Structuring Equity and Nonqualified Deferred Compensation: Achieving Tax and Legal Objectives

Description

Each type of equity compensation and nonqualified deferred compensation is subject to tax rules that determine the timing and amount included in employee gross income from the compensation and the deduction to the employer for paying this compensation.

For equity compensation, which generally includes restricted property, stock options, performance shares and similar incentive pay, the tax rules are found in IRC Sections 83, 421 and 422 and the Treasury regulations and related IRS guidance.

For nonqualified deferred compensation, which generally includes supplemental executive retirement plans (SERPs) and plans of deferred pay, the tax rules are found in IRC Sections 61, 162, 280G, 404, 409A, 451, 457, 3121 and 3306, the Treasury regulations, and relevant IRS guidance. ERISA must be considered when structuring nonqualified deferred compensation.

Counsel must understand these statutory and regulatory rules, IRS guidance, and, where applicable, DOL guidance on ERISA, to structure, draft and implement the equity compensation and nonqualified deferred compensation, and to achieve the tax and legal results the employer intends. Our experienced panel will provide direction to executive compensation counsel on structuring the compensation in light of these rules and this government guidance, as well as the panel’s own experience representing corporations and senior executives.

Listen as our authoritative panel discusses important topics such as the general workings of the rules and regulations under IRC Sections 83 and 409A, substantial risk of forfeiture with restricted property, income recognition, IRC Section 83(b) elections, tax withholding requirements, IRC Section 162 deduction rules and limits, and golden parachute rules. The panel will provide practical considerations, practice pointers and drafting tips for preparing equity compensation and nonqualified plans of deferred compensation.