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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

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