Performance-based pay regulations finalized – Public companies should review their compensation plans
Abstract: On March 31, 2015, the IRS issued final regulations regarding two important exceptions to IRC Section 162(m), which caps a public company’s deduction for compensation paid to top executives at $1 million. The exceptions apply to qualified performance-based compensation and to compensation paid by new public companies during a transition period. This article digs into the final regs. A sidebar notes the conditions under which a plan qualifies for the performance-based pay exception.