In addition to other helpful reminders and tips, Wachtell Lipton's "Compensation Season 2018" suggests companies keep their IRC §162(m)-qualified compensation committees intact pending certification of performance results for performance-based compensation exception-eligible arrangements grandfathered under the new tax law. In addition, compensation committees typically include among their membership exchange-qualified independent directors and Rule 16b-3 (Securities Exchange Act of 1934)-compliant "non-employee" directors for short-swing profit rule purposes, neither of which is impacted by the new law, and thus both remain important if/when considering changes to committee composition.
Recognizing the §162(m) shareholder approval-related incentive plan implications of the new law, the firm also advises companies to adopt a new incentive plan rather than amend their existing plan when seeking shareholder approval for additional shares to avoid inadvertently losing any grandfathered rights that may be associated with existing arrangements.
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Access additional information and resources here, here, here and here.
This post - along with numerous others addressing the executive compensation-related and financial reporting implications of the new tax act - first appeared in this week's Society Alert!
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