
IRS Proposes New Regulations To Clarify Section 162(m) Performance-Based Compensation Exemption
July 13, 2011
The IRS and Treasury Department have proposed new regulations under Section 162(m) of the Internal Revenue Code of 1986 relating to two aspects of the deduction limitation for certain executive compensation. The proposed regulations clarify that performance-based compensation attributable to stock options and stock appreciation rights must specify the maximum number of shares with respect to which such awards may be granted to each individual employee. In addition, the proposals also clarify the scope of a transition rule for newly public companies. Public companies and companies considering going public should review their plans and arrangements to determine whether amendments may be necessary to address the regulations once finalized.
Comments on the proposed regulations must be received by September 22, 2011. Click here to read our client alert discussing the proposed regulations.
If you have any questions regarding these issues, please contact either the Womble Carlyle attorney with whom you usually work or one of our Corporate and Securities or Employee Benefits attorneys.
Womble Carlyle client alerts are intended to provide general information about significant legal developments and should not be construed as legal advice on any specific facts and circumstances, nor should they be construed as advertisements for legal services.
IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice within this client alert is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in a client alert.
