26 CFR 1.162-27 - 1,000,000 달러를 초과하는 특정 직원 보수.
(a) 범위. 이 섹션은 내부 수익 코드 162 (m) 항에 의거 한 1 백만 달러의 공제 한도 적용을위한 규칙을 제공합니다. 이 조항의 (b) 절은 162 (m) 항에 따른 공제를 제한하는 일반적인 규칙을 제공합니다. 이 절의 (c) 절은 일반적으로 적용되는 용어의 정의를 제공한다. 본 section의 paragraph (d)는 수수료 기준으로 지불 할 보상 공제 한도에서 예외를 규정하고있다. 이 섹션의 단락 (e)는 적격 한 성과급 보상에 대한 예외 조항을 제공합니다. 본 section의 paragraph (f)와 (g)는 공개 기업이되는 기업과 280G 조항의 적용을받는 지급에 대한 특별 규정을 제공한다. 본 section의 paragraph (h)는 162 (m) 항에 종속되지 않고 조잡한 계약에 대한 규칙을 포함하여 전환 규칙을 제공한다. 이 section의 paragraph (j)는 시행일 규정을 포함한다. 162 (m) 항과 본 항에서 다루지 않는 서비스에 대한 공제 금액에 관한 규칙은 162 (a) (1) 절 및 & xA7 항을 참조하십시오. 1.162-7. 이 조항은 보상이 162 (a) (1) 항의 요건을 충족시키는 지 여부를 결정 짓지는 않습니다.
(b) 공제에 대한 제한. 섹션 162 (m)은 과세 대상 연도에 대한 보상이 1,000,000 달러를 초과하는 경우, 해당 피고용인에게 지급되는 보상에 대해 공개 법인이 내국세 법 제 1 장에 의거하여 공제하지 못하게합니다.
(1) 상장 법인 -
(i) 일반 규칙. 공개 법인이란 Exchange Act 12 조에 따라 등록해야하는 모든 종류의 보통주 증권을 발행하는 법인을 의미합니다. 지분 증권의 등록이 자발적이라면 기업은 공개적으로 간주되지 않습니다. 이 조항의 목적 상 기업이 공개적으로 개최되는지 여부는 해당 과세 연도의 마지막 날 현재 회사가 거래법 제 12 조의보고 의무를 적용 받는지 여부만을 기준으로 결정됩니다.
(ii) 소속 그룹. 상장 기업은 1504 항 (1504 (b) 항에 관계없이 결정됨)에 정의 된 바와 같이 계열사 그룹을 포함합니다. 그러나이 조항의 목적 상, 계열사 계열의 기업은 자체적으로 공개 법인 인 자회사를 포함하지 않습니다. 공개 된 자회사 및 자회사 (있는 경우)는이 섹션과 별도로 적용됩니다. 해당 피고용인이 계열사 그룹의 2 명 이상의 회원에 의해 과세 연도에 보수를 지급받는 경우, 계열사 그룹의 각 구성원이 지불 한 보수는 그룹의 다른 모든 구성원이 보상 대상 직원에게 지불 한 보수로 집계됩니다. 이 섹션에서 공제로 허용되지 않는 금액은 과세 연도에 각 해당 법인이 보상하는 직원에게 지불 한 보상 금액에 비례하여 지불 회사간에 비례 배분해야합니다.
(2) 해당 직원 -
(i) 일반 규칙. 해당 근로자는 과세 연도의 마지막 날에 다음과 같은 개인을 의미합니다.
(A) 회사의 최고 경영자 또는 그러한 역량으로 행동하고있다. 또는.
(B) 최고 책임자 4 명 중 최고 경영자를 제외한
(ii) 증권 거래위원회 규칙 적용. 개인이 본 section의 paragraph (c) (2) (i) (A) 또는이 section의 paragraph (c) (2) (ⅰ) (B)에 기술 된 임원인지 여부에 따라 결정된다. Exchange Act에 따른 임원 보상 공개 규정에 적용됩니다.
(i) 일반적으로. 본 section의 paragraph (b)에 설명 된 공제 제한의 목적 상 보상은 보상에 대한 과세 연도 (162 (m) 항에 관계없이 결정됨)에 대한 내국세 법 제 1 장에 의거 공제로 허용되는 총액을 의미한다 서비스가 과세 연도에 수행되었는지 여부에 관계없이 해당 직원이 수행 한 서비스의 경우.
(ii) 예외. 보상에는 다음이 포함되지 않습니다 -
(A) 3121 (a) (5) (A) 항 내지 3121 (a) (5) (D) 항 (연방 보험 기여법의 목적 상 임금으로 취급되지 않는 보수에 관한)에 포함 된 보상; 과.
(B) 급여가 제공 될 때 근로자가 그 급여를 근로자가 총소득에서 제외 할 수 있다고 믿는 것이 합당한 경우, 근로자에게 제공되거나 근로자를 대신하여 제공된 급여로 구성된 보수. 또한 보상에는 3121 (v) (1) 항에 기술 된 급여 삭감 기여금이 포함되지 않습니다.
(4) 보상위원회. 보상위원회는 본 section의 paragraph (e) (2)에 설명 된 성과 목표를 수립하고 관리 할 수있는 권한을 가진 공개 법인의 이사회 (이사 소위원회 포함)의위원회를 의미하며 성과 목표는 다음과 같다. 이 절의 (e) (5) 절에 설명 된대로 달성된다. 이사회의위원회는 상장 기업의 이사회 또는 해당되는 경우 이사회의 다른위원회가 비준 한 목적으로 만 성과 목표를 수립 할 권한이없는 것으로 취급되지 않습니다. 보상위원회의 구성에 관한 규칙은이 절의 (e) (3) 항을 참조하십시오.
(5) 거래법. Exchange Act는 1934 년 증권 거래법을 의미합니다.
(6) 예. 이 단락 (c)는 다음의 예를 통해 설명 될 수 있습니다.
(d) 수당 기준으로 지급되는 보상에 대한 예외. 이 절의 (b) 단락의 공제 한도는 수수료 기준으로 지급되는 보상에는 적용되지 않습니다. 이 목적을 위해 사실과 상황에 따라 보상금이 지급되는 개인의 개인 성과에 의해 직접적으로 발생한 소득으로 지급되는 것으로 나타났다면 수수료는 수수료 기준으로 지급됩니다. 비서직 또는 연구 서비스와 같은 지원 서비스가 소득 창출에 활용되기 때문에 보상이 개인에게 직접 귀속되는 것은 아닙니다. 그러나 회사의 사업 단위에서 발생한 소득과 같은보다 광범위한 성과 기준으로 보상이 지급되는 경우 보상은 본 단락 (d)에 의거하여 제공된 예외에 해당하지 않습니다.
(e) 자격 기반 성과 보상에 대한 예외 -
(1) 일반적으로. 본 조항의 (b) 단락의 공제 한도는 적격 한 성과급 보상에는 적용되지 않습니다. 적격 한 성과급 보상은 본 section의 paragraph (e) (2)에서 (e) (5)까지의 모든 요건을 충족시키는 보상이다.
(2) 성과 목표 요구 사항 -
(i) 미리 정해진 목표. 공인 된 성과 중심 보상은 하나 이상의 사전에 정해진 객관적인 성과 목표의 달성으로 인해서 만 지급되어야합니다. 성과 목표는 성과 목표와 관련된 용역 기간의 개시 후 90 일 이내에 보상위원회가 서면으로 확정 한 경우에 확정 된 것으로 간주한다. 단, 보상위원회가 실제적으로 그 결과가 실질적으로 불확실하다면 목표를 수립한다. 그러나 성과 목표의 25 %가 (목표가 성립 될 때 성실히 계획된대로) 경과 한 후에 성취된다면 성과 목표는 미리 정해진 것으로 간주되지 않습니다. 성과 목표는 관련 사실을 알고있는 제 3자가 목표 달성 여부를 결정할 수 있다면 객관적입니다. 성과 목표는 개인, 사업 단위 또는 회사 전체에 적용되는 하나 이상의 비즈니스 기준을 기반으로 할 수 있습니다. 이러한 비즈니스 기준에는 주가, 시장 점유율, 매출액, 주당 순이익, 자본 수익률 또는 비용이 포함될 수 있습니다. 그러나 성과 목표는 비즈니스 기준에 따라 증가 또는 긍정적 인 결과를 기반으로 할 필요는 없으며, 예를 들어 현 상태를 유지하거나 경제적 손실을 제한하는 것 (각각의 경우 특정 비즈니스 기준을 참조하여 측정) . 성과 목표에는 피고용인의 단순한 계속 고용은 포함되지 않는다. 따라서 계속 고용에만 근거한 가득 조 건의 조항은 성과 목표를 구성하지 않을 것입니다. 주식 가격의 상승에 근거한 보상 규정에 대해서는 본 section의 paragraph (e) (2) (vi)를 참조하십시오.
