UPDATE: Draft Legislation Released Changing Tax Treatment of Stock Options Effective January 1, 2020

On June 17, the federal government released draft legislative language to implement the proposed changes to the taxation of stock options in Canada, as introduced in the 2019 Budget in March.

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The budget proposed to eliminate the preferential tax treatment of stock options, above an annual $200,000 face value, for large, long-established, mature firms. (See Meridian’s update here for details of the original proposal.) The highlights of the implementation language include:…

2019 Federal Budget: Changes to Tax Treatment of Stock Options

One of the proposed legislative changes in the Liberal government’s 2019 Federal Budget directly affects executive compensation.

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The government has proposed to limit the preferred tax treatment for stock options. Currently options are eligible for a deduction the effect of which is to tax them at one-half the ordinary income tax rate (similar to capital gains treatment).…

House Passes Tax Reform Bill

On November 16th, the U.S. House of Representatives passed its tax reform bill by a vote of 227 to 205.

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The tax reform bill approved by the full House does not substantively differ from the bill previously approved by the House Ways and Means Committee, as described in our Client Updates dated November 7, 2017 and November 10, 2017. Therefore,…

House Proposal on Tax Reform

On November 2, 2017, the House Republicans issued a sweeping tax reform bill that generally adheres to the themes of President Trump’s previous tax proposals, except that it includes a number of surprises involving executive compensation. Generally, the proposed changes to the Internal Revenue Code (“Code”) would be effective for tax years beginning after 2017.

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President Trump hopes to have a tax reform bill to sign by Thanksgiving. We believe that this timeframe is overly optimistic, given that the legislative process on the bill has just begun. Further, while House Republicans may be able to…

SEC Issues Proposed Rule on Relationship Between Pay and Performance

The new rule would require more disclosure of compensation "actually paid" to CEOs.

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On April 29, 2015, the Securities and Exchange Commission (SEC) approved (by a 3 to 2 vote) a proposed rule that would require a public company to disclose the relationship between executive compensation actually paid and the financial performance of…

IRS and Treasury Department Issue Final Regulations on Section 162(m)

The ruling has implications for the use of stock options in equity compensation plans.

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On March 31, 2015, the Internal Revenue Service and Treasury Department issued final amended regulations under Section 162(m) of the Internal Revenue Code (the “Code”) to clarify that (1) stock plans must provide per-employee limits for stock options and stock…

Coca-Cola Announces Equity Stewardship Guidelines

Announcement is part of Coke’s rollout of its “Equity Stewardship Guidelines” which will govern the Company’s equity grant practices.

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In response to shareholder concerns over the potential dilutive impact of its 2014 Equity Plan, the Coca-Cola Company took the unusual step of announcing that it will use “substantially fewer shares for long-term equity awards” by “significantly reducing the use…

House Bill Will Eliminate Tax Exemption

Congressional Interest in Curtailing the Tax Deductibility of Executive Compensation Appears to Be Heating Up

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Identical bills have been introduced in the Senate and House that would extend the reach of the $1 million deduction limit under Section 162(m) of the Internal Revenue Code (“Code”) to all employees and would eliminate the exemption for performance-based…

Meridian Compensation Partners Study Analyzes Equity Incentives

The Study Reveals the “Run Rate” And “Overhang” Levels for Fortune Companies

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Meridian Compensation Partners, a leading executive compensation and corporate governance consulting firm, has released a new study of annual “run rate” and “overhang” levels among Fortune 100, 250, and 500 companies. Meridian found the median annual run rate for Fortune…

Golden Parachutes

Discussion of the Structures Boards Can Use for Executive Severance Payments

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Golden parachutes aren’t going away. In this discussion with NACD Directorship’s Steve Kalan, Meridian Compensation Partner’s Donald Kalfen explains the use of severance packages and how they can be controversial.

Long-Term Compensation Plans

The Board’s Use of Incentives to Align Management’s Interests with Long-Term Value Creation

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For many companies, performance-based shares are the form of long-term compensation that makes the most sense. However, not every company will find this to be the case. Ryan Harvey, Partner, discusses both of these scenarios in this video from NACD…