Pay Governance's "The Elimination of Performance-Based Requirement Under 162(m): When it Comes to Executive Pay Design Changes, There is "Less Than Meets the Eye" addresses pay plan design and process/procedural implications of the Tax Act-triggered changes to §162(m). The memo includes two user-friendly tables that cover: (i) projected plan design impacts for each of the most common components of executive pay, and (ii) the projected impacts on core management and compensation committee processes/procedures (e.g., shareholder approvals, umbrella formulas, grant timing) associated with pay setting and approval.
The latter is particularly instructive for companies that are evaluating which processes formerly tied to utilizing the now-repealed §162(m) performance-based exception to retain, tweak or eliminate in view of other potentially still-relevant considerations, e.g., proxy disclosures, uptick in interest in - and flexibility to use - non-financial incentive measures such as diversity, and common and best governance practices.
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This post first appeared in last week's Society Alert! Access numerous additional resources on our Compensation page.
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