The IRS and Treasury Department have proposed new regulations under Section 162(m) of the Internal Revenue Code of 1986 relating to two aspects of the deduction limitation for certain executive compensation. The proposed regulations clarify that performance-based compensation attributable to stock options and stock appreciation rights must specify the maximum number of shares with respect to which such awards may be granted to each individual employee. In addition, the proposals also clarify the scope of a transition rule for newly public companies. Public companies and companies considering going public should review their plans and arrangements to determine whether amendments may be necessary to address the regulations once finalized.
Comments on the proposed regulations must be received by September 22, 2011.Click here to read our client alert discussing the proposed regulations.