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2018.08.21 IRS 162(m) Guidance Brings Little Relief - Headache re Negative Discretion. Today, the IRS released Notice 2018-68, which addresses questions raised by changes to Code Section 162(m) as part of the Tax Cuts and Jobs Act of 2017 (discussed below). See KPMG Summary of IRS Notice 2018-68.
2018 Update for Code 162(m) Changes
The Tax Cuts and Jobs Act of 2017 made fundamental changes to Section 162(m) of the Internal Revenue Code. The general nature of those changes is noted below, followed by thoughts about their impact on public companies - and next steps that compensation committees should be considering. Forward-minded action is warranted in order to preserve corporate deductions, especially for severance and other post-employment compensation that were previously safe from 162(m). Feel welcome to contact Mark Poerio of Wagner Law for more information about these issues.
No Future Exemption for Performance-based Compensation
Expanded "Covered Employee" Definition
New Companies Brought within 162(m)'s Scope
Anticipated Reaction from Shareholder Advisory Groups
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(from David Kokell, head of ISS U.S. Compensation Research, posted 1/25/2018 on Harvard Governance Blog):
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