(ii) 객관적인 보상 공식. 미리 정해진 성과 목표는 목표에 도달하면 직원에게 지불 할 보상 액수를 계산하는 방법을 객관적인 공식 또는 표준의 관점에서 명시해야합니다. 공식 또는 표준은 관련 성과 결과를 알고있는 제 3자가 직원에게 지불 할 금액을 계산할 수있는 경우 객관적입니다. 또한 수식이나 표준은 적용되는 개별 직원 또는 직원 클래스를 지정해야합니다.
(A) 객관적인 공식 또는 기준의 조건은 달리 달성 할 때 지불해야 할 보상 금액을 증가시키는 재량을 배제해야한다. 보상위원회가 목표 달성에 따른 보상이나 기타 경제적 이익을 줄이거 나 제거했기 때문에 성과 목표는 본항 (e) (2) (iii)의 목적 상 임의적 인 것이 아닙니다. 그러나 한 직원에 대한 부정적 재량권 행사는 다른 직원에게 지급해야하는 금액을 증가시키는 것을 허용하지 않습니다. 예를 들어, 보너스 풀의 경우, 각 직원에게 지급해야하는 금액이 풀의 비율로 표시되는 경우 풀의 이러한 개별 비율의 합계가 100 %를 초과 할 수 없습니다. 객관적인 공식 또는 표준의 조건이 성과 목표를 달성 할 때 지불해야하는 보상 금액의 전부 또는 일부가 급여 또는 기본의 비율에 기초한 경우에만 보상 금액을 증가시키는 재량권을 배제하지 못하는 경우 성과 목표가 확립 된 시점에 급료 또는 기본급의 달러 금액이 고정되어 있지 않은 경우, 목표 수식 또는 표준은 본 절 (e) (2) (iii)의 목적 상 임의로 고려되지 않습니다. 지불 할 최대 금액은 그 시점에 고정되어 있습니다.
(B) 성과 목표를 달성 한 후 또는 그 후에 보상금을 지불하고, 목표 달성 후 더 빠른 날짜에 보상금 지급을 가속화하기 위해 변경이 이루어진 경우, 그 변경은 금액 인상으로 처리됩니다 지급 된 보상 금액이 시간 가치를 합리적으로 반영하여 할인되지 않는 한 성과 목표 달성시 또는 그 이후에 보상금이 지급되고 나중에 보상금 지급을 연기하도록 변경 한 경우, 원래 그 근로자에게 빚진 금액을 초과하여 지급 된 금액은 추가 금액이 합리적인 이자율 또는 하나 이상의 사전 결정된 실제 투자 (원래 부담해야하는 자산과 관련된 자산이 실제로 투자되었는지 여부에 따라)에 따라 지급되는 금액이 증가하는 경우 보상 금액이 증가합니다. 나중에 고용주는 특정 투자에 대한 실제 수익률 (투자 가치의 감소뿐만 아니라 감소도 포함)을 기준으로합니다. 보상이 재산 형태로 지급되는 경우, 목표 달성 후 해당 자산의 이전 시점 변경은이 단락 (e) (2)의 목적을위한 보상 금액의 증가로 간주되지 않으며, (iii). 따라서, 예를 들어, 주식 부여의 조건이 성과 목표를 달성 한 후에 양도 될 주식을 제공하고 주식의 양도가 가득 된 일정의 적용을받는다면, 가득되거나 또는 연기되는 가득 기간의 변경 주식 양도는 실적 목표에 따라 지불 할 금액의 증가로 간주되지 않습니다.
(C) 스톡 옵션, 주식 보상 권리 또는 기타 주식 기준 보상에 기인하는 보상은 (e) (2)의 요건을 충족시키지 못하는 것은 아니며, 주식 분할 또는 배당과 같은 기업 자본화의 변화 또는 회사의 다른 회사로의 합병, 두 개 이상의 회사의 다른 회사로의 합병, 법인 분리 (예 : 법인의 주식 또는 재산의 분담 또는 기타 배분), 회사의 재구성 (그러한 재구성이 제 368 조의 정의에 포함되는지 여부와 상관없이), 또는 회사의 부분적 또는 완전한 청산.
(iv) 교부금 교부 결정. 보상이 본 절 (e) (2)의 요건을 충족시키는 지의 여부는 일반적으로 보조금 기준으로 결정되어야한다. 따라서 스톡 옵션 보조금에 기인 한 보상이 (e) (2) 항의 요건을 충족시키는 지 여부는 일반적으로 다른 옵션 보조금의 조건이나 기타 조건에 관계없이 특정 보조금에 근거하여 결정됩니다 동일한 직원 또는 다른 직원에게 보상금 지급. 추가 예로서, 단락 (e) (2) (vi)에 규정 된 경우를 제외하고, 제한 주식 또는 기타 주식 기준 보상이 본 절 (e) (2)의 요건을 충족시키는 지 여부는 배당금, 배당금 또는 주식과 관련한 기타 유사한 배당금은 주식 기준 보상에 따라 성과 목표를 달성하기 전에 지불해야합니다. 이 단락 (e) (2) (iv)에 따라 별도의 보조금으로 취급되는 주식과 관련한 배당금, 배당금 또는 이에 상응하는 기타 배당금은 본 절 (e)의 요건을 별도로 충족하지 않는 한 성과에 근거한 보상이 아닙니다 2).
(v) 성과 목표 달성에 따라 보상. 성과 목표 달성 여부에 관계없이 근로자가 보상의 전부 또는 일부를 수령한다는 사실과 상황에 해당하는 경우 보상은이 단락 (e) (2)의 요구 사항을 충족시키지 못합니다. 따라서 보조금이나 보상에 의한 보상금 지급이 실적 목표 달성에 명목상 또는 부분적으로 만 필요한 경우 보조금이나 보조금으로 지급되는 보상금은 실적 기반으로 간주되지 않습니다. 예를 들어, 근로자가 두 가지 중 하나의 계약에 따라 보너스를받을 자격이있는 경우, 그렇지 않은 경우 성과 기반의 계약에 따라 성과 목표를 달성하지 못한 경우 부적격 기반의 계약에 의한 지급이 발생하는 경우, 본항 (e) (2)의 요건을 충족시킨다. 보상은 성과 목표를 달성하기 전에 실제로 발생한 사건을 고려하여 보상 되기는하지만 사망, 장애 또는 소유권 또는 통제권 변경시 보상금 지급이 허용되기 때문에 보상만으로 성과 기반 보상을받을 수 있습니다 (e) (2)의 요건을 충족시키지 못한다. 본 section의 paragraph (e) (2) (iv)의 첫 번째 문장에 규정 된 일반 규칙의 예외로서, 본 paragraph (e) (2)의 첫 번째 문장에서 언급 된 사실 및 상황 결정은, (v) 직원에게 보상을 제공하는 모든 계획, 약정 및 계약을 고려하여 작성되어야합니다.
