Stroock Special Bulletin
"Proposed Amendments to Section 162(m)"
This Stroock Special Bulletin briefly discusses the Internal Revenue Service's (the "Service") proposed amendments published on June 24, 2011 (the "Proposal") clarifying and modifying requirements for the grant of performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)").
In general, Section 162(m) denies a deduction to public companies on compensation in excess of $1,000,000 paid to certain named executive officers, unless the compensation meets an exception for "performance-based" compensation granted under shareholder-approved plans. Qualified performance-based compensation must be paid solely based on the attainment of one or more pre-established, objective performance goals.