Earlier this year, the Internal Revenue Service (“IRS”) announced it would be using advanced analytic techniques and additional funding to audit tax compliance by businesses when their business aircraft are used for personal reasons by executives. The IRS’s Large Business and International Division also added a “Business Aircraft Campaign” to its list of compliance campaigns. This focus by the IRS appears to have triggered calls for it to revisit the manner in which personal use…
On April 12, 2024, Treasury and the IRS published proposed regulations on the 1% excise tax imposed by Internal Revenue Code Section 4501 on the value of stock repurchased by a US public corporation or a 50% affiliate. The proposed regulations elaborate on and clarify compensation-related issues that arose in Notice 2023-2, December 27, 2022 (addressed in our prior blog post), including: For a full discussion of these topics and practical tips on next steps, we…
As many readers likely know, last fall California doubled-down on the state’s hostility to noncompete agreements. Assembly Bill 1076 codified the landmark 2008 Edward v. Arthur Andersen decision that invalidated all employment noncompetes, including narrowly tailored ones, unless they satisfy a statutory exception.AB 1076 also added new Business & Professions Code §16600.1, requiring California employers to notify current (and certain former) employees that any noncompete agreement or clause to which they may be subject is void (unless it falls within one of…
On September 27, 2023 and November 21, 2023, the Securities and Exchange Commission (SEC) issued additional Compliance & Disclosure Interpretations (CDIs) clarifying certain technical aspects of the pay versus performance (PVP) disclosure rules under Item 402(v) of Regulation S-K[1]. These CDIs are intended to supplement the CDIs covering PVP disclosure that were issued by the SEC on February 10, 2023.[2] By way of background, covered public companies must comply with the PVP disclosure rules beginning…
One of the biggest sleeper issues (in my opinion) for US companies when granting equity awards to non-US employees or other service providers is the fact that their heirs may be assessed with US estate tax and be required to file an estate tax return in the US if the individual dies while holding equity awards or shares. US Estate Tax Exemptions Individual US taxpayers (i.e., US citizens and non-US citizens who are domiciled in…
Happy New Year from California. As a reminder, starting January 1, 2024, changes to California’s state disability insurance (SDI) program will effectively increase taxes for employees working in California by 1.1% on income over $153,164. This is the result of both the elimination of the taxable wage limit (which was $153,164 in 2023) and an increase in the California SDI rate, from 0.9% in 2023, such that SDI will apply on all wages at a…
The United States Dodd–Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as implemented by Section 10D of the US Securities and Exchange Act of 1934, Rule 10D-1 thereunder, and applicable stock exchange listing standards, requires US listed companies, by December 1, 2023, to adopt a clawback policy applicable to executive officers in the event of an accounting restatement due to material noncompliance with financial reporting requirements.The policy must provide for the recovery…
On June 9, 2023, the Securities and Exchange Commission (“SEC”) approved listing standards proposed by the NYSE and Nasdaq to implement its final Rule 10D-1 regarding recoupment of erroneously awarded compensation under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Pursuant to this approval, the effective date of the listing standards is October 2, 2023 and the deadline for U.S. listed companies to adopt a Dodd-Frank-compliant clawback policy is December 1, 2023. For…
We are pleased to share a recent LegalDive article, “Why companies should review noncompetes in equity award agreements,” with quotes from Barbara Klementz. Given increased government scrutiny, employers need to be mindful of the time periods noncompetes cover and review state-specific requirements. In the light of the sharp focus the federal government and a growing number of states have placed on noncompetes, many employers have reexamined their use of that type of contractual clause in…
In welcome news for U.S. listed companies, both the New York Stock Exchange (NYSE) and NASDAQ have extended the effective date of their proposed listing standards to implement the Dodd-Frank clawback requirement to October 2, 2023 (see the NYSE Amendment and Nasdaq Amendment, filed with the Securities and Exchange Commission (SEC) on June 5, 2023 and June 6, 2023, respectively). If the SEC approves the listing rules as proposed, listed companies will have until December…