This is a just a quick note that proposed Treasury regulations were issued under Section 162(m) that reverses a series of private letter rulings previously granted to UPREITs.  Under the proposed Treasury regulations, the $1mm deduction limitation under Section 162(m) would apply with respect to compensation that a publicly-traded REIT's covered employee receives from an operating partnership for services he or she provided on behalf of such operating partnership.  The proposed Treasury regulation is applied by potentially disallowing a REIT's distributive share of any ...

The purpose of this Post is to help issuers prepare for the upcoming 2020 proxy season by providing a non-exhaustive list of certain compensatory issues/topics to consider.  To that end (listed in no particular order):

ADOPT AN ANNUAL GRANT POLICY

• Background.  It is common for Compensation Committees to initially denominate an equity award as a dollar amount, and then convert such dollar amount into a number of shares immediately prior to the date the equity is granted (e.g., executive is to receive a number of shares equal to 20% of his/her base salary).  This approach could create ...

If an issuer is looking for a primer or introductory course on Employee Stock Purchase Plans ("ESPPs"), then check out the detailed slide deck that our David Branham put together for our monthly webinar series.  The slide deck is entitled Employee Stock Purchase Plans - The Introductory Course (November 2019 Webinar) and covers the following:

• Requirements under the tax law,
• Must have document requirements,
• Tax consequences to employees and to employers,
• Compliance requirements with respect to federal securities laws, and
• International workforce considerations.

The slide ...

It is common for a key employee to be offered an opportunity to purchase equity of the employer.  Often the key employee can personally finance such purchase.   And sometimes the employer will help the key employee finance the purchase by providing him or her with a loan equal to the purchase price.  The purpose of this Tip of the Week is to remind readers that a substantial part of the loan should be recourse.

• Risk Associated with 100% Non-Recourse Note - Key Employee Received an Option.   If the loan is 100% non-recourse (meaning the key employee has no personal assets at risk other than the ...

Compensation governance is a front-and-center topic with a continued focus on stock ownership and clawback policies (in part due to the voting guidelines of institutional investors, proxy advisory firms and the Dodd-Frank Act).  At 10:00 am Central on Thursday, October 10, 2019, in a webinar entitled "Stock Ownership Policies & Clawback Policies: Design Pointers," our Emily Cabrera will be providing a complete overview of stock ownership policies and clawback policies, including a deep dive into their related design choices, prevalence, best practices and disclosure ...

The purpose of this post is to discuss whether incentive stock option (“ISO”) awards should be designed to destroy ISO treatment with respect to terminated employees, thereby preserving the compensatory deduction to the corporation and increasing shareholder value.

As a follow-on to last month's webinar, please join us this Thursday (July 11, 2019) for our FREE webinar entitled "Multi-Disciplinary Facets to Net Withholding: It Ain't Boring".   The purpose of this presentation is to discuss administrative and design considerations when effectuating net withholding with respect to equity awards, including whether to increase the net withholding rate from the minimum statutory rate (i.e., the supplemental rate) to the maximum individual rate.   Sign up at the above link if interested ...

Please join us tomorrow morning at 10:00 Central for our free monthly webinar series.  Tomorrow's topic, "Tips to Increase the Longevity of the Equity Plan's Share Reserve," will discuss ideas on how a publicly-traded company can lengthen the longevity of its equity plan's share reserve, with the hopeful result of the company less frequently seeking shareholder approval to increase such share reserve.  More information can be found at the above hyperlink!

Just a quick reminder that this Thursday (March 14, 2019) we are hosting our monthly webinar program and the discussion topic is "Golden Parachutes & 280G: Design Pointers on How to Win."  Our discussion will include: (i) an explanation of 280G and how the calculations are applied, (ii) how 280G issues are typically addressed in compensatory documents (discussed from both an employer and employee perspective), and (iii) a description of various mitigation techniques that an employer could implement to eliminate or greatly reduce the negative ramifications of 280G (i.e., eliminate ...

The purpose of this post is to highlight compensatory action items that publicly-traded issuers should consider this proxy season.  Such considerations include:

• Chase the Say-on-Pay Vote.  The most common reason for a negative recommendation from ISS is a perceived pay-for-performance disconnect within the compensation structure.  Robust disclosure on this point can help, especially disclosure that clarifies why certain performance criteria were used and explains the degree of difficulty associated with achieving target performance.
• Consider an Annual Equity Grant Policy.  Some issuers grant equity awards to executive officers based upon an initial dollar amount that is then converted into shares.  If such an issuer has a depressed stock price due to market volatility, then the conversion formula will result in the award having more shares (compared to the situation where the issuer's stock price had not fallen).  Is the issuer ripe for an allegation that the executives are timing the market because equity was granted at a low stock price for the sole purpose of receiving a larger number of shares?  To help defend against such a question, issuers should consider having a documented annual equity grant policy.  The policy could be formal or informal (with the latter being clearly presented in the CD&A of the issuer's proxy statement).