(vi) 스톡 옵션 및 주식 보상 권리 요구 사항의 적용 -
(A) 일반적으로. 스톡 옵션 또는 주식 보상 권리로 인한 보상은 보상위원회가 보조금 또는 보상을 한 경우 본 paragraph (e) (2)의 요건을 충족하는 것으로 간주됩니다. 옵션 또는 권리가 부여 된 계획은 특정 기간 동안 옵션 또는 권리가 개별 직원에게 부여 될 수있는 최대 주식 수를 명시합니다. 옵션 또는 권리의 조건에 따라 직원이 수령 할 수있는 보상 금액은 보조금 또는 보상을받은 날 이후의 주식 가치의 증가에만 근거합니다. 계획은 스톡 옵션과 주식 매입 선택권과 관련하여 스톡 옵션과 주식 매수 선택권이 최대 주식수를 규정 한 경우 & # xA7에 따라 주주가 승인 한 계획에 따라 특정 기간 동안 개별 직원에게 부여 될 수있는 주식 보상 권한, 제한된 주식, 제한된 주식 단위 및 기타 주식 기준 보상; 1.162-27 (e) (4). 보조금이나 보상으로 직원이받을 수있는 보상 금액이 보조금이나 보상을받은 날 이후의 주식 가치 상승에만 근거하지 않는 경우 (예 : 제한된 주식의 경우 또는 부여 일 현재 주식의 공정한 시장 가치보다 낮은 행사 가격으로 부여 된 경우), 보조금 또는 보상에 기인하는 보상금은 본 호 (e) (2)에 의거 한 적격 한 성과급 보상이 아니며 통하다). 주식 매수 선택권 부여가 주식 매수 선택권 부여 후 주식 가치 상승에만 기초하는지 여부는 지급 가능한 동등한 배당금에 관계없이 결정되며, 동등한 배당금 지급은 옵션. 스톡 옵션이나 주식 보상 권리로 인한 보상은 보조금이나 보상이 주식으로 이루어진 경우 주식의 가치가 증가한 경우에만 적용되어야한다는 규칙이 적용되거나 보조금 또는 보상의 가득 또는 행사 가능성은 본 절 (e) (2)의 요건을 충족하는 성과 목표의 달성에 달려있다.
(B) 취소 및 변경. 스톡 옵션 또는 주식 보상 권리로 인한 보상은 부여 된 옵션 수가 지정된대로 직원에게 옵션을 부여 할 수있는 최대 주식 수를 초과하는 경우 (e) (2) 항의 요건을 충족하지 못합니다 계획에. 옵션이 취소 된 경우 취소 된 옵션은 계획에 따라 직원에게 옵션을 부여 할 수있는 최대 주식 수에 계속 계산됩니다. 부여 후 옵션의 행사 가격이 감소한 경우, 거래는 옵션의 취소 및 새로운 옵션의 부여로 취급됩니다. 이 경우 취소 된 것으로 간주되는 옵션과 부여 된 것으로 간주되는 옵션은 모두 해당 옵션에 따라 옵션을 부여받을 수있는 최대 주식 수를 줄입니다. 이 단락 (e) (2) (vi) (B)는 또한 주식 보상위원회가 결정된 후 주식 가치 상승이 계산 된 기본 금액이 공정 가치의 감소를 반영하여 감소되는 주식 보상 권의 경우에도 적용됩니다 주식의 시가.
(vii) 예. 이 단락 (e) (2)는 다음의 예들로 설명 될 수 있습니다 :
(3) 사외 이사 -
(i) 일반 규칙. 보상이 지급되는 성과 목표는 두 명 이상의 사외 이사로만 구성된 보상위원회에서 설정해야합니다. 이사는 사외 이사인데,
(A) 상장 기업의 현재 직원이 아니다.
(B) 상장 기업의 전직 직원이 과세 연도 동안 이전 서비스 (세금 공제 퇴직 계획에 따른 혜택 제외)에 대한 보상을받는 사람이 아닌가?
(C) 상장 기업의 장교가 아니 었습니다. 과.
(D) 감독직이 아닌 직무 상 직접 또는 간접적으로 공개 법인으로부터 보수를받지 못한다. 이를 위해 보상에는 재화 나 용역에 대한 대가로 지불하는 것이 포함됩니다.
(ii) 보수를 받았다. 이 단락 (e) (3)의 목적 상, 다음 상황에서 감독이 직접 또는 간접적으로 보수를 수령합니다.
(A) 보수가 직접 또는 간접적으로 이사에게 개인적으로 또는 이사의 실질 소유 지분이 50 % 이상인 경우. 이를 위해 보수는 실제로 지급되었을 때 (그리고 회사의 과세 연도의 남은 기간 동안) 지급되며, 보수를 지급 할 계약이나 약정이 미결 된 기간에 지급됩니다.
(B) 최소 지급액 이외의 보수가 이전 과세 연도의 공개 법인에 의해 지급 된 경우, 그 이사가 5 % 이상 50 % 이하의 실질 소유 지분을 보유하고있는 법인에게 지급된다. 이를 위해 보상금은 실제 지급되었을 때 지급 된 것으로 간주되며, 이전에 상장 된 법인이 지불해야하는 경우 보상으로 간주됩니다.
(C) 최소 지급액 이외의 보수가 이전 과세 연도의 공개 법인에 의해 이사가 아닌 자영업자에게 지급 된 경우. 이를 위해 보상금은 실제 지급되었을 때 지급 된 것으로 간주되며, 이전에 상장 된 법인이 지불해야하는 경우 보상으로 간주됩니다.
(iii) 최소한의 보수 -
(A) 일반적으로. 본 section의 paragraph (e) (3) (ii) (B)와 (C)의 목적 상, 상장 기업이 이전에 과세 연도에 지급 한 보수는 기업에 대한 지급이 공개 법인의 과세 연도가 끝나거나 그 이전에 종료 된 과세 연도의 법인세 총액의 5 퍼센트를 초과하지 않아야한다.
(B) 개인 서비스 및 상당한 소유자에 대한 보상. 본 section의 paragraph (e) (3) (iii) (A)에도 불구하고, 보수가 (e) (3) (ii) (B) 항에 기술 된 회사에게 지급되는 경우, $ 60,000를 초과하는 보수는 극히 적지 않습니다. 이 섹션의 (e) (3) (ii) (C) 절에 설명 된 개인에게 개인 서비스를 제공해야합니다.
(iv) 개인적 서비스에 대한 보수. 본 section의 paragraph (e) (3) (iii) (B)의 목적 상, 공개 된 회사의 보수는 다음과 같은 경우에 개인적인 서비스를위한 것이다 :
(A) 보수는 법률, 회계, 투자 은행 및 경영 컨설팅 서비스 (및 판매 인의 판결, 고지 또는 기타 지침에 대해 국장이 지정한 기타 유사 서비스로 구성된 개인 또는 전문 서비스 용으로 기업에 지급됩니다 내부 수익 게시판에 게시 됨), 상장 기업에 대해 수행되며, 보상은 물품 구매 또는 개인 서비스가 아닌 서비스 구매에 부수적 인 서비스에 대한 것이 아닙니다. 과.
(B) 이사는 (e) (3) (iv) (A) 항에 기술 된 서비스를 실제로 제공하는 회사, 부서 또는 이와 유사한 조직 (회사 내)에 대해 중요한 서비스를 수행합니다 (종업원이든 아니든) (기업의 과세 연도의 전체 매출의 50 % 이상)가 해당 법인, 자회사 또는 유사한 조직으로부터 파생 된 경우.
(v) 정의 된 개체. 이 단락 (e) (3)의 목적 상 독립 체는 단독 소유권, 신탁 재산, 파트너십 또는 법인 인 조직을 의미합니다. 이 용어에는 1504 항 (제 1504 조 (b) 항에 관계없이 결정)에 정의 된 계열사 그룹과 계열사가 될 조직 그룹이 포함되지만 하나 이상의 조직이 조직화되지 않았다는 사실 . 그러나 앞의 문장에서 언급 된 집계 규칙은 이사가 5 % 이상 또는 50 % 이상의 실질 소유 지분을 보유하고 있는지 여부를 판단하기위한 목적으로는 적용되지 않습니다.
(vi) 직원 및 전직 직원. 이사가 직원인지 또는 전직 임원인지 여부는 개인이 보상위원회의 이사로 근무하는 시점의 사실에 근거하여 결정됩니다. 따라서 이사는 이전에 상장 기업의 계열사였던 법인의 전직 장교이기 때문에 이사는 전적으로 사외 이사가 될 수 없습니다. 예를 들어, 계열사의 모회사의 이사는 그 이사가 분리되거나 청산 된 계열사의 전직 장교이기 때문에 전적으로 사외 이사가되는 것을 배제하지 않습니다. 그러나 이전에 임원이 된 회사가 상장 기업의 계열사가되면 사외 이사는 더 이상 사외 이사가되지 않습니다.
(vii) 경관. 이 단락 (e) (3)의 목적 상, 공무원은 정기적이고 지속적으로 봉사 활동을하고있는 행정 관리를 의미합니다. 이 용어는 서비스의 연속성을 의미하며 특별하고 단일 거래를 위해 고용 된 사람들을 제외합니다. 공무원의 직책을 단순히 소유하고 있거나 소유하고 있지만 공무원의 권한은 갖고 있지 않은 개인은 공무원으로 간주되지 않습니다. 개인이 임원인지 또는 임원인지에 대한 결정은 개인의 권한의 원천, 개인이 선출되거나 임명 된 기간, 개인의 본질 및 개인의 의무 범위.
