Academic journal article Journal of Accountancy

Qualified Performance-Based Compensation Rules Are Finalized

Academic journal article Journal of Accountancy

Qualified Performance-Based Compensation Rules Are Finalized

Article excerpt

Regs, clarify the per-employee limitation and transition rule for compensation paid before a corporation becomes publicly held.

The IRS finalized proposed regulations issued in 2011 regarding the performance-based compensation exception under Sec. 162(m)(4)(C) to the $1 million deduction limitation for compensation paid by publicly held corporations to covered employees.

Regs. Sec. 1.162-27(e)(2)(vi)(A) in the final regulations clarifies that the plan under which an option or stock appreciation right is granted must state "the maximum number of shares with respect to which options or rights may be granted during a specified period to any individual [emphasis added] employee" (per-employee limitation requirement). The prior regulations had specified that the requirement applied "to any employee."

The final version of Regs. Sec. 1.162-27(e)(2)(vi)(A), in response to comments to the proposed regulations, clarifies that a plan satisfies the per-employee limitation requirement if the plan specifies an aggregate maximum number of shares with respect to which stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), and other equity-based awards can be granted to any individual employee during a specified period under a plan the shareholders approved, as required by Regs. Sec. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.