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Reminder: 162(m) Performance-Based Compensation Plans Must be Re-Approved by Shareholders Every Five Years

As another proxy season gets underway, public corporations should consider whether their performance-based equity or incentive compensation plans should be submitted for shareholder approval at the corporation’s next annual meeting. Generally, Code Section 162(m) requires a plan’s performance goals to be disclosed to and approved by the corporation’s shareholders at least every five years in order for performance-based awards granted under the plan to be exempt from Code Section 162(m)’s deduction limits on executive compensation. Plans that were last submitted for shareholder approval in 2010 should be included in this year’s proxy statement and submitted for re-approval by the corporation’s shareholders.

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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