(viii) 부속 그룹의 회원. 본 paragraph (e) (3)의 목적 상, 상장 된 그룹의 공개 위원의 사외 이사는 계열사의 모든 구성원의 사외 이사로 취급됩니다.
(ix) 예. 이 단락 (e) (3)은 다음의 예들로 설명 될 수 있습니다 :
(ii) 따라서 1998 년, 1999 년 및 2000 년에 본 섹션의 (e) (3) (ii) (A) 조항에 의거하여 회사 W가 간접적으로 C에게 지불 한 보수로 간주됩니다. 이에 따라 1998 년, 1999 년 및 2000 년에 C가 법인 W의 사외 이사가 아니 었습니다. 법인 W가 적절한 진술을 받았지만 간접적으로 C에게 간접적 인 보수를 지급하고 있다고 믿을만한 이유가 있었 더라면 결과는 동일했을 것입니다.
(4) 주주 승인 요건 -
(i) 일반 규칙. 보상이 지급되는 성과 목표의 중요한 조건은 보상이 지급되기 전에 공개 기업의 주주들에게 공개되어야하고 이후에 승인되어야합니다. 이 단락 (e) (4)의 요건은 중요한 조건이 주주의 승인을 받았는지 여부와 상관없이 보상이 지급되는 경우 충족되지 않습니다. 중요한 용어에는 보상을받을 자격이있는 직원이 포함됩니다. 성과 목표의 근거가되는 비즈니스 기준에 대한 설명; 근로자에게 지불 할 수있는 최대 보상 금액 또는 성과 목표에 도달 할 경우 직원에게 지불 할 보상 금액을 계산하는 공식 (단, 공식을 기반으로 한 경우는 제외) 또는 부분적으로 월급이나 기본급의 일정 비율에 따라 직원에게 지불 할 수있는 최대 보상 금액을 공개해야합니다.
(ii) 적격 직원. 보상을받을 자격이있는 직원의 공개는 특정 개인을 이름으로 식별 할 정도로 구체적 일 필요는 없습니다. 최고 경영자 및 부회장 또는 모든 급여 직원, 모든 임원 또는 모든 핵심 직원과 같이 자격을 갖춘 직원의 직급이나 직급 별 일반적인 설명이 충분합니다.
(iii) 사업 기준 설명 -
(A) 일반적으로. 성과 목표에 기반한 비즈니스 기준의 공개는 성과 목표에 따라 충족되어야하는 특정 목표를 포함하지 않아도됩니다. 예를 들어 주당 순이익이 10 % 증가하면 보너스가 지급된다는 보너스 플랜이 주어지면 10 %는 주주에게 공개 할 필요가없는 목표입니다. 그러나이 경우 보너스 플랜은 주당 순이익 기준에 근거하여 공개해야합니다. 종업원에게 주식 매수 선택권이나 주식 매입 권을 부여 할 수있는 계획의 경우, 보조금이나 보상이 현재의 공정 시장 가격보다 낮은 주가에 기초한 경우 사업 기준에 대한 구체적인 설명이 필요하지 않습니다.
(B) 기밀 정보의 공개. 보상위원회가 정보가 기밀 상업 또는 사업 정보라고 판단하는 경우, 성과 목표의 중요한 용어가 될 정보가 주주들에게 공개되지는 않더라도 본 paragraph (e) (4)의 요건은 충족 될 수있다. 그 공개는 공개 된 기업에 악영향을 미친다. 공개 여부가 기업에 부정적인 영향을 미칠지 여부는 사실과 상황을 기반으로 결정됩니다. 보상위원회가 그러한 결정을 내릴 경우, 주주에 대한 공개는 정보가 기밀 상거래 또는 사업 정보라는 보상위원회의 신념을 밝혀야하며, 그 공개는 회사에 악영향을 미칩니다. 또한 기밀 정보를 공개하지 않는 것이 성과 목표에 따라 개인에게 지불 할 수있는 최대 보상 금액에 대한 공개 요건을 제거하는 것은 아닙니다. 기밀 정보에는 성과 목표가 적용되는 경영진 또는 경영진의 신분 또는 목표가 충족 될 경우 지급 할 보상 금액이 포함되지 않습니다.
(iv) 보상에 대한 설명. 성과 목표에 따라 지급되는 보상에 대한 공시는 주주가 특정 기간 동안 개별 직원에게 지급 할 수있는 최대 보상 금액을 결정할 수 있도록 충분히 구체적이어야합니다. 성과 목표의 조건이 최대 달러 금액을 제공하지 않는 경우, 공시에는 보상이 계산되는 공식을 포함해야합니다. 따라서 스톡 옵션 행사로 인한 보상 금액이 행사 가격과 현재 주가의 차이와 같을 경우 특정 기간 동안 개별 직원에게 부여 할 수있는 최대 주식 수의 공개 그러한 옵션의 행사 가격 (예를 들면, 부여 일의 공정 시장 가격)은 본 paragraph (e) (4) (iv)의 요건을 충족시킬 것이다. 이 경우 주주는 미래 주식 가격에 대한 가정하에 옵션의 행사로 인한 최대 보상 금액을 계산할 수 있습니다.
(ⅴ) 증권 거래위원회의 공시 요구 사항. To the extent not otherwise specifically provided in this paragraph (e)(4), whether the material terms of a performance goal are adequately disclosed to shareholders is determined under the same standards as apply under the Exchange Act.
(vi) Frequency of disclosure. Once the material terms of a performance goal are disclosed to and approved by shareholders, no additional disclosure or approval is required unless the compensation committee changes the material terms of the performance goal. If, however, the compensation committee has authority to change the targets under a performance goal after shareholder approval of the goal, material terms of the performance goal must be disclosed to and reapproved by shareholders no later than the first shareholder meeting that occurs in the fifth year following the year in which shareholders previously approved the performance goal.
(vii) Shareholder vote. For purposes of this paragraph (e)(4), the material terms of a performance goal are approved by shareholders if, in a separate vote, a majority of the votes cast on the issue (including abstentions to the extent abstentions are counted as voting under applicable state law) are cast in favor of approval.
(viii) Members of affiliated group. For purposes of this paragraph (e)(4), the shareholders of the publicly held member of the affiliated group are treated as the shareholders of all members of the affiliated group.
(ix) Examples. This paragraph (e)(4) may be illustrated by the following examples:
(5) Compensation committee certification. The compensation committee must certify in writing prior to payment of the compensation that the performance goals and any other material terms were in fact satisfied. For this purpose, approved minutes of the compensation committee meeting in which the certification is made are treated as a written certification. Certification by the compensation committee is not required for compensation that is attributable solely to the increase in the value of the stock of the publicly held corporation.
(f) Companies that become publicly held, spinoffs, and similar transactions -
(1) In general. In the case of a corporation that was not a publicly held corporation and then becomes a publicly held corporation, the deduction limit of paragraph (b) of this section does not apply to any remuneration paid pursuant to a compensation plan or agreement that existed during the period in which the corporation was not publicly held. However, in the case of such a corporation that becomes publicly held in connection with an initial public offering, this relief applies only to the extent that the prospectus accompanying the initial public offering disclosed information concerning those plans or agreements that satisfied all applicable securities laws then in effect. In accordance with paragraph (c)(1)(ii) of this section, a corporation that is a member of an affiliated group that includes a publicly held corporation is considered publicly held and, therefore, cannot rely on this paragraph (f)(1).
(2) Reliance period. Paragraph (f)(1) of this section may be relied upon until the earliest of -
(i) The expiration of the plan or agreement;
(ii) The material modification of the plan or agreement, within the meaning of paragraph (h)(1)(iii) of this section;
(iii) The issuance of all employer stock and other compensation that has been allocated under the plan; 또는.
(iv) The first meeting of shareholders at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which the initial public offering occurs or, in the case of a privately held corporation that becomes publicly held without an initial public offering, the first calendar year following the calendar year in which the corporation becomes publicly held.
