Recent press coverage of Internal Revenue Service and U.S. Securities and Exchange Commission problems with executive travel on company aircraft makes continued use challenging. The known benefits of business-owned aircraft include security, privacy and efficiency, particularly in light of delays inherent in commercial travel. This newsletter describes in plain English the basic requirements and strategies for dealing with the myriad rules presented with respect to executive and guest travel on company aircraft, and recommends as a solution the adoption of a carefully drafted executive aircraft use policy.
Well, for emerging growth companies, at least. The new law also exempts such firms — which are planning an IPO and have less than $1 billion in revenue — from holding a “say-on-pay” vote.
Public Company Accounting Oversight Board (PCAOB) proposals would have auditors reading the employment and compensation contracts of corporate leaders and, possibly, forcing changes to comp programs due to unacceptable risks of material restatement.
Proxy season is now upon us, and a key task is to evaluate whether shareholder approval is needed for any executive compensation plan. One of the typical reasons to seek shareholder approval is to qualify for tax-deduction relief under Section 162(m) of the Internal Revenue Code. By and large, seeking shareholder approval for that purpose has been viewed as a relatively routine task. However, recent shareholder derivative lawsuits suggest that public companies should take a careful look at disclosures that solicit Section 162(m) shareholder approval.
ISS has released its annual update to its proxy voting guidelines for the 2012 proxy season. The update reflects changes in ISS’s pay-for-performance evaluation methodology, responses to say-on-pay votes and say-on-pay frequency votes and a number of social and environmental policies.
As the year draws to a close, please join us for a focused and concise update on the most important employee benefit issues.
Mark your calendars McDermott Will & Emery will present a 60-minute complimentary webcast, hosted by the leaders of our employee benefits and compensation practice, that will highlight key year-end considerations for:
Health and welfare benefits
Qualified and non-qualified retirement plan
Plan fiduciary and investment management
Executive compensation
Fringe benefits
Domestic partner benefits
Who should attend All vice presidents of human resources, in-house counsel, compensation and benefits directors, chief financial officers and others responsible for overseeing corporate or executive benefits and/or retirement plans.
On Wednesday, September 14, 2011, the IRS issued Notice 2011-72, which provides long-awaited relief concerning the tax treatment for the employee use of employer-provided cellular telephones or other similar telecommunications equipment (e.g., PDAs and Blackberries):
The IRS will generally treat an employee’s business use of an employer-provided cell phone as a nontaxable working condition fringe benefit, without the need to meet onerous substantiation requirements.
The IRS will generally treat the value of any personal use of an employer-provided cell phone as a nontaxable de minimis fringe benefit.
The IRS guidance specifies that the business and personal use of an employer-provided cell phone provided by the employer will generally be treated as nontaxable to the employee, if the employer has provided the cell phone primarily for noncompensatory business reasons. Because it applies for taxable years beginning after December 31, 2009, the tax relief provided under the IRS Notice takes effect immediately.
McDermott’s Employee Benefits Blog was recently recognized as one of the Top 10 Compensation and Benefits Blogs by HR Daily Advisor. Thank you to those who follow our blog on a regular basis. We appreciate your support and please contact our editors if you have suggestions on trending topics you’d like to hear more about.
The SEC recently adopted final rules regarding shareholder advisory votes on executive compensation, the frequency of say‑on‑pay votes and golden parachute arrangements. Public companies must provide shareholders with a say‑on‑pay vote and say‑on‑frequency vote at the first annual or other meeting of shareholders where directors are elected occurring on or after January 21, 2011. The say‑on‑parachutes vote and enhanced disclosure of golden parachute compensation will be required for initial filings by all public companies on or after April 25, 2011. While the final rules are similar to the proposed rules, understanding the differences will assist in preparing for the 2011 proxy season.
On January 18, 2011, the SEC announced that it will be holding an open meeting to consider adopting final rules under Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is expected that final rules will be issued at that time regarding the procedures to be followed when soliciting shareholder advisory votes to approve the compensation of executives and the frequency of shareholder say-on-pay votes. For further details regarding the requirements under Section 951, click here. The final rules will be important for public companies to evaluate prior to filing proxies on and after January 25, 2011. We will post a copy of the final rules on this blog when they become available and thereafter will publish an On the Subject summarizing the key aspects of the final rules.
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