We expect that the Tax Cuts and Jobs Act (the Act) will be signed into law by the end of this week. The Act would make significant changes to Section 162(m) of the Internal Revenue Code, all of which would be effective for taxable years beginning on and after January 1, 2018. These changes potentially affect all awards payable in and after 2018, unless the company takes action now.
Included in both the Senate and House tax reform bills is a reduction in the corporate tax rate from 35% to 20% (but, it appears the reconciled bill includes a corporate tax rate of 21%). The Senate plan cuts the corporate tax rate effective in 2019 and the House plan in 2018.
The Tax Cuts and Jobs Act H.R. 1 passed by the US House of Representatives on November 16 and the Senate Finance Committee’s “Modified Mark” released November 14 would make sweeping changes to the tax treatment of executive compensation, fringe benefits, and tax-qualified plans (among many other areas) in order to pay for centerpiece reductions in both corporate and individual tax rates.
The CEO pay ratio disclosure requirement of Regulation S-K, Item 402(u) mandated by section 953(b) of the Dodd-Frank Act requires most publicly held companies to disclose, among other matters, the ratio of the compensation of the CEO to the compensation of the company’s median employee, excluding the CEO, beginning in the 2018 proxy season.
As fall gets underway, executive compensation planning rises to the top of the priority list.
Join Morgan Lewis in September for these upcoming programs on a variety of employee benefits and executive compensation topics
Congratulations to Gina L. Lauriero on her election to the Morgan Lewis partnership in our employee benefits and executive compensation practice!