New Section 162(m) Regulations.
On March 30, 2015, the IRS released final Code Section 162(m) regulations. The final regulations mirror the proposed regulations with a few small changes. Of particular note, the IRS emphasizes in the final regulations that certain equity compensation cannot be considered performance-based compensation unless the plan document specifically states “the maximum number of shares with respect to which options or rights may be granted during a specified period to any individual employee.” In adopting these final regulations, the IRS specifically notes that simply stating a maximum number of shares for the plan in general is insufficient to comply with the Section 162(m) exception for performance-based compensation. Any publicly held corporation that wishes to rely on the performance-based compensation exception to Section 162(m) should confirm that its equity-based compensation complies with this requirement by setting a limit on individual grants in the plan document.