(3) Stock-based compensation. Paragraph (f)(1) of this section will apply to any compensation received pursuant to the exercise of a stock option or stock appreciation right, or the substantial vesting of restricted property, granted under a plan or agreement described in paragraph (f)(1) of this section if the grant occurs on or before the earliest of the events specified in paragraph (f)(2) of this section. This paragraph does not apply to any form of stock-based compensation other than the forms listed in the immediately preceding sentence. Thus, for example, compensation payable under a restricted stock unit arrangement or a phantom stock arrangement must be paid, rather than merely granted, on or before the occurrence of the earliest of the events specified in paragraph (f)(2) of this section in order for paragraph (f)(1) of this section to apply.
(4) Subsidiaries that become separate publicly held corporations -
(i) In general. If a subsidiary that is a member of the affiliated group described in paragraph (c)(1)(ii) of this section becomes a separate publicly held corporation (whether by spinoff or otherwise), any remuneration paid to covered employees of the new publicly held corporation will satisfy the exception for performance-based compensation described in paragraph (e) of this section if the conditions in either paragraph (f)(4)(ii) or (f)(4)(iii) of this section are satisfied.
(ii) Prior establishment and approval. Remuneration satisfies the requirements of this paragraph (f)(4)(ii) if the remuneration satisfies the requirements for performance-based compensation set forth in paragraphs (e)(2), (e)(3), and (e)(4) of this section (by application of paragraphs (e)(3)(viii) and (e)(4)(viii) of this section) before the corporation becomes a separate publicly held corporation, and the certification required by paragraph (e)(5) of this section is made by the compensation committee of the new publicly held corporation (but if the performance goals are attained before the corporation becomes a separate publicly held corporation, the certification may be made by the compensation committee referred to in paragraph (e)(3)(viii) of this section before it becomes a separate publicly held corporation). Thus, this paragraph (f)(4)(ii) requires that the outside directors and shareholders (within the meaning of paragraphs (e)(3)(viii) and (e)(4)(viii) of this section) of the corporation before it becomes a separate publicly held corporation establish and approve, respectively, the performance-based compensation for the covered employees of the new publicly held corporation in accordance with paragraphs (e)(3) and (e)(4) of this section.
(iii) Transition period. Remuneration satisfies the requirements of this paragraph (f)(4)(iii) if the remuneration satisfies all of the requirements of paragraphs (e)(2), (e)(3), and (e)(5) of this section. The outside directors (within the meaning of paragraph (e)(3)(viii) of this section) of the corporation before it becomes a separate publicly held corporation, or the outside directors of the new publicly held corporation, may establish and administer the performance goals for the covered employees of the new publicly held corporation for purposes of satisfying the requirements of paragraphs (e)(2) and (e)(3) of this section. The certification required by paragraph (e)(5) of this section must be made by the compensation committee of the new publicly held corporation. However, a taxpayer may rely on this paragraph (f)(4)(iii) to satisfy the requirements of paragraph (e) of this section only for compensation paid, or stock options, stock appreciation rights, or restricted property granted, prior to the first regularly scheduled meeting of the shareholders of the new publicly held corporation that occurs more than 12 months after the date the corporation becomes a separate publicly held corporation. Compensation paid, or stock options, stock appreciation rights, or restricted property granted, on or after the date of that meeting of shareholders must satisfy all requirements of paragraph (e) of this section, including the shareholder approval requirement of paragraph (e)(4) of this section, in order to satisfy the requirements for performance-based compensation.
(5) Example. The following example illustrates the application of paragraph (f)(4)(ii) of this section:
(g) Coordination with disallowed excess parachute payments. The $1,000,000 limitation in paragraph (b) of this section is reduced (but not below zero) by the amount (if any) that would have been included in the compensation of the covered employee for the taxable year but for being disallowed by reason of section 280G. For example, assume that during a taxable year a corporation pays $1,500,000 to a covered employee and no portion satisfies the exception in paragraph (d) of this section for commissions or paragraph (e) of this section for qualified performance-based compensation. Of the $1,500,000, $600,000 is an excess parachute payment, as defined in section 280G(b)(1) and is disallowed by reason of that section. Because the excess parachute payment reduces the limitation of paragraph (b) of this section, the corporation can deduct $400,000, and $500,000 of the otherwise deductible amount is nondeductible by reason of section 162(m).
(h) Transition rules -
(1) Compensation payable under a written binding contract which was in effect on February 17, 1993 -
(i) General rule. The deduction limit of paragraph (b) of this section does not apply to any compensation payable under a written binding contract that was in effect on February 17, 1993. The preceding sentence does not apply unless, under applicable state law, the corporation is obligated to pay the compensation if the employee performs services. However, the deduction limit of paragraph (b) of this section does apply to a contract that is renewed after February 17, 1993. A written binding contract that is terminable or cancelable by the corporation after February 17, 1993, without the employee's consent is treated as a new contract as of the date that any such termination or cancellation, if made, would be effective. Thus, for example, if the terms of a contract provide that it will be automatically renewed as of a certain date unless either the corporation or the employee gives notice of termination of the contract at least 30 days before that date, the contract is treated as a new contract as of the date that termination would be effective if that notice were given. Similarly, for example, if the terms of a contract provide that the contract will be terminated or canceled as of a certain date unless either the corporation or the employee elects to renew within 30 days of that date, the contract is treated as renewed by the corporation as of that date. Alternatively, if the corporation will remain legally obligated by the terms of a contract beyond a certain date at the sole discretion of the employee, the contract will not be treated as a new contract as of that date if the employee exercises the discretion to keep the corporation bound to the contract. A contract is not treated as terminable or cancelable if it can be terminated or canceled only by terminating the employment relationship of the employee.
(ii) Compensation payable under a plan or arrangement. If a compensation plan or arrangement meets the requirements of paragraph (h)(1)(i) of this section, the compensation paid to an employee pursuant to the plan or arrangement will not be subject to the deduction limit of paragraph (b) of this section even though the employee was not eligible to participate in the plan as of February 17, 1993. However, the preceding sentence does not apply unless the employee was employed on February 17, 1993, by the corporation that maintained the plan or arrangement, or the employee had the right to participate in the plan or arrangement under a written binding contract as of that date.
(iii) Material modifications.
(A) Paragraph (h)(1)(i) of this section will not apply to any written binding contract that is materially modified. A material modification occurs when the contract is amended to increase the amount of compensation payable to the employee. If a binding written contract is materially modified, it is treated as a new contract entered into as of the date of the material modification. Thus, amounts received by an employee under the contract prior to a material modification are not affected, but amounts received subsequent to the material modification are not treated as paid under a binding, written contract described in paragraph (h)(1)(i) of this section.
(B) A modification of the contract that accelerates the payment of compensation will be treated as a material modification unless the amount of compensation paid is discounted to reasonably reflect the time value of money. If the contract is modified to defer the payment of compensation, any compensation paid in excess of the amount that was originally payable to the employee under the contract will not be treated as a material modification if the additional amount is based on either a reasonable rate of interest or one or more predetermined actual investments (whether or not assets associated with the amount originally owed are actually invested therein) such that the amount payable by the employer at the later date will be based on the actual rate of return of the specific investment (including any decrease as well as any increase in the value of the investment).
(C) The adoption of a supplemental contract or agreement that provides for increased compensation, or the payment of additional compensation, is a material modification of a binding, written contract where the facts and circumstances show that the additional compensation is paid on the basis of substantially the same elements or conditions as the compensation that is otherwise paid under the written binding contract. However, a material modification of a written binding contract does not include a supplemental payment that is equal to or less than a reasonable cost-of-living increase over the payment made in the preceding year under that written binding contract. In addition, a supplemental payment of compensation that satisfies the requirements of qualified performance-based compensation in paragraph (e) of this section will not be treated as a material modification.
(iv) Examples. The following examples illustrate the exception of this paragraph (h)(1):
(2) Special transition rule for outside directors. A director who is a disinterested director is treated as satisfying the requirements of an outside director under paragraph (e)(3) of this section until the first meeting of shareholders at which directors are to be elected that occurs on or after January 1, 1996. For purposes of this paragraph (h)(2) and paragraph (h)(3) of this section, a director is a disinterested director if the director is disinterested within the meaning of Rule 16b-3(c)(2)(i), 17 CFR 240.16b-3(c)(2)(i), under the Exchange Act (including the provisions of Rule 16b-3(d)(3), as in effect on April 30, 1991).
