Performance-Based Compensation After IRS Reversal on Early Termination

Legal Strategies to Preserve Tax Benefits Under IRC Section 162(m)

Recording of a 90-minute CLE teleconference with Q&A


Conducted on Wednesday, April 9, 2008
Recorded event now available


Description

On Jan. 25th 2008, the IRS released a Private Letter Ruling (PLR) disallowing a business's exemption under IRC Section 162(m) for an employment agreement that allowed payout of performance-based compensation upon an involuntary or “good reason” employment termination without regard to satisfaction of the performance criteria. The IRS issued a Revenue Ruling confirming the PLR on Feb. 21.

The new ruling signals a surprising reversal of the IRS's position in two prior letter rulings, creating uncertainty regarding what constitutes performance-based compensation under 162(m). It also has potential 409A implications related to nonqualified deferred compensation.

In light of this ruling, legal advisors should review and revise existing performance-based plans that permit payment after an involuntary or “good reason” termination. In addition, counsel should consider the IRS position in designing new compensation plans and employment and severance agreements.

Listen as our panel of employee benefits attorneys explains the recent PLR and subsequent Revenue Ruling, the status of prior PLRs on the subject, 409A implications and steps employers should take now to ensure that performance-based compensation plans, employment agreements and severance agreements comply with the new standards.

Outline

  1. Overview
    1. Section 162(m)
    2. PLR 200804004 and Revenue Ruling 2008-13
      1. What does the ruling mean?
      2. What types of incentive arrangements are affected?
      3. Effect of relief granted during 2008
  2. Steps employers should take now
    1. Effective application date
    2. Restructure compensation arrangements
    3. Modify existing agreements
    4. Negotiating employment and severance agreements going forward
  3. Broader implications
    1. Enhanced scope of 162(m)
    2. 409A implications

Benefits

The panel reviewed these and other key questions: 

  • What types of performance-based arrangements are affected by the new ruling?
  • What is the impact of the new ruling on existing performance-based compensation plans?
  • What do employers need to do now to ensure that their compensation agreements comply with the IRS's new guidance?

Faculty

Joseph S. Adams, Partner
McDermott Will & Emery, Chicago

He concentrates in employee benefits and executive compensation matters. He has substantial experience advising clients regarding incentive compensation programs and regularly speaks on the topic.

Randy L. Gegelman, Partner
Faegre & Benson, Minneapolis

He has extensive experience with executive contracts and compensation and a special expertise in stock-based compensation arrangements.

Matthew E. Johnson, Partner
Sidley Austin, Chicago

He advises clients in all types of employee benefits and executive compensation matters. He regularly represents corporations in the design and administration of equity-based compensation plans.

Ordering

Recorded Event

Includes full event recording plus handouts (available after live seminar).

CLE: Pre-approved for self-study credit in: AK, AZ, CA, CT, HI, MO, MT, NY, TX, VT, WA, WV. Upon request, self-study credit is also available in: CO, FL, GA, ID, KY, ME, ND, NE, NH, NM, NV, OR, UT, WI, WY. If you are applying for self-study credit in one of these states, contact Strafford CLE at 1-800-926-7926 ext. 35 or CLE@straffordpub.com.

CD $49.00 plus $9.45 S&H
Available ten business days after the live event

Program Materials

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Program Materials

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CLE Credit

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Customer Reviews

The question and answer session was one of the best I've attended.

Tricia Le Meur

Phillips Parker Orberson & Arnett

Speakers were knowledgeable enough to talk about the subject matter in an easily digestible manner.

Daniel M. Cleary

Gotham Insurance/New York Marine & General Insurance

The teleconference contained information that was relevant, useful and up-to-date.

Mark Hegedus

Spiegel & McDiarmid

Presentations were excellent. I especially benefited from the question and answer session, as the speakers addressed actual situations that affect many of us.

Angelica Toro

Popular

Great program.  All three speakers were very knowledgeable and had smooth deliveries.

John Bowers

Fortune 100 Company

Employment & ERISA Advisory Board

Barbara E. Hoey

Partner

Littler Mendelson

Jeffrey Hollingsworth

Partner

Perkins Coie

Marcia Nelson Jackson

Partner

Wick Phillips

Paul J. Kennedy

Shareholder

Littler Mendelson

Laura Foote Reiff

Shareholder

Greenberg Traurig

Eugene Scalia

Partner

Gibson Dunn & Crutcher

Teresa R. Tracy

Partner

Gladstone Michel Weisberg Willner & Sloane

Todd D. Wozniak

Shareholder

Greenberg Traurig