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ISS Issues U.S. Compensation Policies FAQs for 2019

On December 14, 2018, Institutional Shareholder Services (“ISS”) issued its updated FAQs related to its U.S. Compensation Policies, effective for shareholder meetings occurring on or after February 1, 2019. There were some notable updates with respect to executive compensation and nonemployee director compensation, which are briefly discussed below. Problematic Pay Practices ISS had previously identified certain “problematic pay practices” that are likely to result in a negative say-on-pay vote recommendation. ISS has issued some notable updates: Impact of Code Section 162(m) Repeal. In light of the Code Section 162(m) repeal, ISS added, as a problematic pay practice, a shift away from performance-based compensation to discretionary or fixed compensation elements. Excess Termination Payments. ISS stated that new or materially amended agreements that provide for excess termination payments (no longer limited to change in control based termination payments) are problematic. Generally, termination payments are problematic if they exceed three times an executive’s… Continue Reading

Parking Expenses for Qualified Transportation Fringes Under Code Section 274(a)(4)

The Tax Cuts and Jobs Act of 2017 amended Section 274 of the Internal Revenue Code to disallow a deduction for expenses with respect to qualified transportation fringes (“QTFs”) that taxpayer employers provide to their employees. In Notice 2018-99 (the “Notice”), the IRS provides interim guidance regarding how to determine the amount of parking expenses for QTFs that is deductible. The amount of QTFs that an employer provides to an employee is excluded from the employee’s gross income up to the limit provided in Code Section 132(f)(2) ($260 per employee in 2018). If the employer pays a third party to provide parking for its employees, the employer may deduct only those amounts that exceed the Code Section 132(f)(2) limit and are, therefore, included in the employee’s taxable compensation. For employers that own or lease their parking facilities, the disallowed portion of the deduction may be calculated using any reasonable method… Continue Reading

Possible Year-End Deadline for Retirement Plans of Plan Sponsors Involved in a 2017 Corporate Transaction

Generally, employee benefit plans of members of the same controlled group must satisfy certain requirements of the Internal Revenue Code on an aggregated basis (e.g., retirement plan nondiscrimination and coverage testing). Following a corporate transaction, such as a merger or a stock or an asset sale, the benefit plans of the buyer and seller may differ significantly. In order for plan sponsors to have a period of time post-closing to determine how best to structure their benefit plans going forward, Code Section 410(b)(6)(C) provides transition relief by permitting the plans to choose to be operated and tested separately, if certain requirements are met, such as coverage under the plan not being materially modified during a transition period. The transition period begins on the transaction’s closing date and, generally, ends on the last day of the first plan year beginning after the year in which the transaction occurred or, if earlier,… Continue Reading

Collateral Estoppel is Allowed to Apply to Rule 36 Affirmances of the PTAB

The Federal Circuit has affirmed that a Rule 36 judgment may serve as a basis for collateral estoppel in Patent Trial and Appeal Board (PTAB) proceedings, in addition to district court proceedings. In VirnetX Inc. v. Apple, Inc., Nos. 2017-2490, 2017-2494 (Fed. Cir. Dec. 10, 2018), the Federal Circuit affirmed the PTAB’s determination in two Inter Partes Reviews (IPRs) that a prior art document was a printed publication. While the PTAB’s final written decision did not reach the merits of any collateral estoppel argument,[1] the Federal Circuit affirmed the PTAB’s determination in those two IPRs that a prior art document was a printed publication expressly on the basis of collateral estoppel in view of a Rule 36 affirmance.[2] How did we get here? Apple challenged U.S. Patent No. 8,504,696 (the ’696 Patent), owned by VirnetX, in two IPR proceedings (IPR2016-00331 and IPR-2016-00332).[3] In IPR2016-00331, and in the companion case IPR2016-00332,… Continue Reading

Top Ten Insurance Tips For Year-End Transactions

The end is near.  2018 is fast coming to a close, and it is that time of year when corporate lawyers are counting—not the number of shopping days left until Christmas, but the number weeks, days and hours left before the end of the fiscal year.  Admittedly, in the scramble to close deals, insurance requirements and indemnity provisions may not be at the top of the list of critical deal points for clients and counsel.  But, in the larger scheme of things, law libraries and LEXIS are littered with the sad stories of parties, who paid too little attention to such details.  Money is the mother’s milk of litigation, and ensuring the availability of adequate insurance and indemnity coverage cannot be overemphasized. For those working on corporate transactions, here are some practical reminders and best practices for drafting indemnity provisions and insurance requirements.  As always, individual circumstances may vary.  What… Continue Reading

IRS Provides Initial Guidance on New Tax Benefits Under Code Section 83(i)

The Tax Cuts and Jobs Act of 2017 amended Section 83 of the Internal Revenue Code by adding a new Section 83(i) (“Code Section 83(i)”), which allows certain employees of privately-held corporations to defer the recognition of income (for up to five years) attributable to the vesting or receipt of certain qualified company stock transferred to such employees upon the exercise of stock options or the settlement of restricted stock units. On December 7, 2018, the IRS released Notice 2018-97, which provides initial guidance on certain aspects of Code Section 83(i). In particular, the notice provides guidance on (i) the application of the requirement in Code Section 83(i)(2)(C)(i)(II) that equity grants be made to at least 80 percent of all employees who provide services to the corporation in the United States, (ii) the application of tax withholdings on the deferred income related to the qualified company stock, and (iii) the… Continue Reading

Extension of Due Date to Furnish Form 1095 to Individuals and Good Faith Transition Relief

In Notice 2018-94, the IRS extended the due date, from January 31, 2019 to March 4, 2019, for furnishing to individuals their 2018 Form 1095-B and Form 1095-C. The Notice does not extend the due date to file Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS, which are due by February 28, 2019 (paper filing) or April 1, 2019 (filing electronically), although extensions may be available. The Notice also extends the IRS’s good-faith transition relief from penalties that could apply for incorrect or incomplete information reported on such forms furnished to individuals or filed with the IRS. This relief does not apply if the applicable forms were not filed or furnished by their respective due dates. View Notice 2018-94.

Printed Publications – Public Accessibility Requires More Than Technical Accessibility

Printed Publications – Public Accessibility Requires More Than Technical Accessibility

In Acceleration Bay, LLC v. Activision Blizzard Inc. et al., Nos. 2017-2084, 2085, 2095, 2096, 2097, 2098, 2099, 2117, 2118 (Nov. 6, 2018), the Federal Circuit affirmed the Patent Trial and Appeal Board’s (PTAB) final written decision in a group of related proceedings, including IPR2015-01951.[1]  The PTAB had found that several claims of the challenged patents were unpatentable and that other claims, along with substitute claims of the challenged patents, were not unpatentable.  Particularly, the PTAB found that one of the references used to challenge the different patents was not a printed publication under 35 U.S.C. § 102(a).  The Federal Circuit affirmed the PTAB’s decision with respect to the printed publication issue and held that the reference was not a printed publication under § 102(a). Background Acceleration owns U.S. Patent Nos. 6,829,634 (the ’634 patent), 6,701,344 (the ’344 patent), and 6,714,966 (the ’966 patent).  Blizzard filed six petitions for inter partes review… Continue Reading

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