(3) Special transition rule for previously-approved plans - (i) In general. Any compensation paid under a plan or agreement approved by shareholders before December 20, 1993, is treated as satisfying the requirements of paragraphs (e)(3) and (e)(4) of this section, provided that the directors administering the plan or agreement are disinterested directors and the plan was approved by shareholders in a manner consistent with Rule 16b-3(b), 17 CFR 240.16b-3(b), under the Exchange Act or Rule 16b-3(a), 17 CFR 240.16b-3(a) (as contained in 17 CFR part 240 revised April 1, 1990). In addition, for purposes of satisfying the requirements of paragraph (e)(2)(vi) of this section, a plan or agreement is treated as stating a maximum number of shares with respect to which an option or right may be granted to any employee if the plan or agreement that was approved by the shareholders provided for an aggregate limit, consistent with Rule 16b-3(b), 17 CFR 250.16b-3(b), on the shares of employer stock with respect to which awards may be made under the plan or agreement.
(ii) Reliance period. The transition rule provided in this paragraph (h)(3) shall continue and may be relied upon until the earliest of -
(A) The expiration or material modification of the plan or agreement;
(B) The issuance of all employer stock and other compensation that has been allocated under the plan; 또는.
(C) The first meeting of shareholders at which directors are to be elected that occurs after December 31, 1996.
(iii) Stock-based compensation. This paragraph (h)(3) will apply to any compensation received pursuant to the exercise of a stock option or stock appreciation right, or the substantial vesting of restricted property, granted under a plan or agreement described in paragraph (h)(3)(i) of this section if the grant occurs on or before the earliest of the events specified in paragraph (h)(3)(ii) of this section.
(iv) Example. The following example illustrates the application of this paragraph (h)(3):
(j) Effective date -
(1) In general. Section 162(m) and this section apply to compensation that is otherwise deductible by the corporation in a taxable year beginning on or after January 1, 1994.
(2) Delayed effective date for certain provisions -
(i) Date on which remuneration is considered paid. Notwithstanding paragraph (j)(1) of this section, the rules in the second sentence of each of paragraphs (e)(3)(ii)(A), (e)(3)(ii)(B), and (e)(3)(ii)(C) of this section for determining the date or dates on which remuneration is considered paid to a director are effective for taxable years beginning on or after January 1, 1995. Prior to those taxable years, taxpayers must follow the rules in paragraphs (e)(3)(ii)(A), (e)(3)(ii)(B), and (e)(3)(ii)(C) of this section or another reasonable, good faith interpretation of section 162(m) with respect to the date or dates on which remuneration is considered paid to a director.
(ii) Separate treatment of publicly held subsidiaries. Notwithstanding paragraph (j)(1) of this section, the rule in paragraph (c)(1)(ii) of this section that treats publicly held subsidiaries as separately subject to section 162(m) is effective as of the first regularly scheduled meeting of the shareholders of the publicly held subsidiary that occurs more than 12 months after December 2, 1994. The rule for stock-based compensation set forth in paragraph (f)(3) of this section will apply for this purpose, except that the grant must occur before the shareholder meeting specified in this paragraph (j)(2)(ii). Taxpayers may choose to rely on the rule referred to in the first sentence of this paragraph (j)(2)(ii) for the period prior to the effective date of the rule.
(iii) Subsidiaries that become separate publicly held corporations. Notwithstanding paragraph (j)(1) of this section, if a subsidiary of a publicly held corporation becomes a separate publicly held corporation as described in paragraph (f)(4)(i) of this section, then, for the duration of the reliance period described in paragraph (f)(2) of this section, the rules of paragraph (f)(1) of this section are treated as applying (and the rules of paragraph (f)(4) of this section do not apply) to remuneration paid to covered employees of that new publicly held corporation pursuant to a plan or agreement that existed prior to December 2, 1994, provided that the treatment of that remuneration as performance-based is in accordance with a reasonable, good faith interpretation of section 162(m). However, if remuneration is paid to covered employees of that new publicly held corporation pursuant to a plan or agreement that existed prior to December 2, 1994, but that remuneration is not performance-based under a reasonable, good faith interpretation of section 162(m), the rules of paragraph (f)(1) of this section will be treated as applying only until the first regularly scheduled meeting of shareholders that occurs more than 12 months after December 2, 1994. The rules of paragraph (f)(4) of this section will apply as of that first regularly scheduled meeting. The rule for stock-based compensation set forth in paragraph (f)(3) of this section will apply for purposes of this paragraph (j)(2)(iii), except that the grant must occur before the shareholder meeting specified in the preceding sentence if the remuneration is not performance-based under a reasonable, good faith interpretation of section 162(m). Taxpayers may choose to rely on the rules of paragraph (f)(4) of this section for the period prior to the applicable effective date referred to in the first or second sentence of this paragraph (j)(2)(iii).
(iv) Bonus pools. Notwithstanding paragraph (j)(1) of this section, the rules in paragraph (e)(2)(iii)(A) that limit the sum of individual percentages of a bonus pool to 100 percent will not apply to remuneration paid before January 1, 2001, based on performance in any performance period that began prior to December 20, 1995.
(v) Compensation based on a percentage of salary or base pay. Notwithstanding paragraph (j)(1) of this section, the requirement in paragraph (e)(4)(i) of this section that, in the case of certain formulas based on a percentage of salary or base pay, a corporation disclose to shareholders the maximum dollar amount of compensation that could be paid to the employee, will apply only to plans approved by shareholders after April 30, 1995.
(vi) The modifications to paragraphs (e)(2)(vi)(A), (e)(2)(vii) Example 9, and (e)(4)(iv) of this section concerning the maximum number of shares with respect to which a stock option or stock appreciation right that may be granted and the amount of compensation that may be paid to any individual employee apply to compensation attributable to stock options and stock appreciation rights that are granted on or after June 24, 2011. The last two sentences of § 1.162-27(f)(3) apply to remuneration that is otherwise deductible resulting from a stock option, stock appreciation right, restricted stock (or other property), restricted stock unit, or any other form of equity-based remuneration that is granted on or after April 1, 2015.
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IRS Clarifies Rules under §162(m) of Internal Revenue Code on Deductibility of Certain Compensation.
The IRS has proposed Treasury Regulations that clarify the performance-based compensation exception under Section 162(m) of the Internal Revenue Code, which generally precludes a deduction by any publicly held corporation of compensation paid to certain high level employees to the extent the compensation exceeds $1,000,000. The Treasury Regulations, proposed on June 24, 2011, clarify that in order for stock options and rights to qualify as performance-based compensation, a plan must state the maximum number of shares with respect to which the stock options or rights may be granted during a specified time to any employee. In addition, the proposed Treasury Regulations clarify that restricted stock units and phantom stock awards granted during the “transition period” (as explained below) will not qualify as performance-based compensation if they are paid after the end of such period. These clarifications may require changes to, and new shareholder approval of, an employer’s equity plan.
Clarification of the Maximum Number of Shares Disclosure Requirement.
In order to satisfy the exception for performance-based compensation with respect to stock options and stock appreciation rights, the plan under which the stock options or stock appreciation rights are granted must state the maximum number of shares with respect to which options or rights may be granted during a specified time to any employee . The proposed Treasury Regulations under Section 162(m) clarify that if a plan states the maximum number of shares that may be granted but does not contain a per-employee limitation on the number of options or rights that may be granted, then any compensation attributable to the stock options or rights under the plan is not performance-based compensation. Although this is a clarification rather than a substantive change, we recommend that clients review their existing equity plans to ensure compliance with this clarification. If the proposed Treasury Regulations are finalized without change and without a transition rule, as of the effective date of such regulations, any plan that fails to include the per-employee limitation described above will need to be amended and reapproved by shareholders in order for options and rights granted under the plan to qualify as performance-based compensation.
The text of the proposed Treasury Regulations indicate that this clarification is effective as of June 24, 2011, once the proposed Treasury Regulations are finalized, however, the Preamble to the proposed Treasury Regulations states that they will apply to taxable years ending on or after the date of publication of the rule as final Treasury Regulations. We anticipate that the final Treasury Regulations will clarify the effective date.
Section 162(m) Transition Rule Guidance for Private Companies that Become Public.
The proposed Treasury Regulations also provide additional guidance concerning the transition rules under Section 162(m) that apply when a company becomes a publicly held corporation subject to Section 162(m).
