The Department of the Treasury has issued final regulations setting forth changes to the current regulations under Internal Revenue Code (Code) Section 162(m). Code Section 162(m) precludes a deduction by a public corporation for compensation paid to a “covered employee” to the extent that the compensation exceeds $1,000,000 in any taxable year. “Covered employees” include the company’s chief executive officer and the three highest paid officers (excluding the chief executive officer and the chief […]

On March 31, 2015, the IRS issued final regulations under Section 162(m), the tax code provision which limits the deduction for compensation paid to certain public company executive officers. As signaled by the proposed regulations published in 2011 (described here in an earlier MoFo client alert), the final regulations reflect the IRS’ new and more restrictive interpretation of the transition rule that applies to the preexisting equity plans of private companies that become public. […]