Faced With High-Profile Partner Defections, Firm Revamps Its Compensation Structure

I guess lockstep compensation just ain’t what it used to be…

The Magic Circle firm of Freshfields Bruckhaus Deringer was a real holdout when it came to lockstep partner compensation, but after a series of high profile partner defections, they’ve rethought their process. Earlier this month the firm voted on a new comp model, which will allow top performers to earn up to six times more than those in the bottom: READ MORE

Comparison of the Executive Compensation Provisions in the Tax Cuts and Jobs Act

On November 20, 2017, the Senate Finance Committee released legislative text of its version of the Tax Cuts and Jobs Act, which contains proposals modifying certain executive compensation provisions of the Internal Revenue Code. The Senate Finance Committee’s release follows similar provisions proposed by the House of Representatives’ version of the Tax Cuts and Jobs Act (known as H.R. 1, released on November 2, 2017 and modified by the House Committee on Ways & Means (the “Ways & Means Committee”)). Currently, both plans approved by the House and the Senate Finance Committee include proposals to (1) create a new Section 83(i) that will allow the deferral of income from certain qualified equity grants made by private corporations, (2) significantly expand the scope of the $1 million deductibility limitation on executive compensation described in Section 162(m) (including an elimination of the exceptions for performance-based compensation and commissions) and (3) create a new Section 4960 that subjects excess remuneration paid to certain employees of tax-exempt organizations to an additional 20% tax payable by the employer. The presence of these proposals in both plans makes it more likely that they will appear in a final version of the Tax Cuts and Jobs Act, if approved by Congress. READ MORE

A Guide To CEO Compensation

It's hard to read the business news without coming across reports about the salaries, bonuses and stock option packages awarded to chief executives of publicly traded companies. Making sense of the numbers to assess how companies are paying their top brass isn't always easy. Investors must ensure that executive compensation is working in their favor. READ MORE

Unicorn lobby pushes back on stock-option move in Republican tax bill

Lobbyists for so-called unicorns have persuaded Republicans in the House to allow private company employees to wait up to five years before owing taxes on stock option gains — but the Senate plan forces everyone to pay as soon as share grants vest.

The 400-plus-page House draft bill released November 2 by the House included a provision, 409B, that triggered taxation whenever any payment or award became vested for all companies, public and private. READ MORE

A Tax Tweak for Silicon Valley Workers Awaiting IPOs

The Senate's tax proposal would disrupt the disrupters: By taxing stock options at the time of vesting, rather than when they're exercised, the change would push startups toward cash compensation. Venture capitalists say that would be expensive and harmful to innovation. But the reality is that changes in Silicon Valley financing culture over the last decade have made equity compensation a bad deal for startup employees, as I can personally attest, so this policy change would probably be good for workers.  READ MORE

Why Washington’s tax plans for executive compensation are misguided

Tucked into the mammoth tax bills Congress is debating are two provisions that will increase the taxation of executive compensation and undermine related governance practices. Corporate directors and senior managers, take note.

For starters, the Senate bill would virtually eliminate the ability of a company’s employees to defer the taxation of their compensation. Both the House and the Senate bills would severely limit the ability of corporations to deduct awards of performance-based compensation to their top five officers. READ MORE

The Impact of the Tax Cuts and Jobs Act on Executive Compensation

On November 9, 2017, the House Ways and Means Committee approved the House’s version of the tax reform bill (the “House Bill”) and voted to report it to the House floor for a full House vote. On the same day, the Senate Finance Committee released the Description of the Chairman’s Mark of the “Tax Cuts and Jobs Act” (the “Senate Finance Committee Mark”), which sets forth a summary of the Senate’s proposed tax reform legislation. The Senate Finance Committee Mark will be marked up by the Senate Finance Committee beginning Monday, November 13, 2017.  READ MORE

How Companies Can Rethink Their Compensation Strategy With the Help of Behavioral Science

You value your team. That’s why you put together a compensation package that includes a competitive salary, generous benefits and even the occasional rooftop happy hour. But, if you add in a few more key elements, you’ll create a compensation strategy that helps you connect emotionally with your employees, keep your existing team motivated and attract the right candidates when it’s time to grow. READ MORE