The Treasury Regulations under Section 162(m) provide that in the case of a corporation that was not a publicly held corporation and then becomes a publicly held corporation, the $1,000,000 deduction limit “does not apply to any remuneration paid pursuant to a compensation plan or agreement that existed during the period in which the corporation was not publicly held.” If a corporation becomes publicly held in connection with an initial public offering (“IPO”), then the relief provided in the Treasury Regulations applies only to the extent that the prospectus accompanying the IPO disclosed information concerning the existing compensation plans or agreements and satisfied all applicable securities laws.
The Treasury Regulations provide that the relief applies to any compensation received pursuant the exercise of a stock option or stock appreciation right, or the substantial vesting of restricted property if the grant occurs on or before the end of the Transition Period.
Practitioners have asked whether compensation payable under a restricted stock unit arrangement or a phantom stock arrangement is eligible for this special transition rule that applies to stock options, stock appreciation rights and restricted property. (A restricted stock unit is a right to an amount based on the value of the employer's stock, and which is payable in cash, shares of the stock, or other property, following the satisfaction of a specified vesting condition. Compensation payable under a phantom stock arrangement is compensation that is paid at a future date in cash or in property based on the value of the employer's stock.)
The proposed Treasury Regulations clarify that only compensation attributable to stock options, stock appreciation rights and restricted property is covered under the special transition rule discussed above. Thus, any company attempting to avail itself of the special transition rules in the Section 162(m) Treasury Regulations should be aware that unless restricted stock units and phantom stock arrangements are paid out prior to the end of the Transition Period, such payments will be subject to the $1,000,000 deduction limit under Section 162(m). Companies should keep in mind that to the extent restricted stock units and phantom stock arrangements are subject to Section 409A of the Internal Revenue Code, accelerating the payment date of such awards could have adverse tax consequences to participants.
Prior to publication of these proposed Treasury Regulations, the IRS ruled privately in a number of rulings that where a company that had become publicly traded granted restricted stock units during the Transition Period, payment in respect of the restricted stock units after the close of the Transition Period was not subject to the $1 million deduction limit. See Priv. Ltr. Ruls. 200449012 and 200406026.
The text of the proposed Treasury Regulations provides that this new transition rule will apply after the date of the publication of the proposed Treasury Regulations as final Treasury Regulations in the Federal Register, however, the Preamble to the proposed Treasury Regulations state that they will apply to taxable years ending on or after the date of publication of the rule as final Treasury Regulations. We anticipate that the final Treasury Regulations will clarify the effective date.
©2011 Jackson Lewis P. C. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis.
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Jackson Lewis P. C. represents management exclusively in workplace law and related litigation. Our attorneys are available to assist employers in their compliance efforts and to represent employers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Jackson Lewis attorney with whom you regularly work.
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Know your limits! Section 162(m) and excess equity grants.
In the past few years there has been an uptick in stockholder derivative litigation related to equity compensation granted to named executive officers that exceed the plan share limits. The claims against the companies include breach of fiduciary duty, waste of corporate assets, unjust enrichment and false or misleading disclosures. At the core of these claims is Section 162(m) of the Internal Revenue Code. Section 162(m) limits to $1 million the compensation expense deduction a publicly-traded company can take with respect to compensation of certain named executive officers or "covered employees." Excluded from the Section 162(m) deduction limitation is compensation that qualifies as "performance-based," which includes stockholder approval requirements.
A stock option by its nature is performance-based, as the optionee generally receives a benefit only if the value of the stock at the time of exercise exceeds the exercise price. In addition to other requirements, Section 162(m) qualifies stock options 1 granted under a plan as "performance-based" if (i) the governing plan sets forth the maximum number of shares subject to stock options that may be awarded to an individual over a set period of time, (ii) the exercise price of the stock options are made at or above the stock's fair market value on the grant date, and (iii) the company's stockholders approve the plan. For other types of awards, the stockholders must approve the maximum amount that can be paid to an individual either through a fixed amount or a formula that allows a stockholder to calculate the maximum amount. Typically, a plan will set forth a maximum number of shares or value of shares that may be granted as a performance-based full-value award, for example, restricted stock units or restricted stock upon which vesting is conditioned upon the achievement of performance goals.
It is best practices for a company to avoid compromising the qualification of equity compensation as "performance-based" by taking preventative measures. For example, a company may have its stockholder services department calculate the maximum amount of shares that may be granted, under a stock option or full-value award, to any individual in advance of a meeting of the board of directors or compensation committee in which equity awards are to be approved. If a company finds that it has granted an equity award in excess of the Section 162(m) limits, the company should be able to correct the grant prior to payment, and preserve the grant's status as "performance-based," 2 as follows:
Obtain Stockholder Approval: the company may seek stockholder approval of the award prior to payment; however, seeking stockholder approval from a timing or cost perspective may be impractical. Cancel Excess Shares Subject to the Award: the company may cancel an award made in excess of the limits; provided that (a) the award is not a stock option, and (b) the awardee consents to the cancelation. Cancel the Award and Re-Grant Under a Separate Equity Plan: the Section 162(m) Treasury regulations provide that an option that is canceled "continues to be counted against the maximum number of shares for which options may be granted." Thus, the cancelation of all or a portion of the stock option award will not preserve its performance-based qualification. The new stock option award would have to be granted under a separate stockholder approved plan within the limits of such separate plan.
A cancellation and re-grant of a stock option is not without challenges. The company may not wish to tackle the complexities of re-granting a stock option at the original exercise price, if the stock price has increased, as the re-grant would be considered a discounted stock option and subject to Section 409A of the Internal Revenue Code. Nevertheless, unless the plan has a provision invalidating an excess grant, the cancellation of the stock option is an adverse action requiring the consent of the optionee. If the stock price has decreased, the company would be prudent to re-grant the stock option at the original exercise price as a re-grant at a lower price may be deemed a repricing, which would require stockholder approval under certain listing rules.
A company should be aware that a grant in excess of the plan limits will not always create a tax issue. For example, a company's principal financial officer is not currently considered a "covered employee" subject to the Section 162(m) limitation, so an excess grant to such an officer may be deductible even though his or her compensation is in excess of $1 million. Also, whether or not an award is deductible may not matter to a company that is currently operating at a loss.
We recommend that companies conduct an internal audit of their equity plans in advance of receiving a demand letter from, or notice of a lawsuit filed by, a stockholder. We at King & Spalding are ready to assist you.
Section 162(m) Pitfalls.
It's proxy season. For public companies that rely on the performance-based compensation exception to the $1 million annual deduction limit under section 162(m) of the Internal Revenue Code (Code), that means it's time to adopt annual and long-term incentive plans, set performance goals, certify attainment of performance goals from prior-year plans, disclose performance targets, and address the deductibility of executive compensation in their annual Compensation Discussion and Analysis disclosures.
We have highlighted below several common compliance pitfalls that can be fatal to qualifying for the section 162(m) performance-based compensation exception. Public companies should review their performance-based compensation arrangements in light of these pitfalls to maximize their tax deduction for compensation paid to their top executives.
Common Section 162(m) Pitfalls.
Permitting payment of performance-based compensation upon retirement, involuntary termination, or termination for good reason . Pursuant to IRS Revenue Ruling 2008-13, compensation payable for performance periods beginning after January 1, 2009 or paid under employment agreements entered into after February 21, 2008 (or that are renewed or extended after that date, including automatic renewals or extensions) will not qualify as performance-based if it may be paid without regard to whether the performance goals are met when the executive retires, is involuntarily terminated without cause, or terminates employment for good reason. This rule applies without regard to whether any of these events actually occur or the performance goals are in fact attained; the mere presence of the provision disqualifies the arrangement.[1] Therefore, companies should review their employment contracts, severance agreements, and other compensation arrangements to see if performance-based arrangements intended to comply with section 162(m) could be payable on retirement, involuntary termination, or termination for good reason.
Allowing directors who are not "outside directors" to serve on the committee authorizing and administering section 162(m) performance-based compensation. To qualify as performance-based compensation, compensation must be awarded and administered by a committee composed solely of two or more "outside directors." "Outside directors" are defined as directors who are not former employees or current or former officers (including directors who acted as interim officers depending on the circumstances)[2] and who generally do not receive remuneration other than director compensation from the corporation. Satisfying the NYSE or NASDAQ requirements for independent directors or the SEC requirements for nonemployee directors under Rule 16b-3 (while generally mandatory) is not sufficient-the section 162(m) requirements are different (and can be more restrictive).
