March 27, 2019
162(m): Things to Watch
– Liz Dunshee
DLA Piper has been running a series of memos on “proxy season hot topics.” Among other topics (diversity disclosure, perks, etc.), this installment recaps last year’s IRS guidance on grandfathered arrangements under Section 162(m) – and confirms these things to do & watch going forward:
– Keep a database to track all “covered employees” for tax years beginning in 2017 – particularly in connection with corporate transactions
– Make sure this year’s proxy disclosure reflects any changes to arrangements or philosophy and tax treatment
– Prior to changing any employment agreements with “covered employees,” carefully review and consider the Section 162(m) consequences
– Foreign private issuers, recent IPO companies who are relying on the “IPO transition” rule under the old 162(m) rules, and entities involved in M&A corporate transactions affecting compensation paid to “covered employees” should be on the watch in 2019 hopefully for additional guidance from the IRS