Using a performance goal that is not based on the business criteria approved by shareholders. Compensation other than stock options and stock appreciation rights (SARs) granted with an exercise price at least equal to grant date fair market value will qualify as performance-based compensation only if it is paid solely on the attainment of one or more pre-established, objective performance goals, based upon business criteria approved by shareholders. The compensation committee may not deviate from the business criteria listed in the shareholder-approved plan. These criteria need not be specific as to the exact targets being used. For example, the plan need not be so specific as to provide that the performance goal is a 10% increase in earnings per share. Rather, the plan need only provide that the performance goal may be based on earnings per share. However, pursuant to the SEC's compensation proxy disclosure requirements, a company must annually disclose and analyze the specific performance criteria and targets in its Compensation Discussion and Analysis unless the disclosure involves confidential trade secrets or confidential commercial or financial information, the disclosure of which would result in competitive harm to the company.
Failing to obtain shareholder reapproval of business criteria upon which performance goals are based. The specific targets that must be satisfied under a performance goal need not be approved by shareholders. However, if the compensation committee has the authority to change the targets under a performance goal from year to year after shareholders have approved the business criteria upon which performance goals are based, the business criteria must be disclosed to and re-approved by shareholders at least every five years. Therefore, if shareholders last approved the business criteria in a plan in 2005, the business criteria should be submitted to shareholders for reapproval in 2010. The material terms of the performance goals that must be reapproved include (1) the class of eligible employees, (2) the types of business criteria on which the payouts or vesting for performance-based awards are based, and (3) the maximum amounts of cash or shares that can be provided during a specified period to any employee for performance-based awards under the plan.
Failing to establish the performance goals on a timely basis or making changes to the performance goals or targets. The performance goals must be established in writing no later than 90 days after the beginning of the service period to which the performance goals relate (or before 25% of such service period has elapsed) and at a time when the outcome is substantially uncertain. For calendar-year service (and performance) periods, this means that the performance goals for an annual plan must be established by March 31, 2010. The performance goals cannot be changed after this initial period.
Paying compensation when the performance goals were not attained. To qualify as performance-based compensation, compensation must be paid solely on the attainment of one or more objective performance goals. In the current economic environment, many companies did not attain their performance goals and may be considering paying their executives discretionary bonuses for their efforts in 2009. A word of caution: a discretionary bonus would not qualify for the performance-based exception, and could also jeopardize the performance-based exception for prior or future bonuses, if the facts and circumstances indicate that performance-based compensation is paid regardless of performance. On the flip side, compensation payable on account of attaining the performance goal must not exceed the limit that was approved by shareholders, and the plan should not provide the compensation committee discretion to pay more than the authorized amount.
Adjusting bonus amounts for subsequent events if such an adjustment is not included in the performance goal formula. To qualify as performance-based, compensation must be payable under an objective formula for computing the amount payable if a certain goal is attained. It is possible to adjust performance measures for certain objective subsequent events (for example , reorganization and restructuring programs or other executive termination costs, integration and other one-time expenditures, the sale or acquisition of a business unit); however, this feature must be included in the performance goal formula when it is initially established, and cannot be added at the end of the performance period. If unanticipated circumstances arise, the compensation committee can use its discretion to reduce the payout to the desired level based on the circumstances, but the payment cannot be increased to disregard the impact of subsequent events if no adjustment mechanism is present.
Increasing the amount of compensation that would otherwise be due upon attainment of the performance goals. Compensation will not qualify as performance-based if the compensation committee has discretion to increase the amount payable upon attainment of the performance goals. However, the committee may have discretion to reduce the payment.
Paying awards or bonuses without compensation committee certification that the performance goals were satisfied. Compensation committees must certify that the performance goals have been met in order for amounts paid upon attainment of those goals to be deductible under section 162(m). This applies to any bonuses or awards, including the vesting of equity awards based on performance. This certification should be included in the compensation committee minutes.
Misstating or omitting required terms that must be approved by shareholders for compensation to qualify as performance-based. The material terms that must be approved by shareholders include the maximum amount of compensation that could be paid to any employee or the formula used to calculate the amount of compensation to be paid to individual employees if certain performance goals are attained, the employees eligible to receive the compensation, and a description of the business criteria on which the performance goals are based. The description of the compensation payable must be specific enough so that shareholders can determine the maximum amount that could be paid to any employee during a specified period. With respect to options and SARs, the plan must state the maximum number of shares with respect to which options or SARs may be granted during a specified period to any employee.
Granting stock options or SARs in excess of the plan's limit or the amount that can be awarded to an individual in a specified time period. Stock options and SARs must be granted under a shareholder-approved plan that contains a limit on the maximum number of options or SARs that may be granted to any employee in a specified period and the exercise price.
Allowing inside directors to participate in granting stock options or SARs . Stock options and SARs must be granted by "outside directors" in accordance with a shareholder-approved plan in order to qualify as performance-based compensation under section 162(m).
Granting discounted stock options or SARs. The exercise price (or measurement) of stock options and SARs intended to qualify with section 162(m) (and to be exempt from Code section 409A) must not be less than the fair market value of the underlying stock on the grant date-the amount of the compensation that the employee can receive must be based solely on an increase in the value of the stock after the grant date. A recent IRS generic Legal Advice Memorandum, dated July 6, 2009, emphasizes that discounted stock options or SARs can never qualify as performance-based compensation under section 162(m) and states that discounted options and SARs cannot be cured for purposes of qualifying as performance-based compensation under section 162(m).
Not contemporaneously documenting stock option and SAR grants or failing to document grants altogether. Even though the section 162(m) regulations do not require formal committee meetings to grant options or SARs or even prompt documentation of those grants, on audit the IRS has taken the position that options are discounted (and thus do not qualify as performance-based compensation under section 162(m)) when grants are documented weeks after the grant date using "as of" grant dates or unanimous written consents (UWCs), when there is no contemporaneous documentation of compensation committee meetings or when there are only oral authorizations from the board or the compensation committee. In the event that the IRS determines that it is not possible to determine the grant date, the IRS will use the financial accounting measurement date as a proxy for the grant date. To avoid this challenge, the compensation committee should be precise about when an option or SAR is granted and complete all corporate documentation in a timely manner, for example, by preparing, signing, and dating the committee minutes or UWCs at the committee meeting, or within a day or two after the meeting or after the decision is made to grant options or SARs. This also raises a question about "best practices" for granting equity compensation.
Granting stock options or SARs or paying other compensation under a plan that was not approved by shareholders.
Materially amending a plan without shareholder approval.
For companies having an IPO, failing to obtain shareholder approval of a pre-IPO plan before the first shareholders meeting following the end of the third calendar year after the IPO.
Accelerating the payment date of performance-based compensation without reducing the payment amount to reflect the time value of money.
Companies can mitigate the adverse effect of failing to comply with section 162(m) by requiring deferrals of any amounts that would not be deductible by the company to a date after the employee's termination of employment. Forcing executives to assume the credit risk in difficult economic times may be met with resistance, however. Also, keep in mind that any such deferral must be made in accordance with section 409A.
Companies should consider instituting clawback policies with respect to performance-based compensation. A clawback policy allows the company to recover compensation if subsequent review indicates that payments were not calculated accurately or performance goals were not met.
If you have any questions or would like more information on any of the issues discussed in this Hot Topics alert, please contact any of the following Morgan Lewis attorneys:
[1] Compensation may qualify as performance-based even if the plan allows the compensation to be payable upon death, disability, or change of ownership or control without attainment of the performance goals. The regulations also warn that compensation actually paid on account of those events would not qualify as performance-based. However, separate exceptions generally ensure a deduction for such payments, since the payees (after the death or disability of an executive) or the payor (in the event of a change in control) are likely exempt from section 162(m) in any event.
[2] Whether a director who serves as an interim officer qualifies as "outside director" depends on the facts and circumstances. In Revenue Ruling 2008-32, the IRS concluded that a director did not qualify as an "outside director" based on the following facts: (1) the company employed the director for an indefinite period of time to serve as interim CEO with the full authority invested in that office; (2) the director was in regular and continuous service for nearly a year; (3) the director was not employed for a special or single transaction; and (4) the director did not merely have the title of "officer." However, under case law long predating section 162(m), absent one or more of these cited conditions, an "interim officer" may not necessarily meet the definition of "officer," and thus may still qualify as an "outside director."
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