19 Mar 2024
Give a Little Bit. Adding to the Incentive Comp Package with Executive Perquisites
Executive perquisites, particularly at public companies, have received significant attention (much of it negative) over the last several years, resulting in many public companies cutting back on the level of benefits offered. Still, perquisites often are featured in executive compensation packages and there is good reason to reference them in executive employment agreements.
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- Fringe Benefit Rules (IRC § 132)
Review the rules that result in employees, often at the executive-level, receiving non-cash employee benefits that are free, or taxed below their fair market value. The IRS announced recently, in IR-2024-46, that its Large Business and International Division intends to focus on aircraft usage by large corporations, large partnerships, and high-income taxpayers, investigating whether the use of company-owned/leased jets is being allocated properly between business and personal uses. - Executive Employment Agreement Negotiation and Drafting (Pro-executive)
See how provisions regarding perquisites often are included in executive employment agreements. Common perquisites include a car allowance and/or driver, the ability to travel first-class on longer flights, financial and tax planning at the employer's expense, and employer-paid country club and health club memberships.
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- Employee Benefits & Executive Compensation Key Legal Developments Tracker
Stay informed on new developments.- ERISA Litigation. A class of nearly 40,000 Xerox Corp. employees have requested final approval of a $4.1 million settlement with Xerox resolving accusations the company allowed plan recordkeeping fees costing up to four-times more than what similar comparators charged. Xerox Workers Seek Final OK of $4.1M Deal over 401(k) Fees (Carrigan v. Xerox Corp., No. 3:21-CV-1085).
- Retirement Plans. IRS Employee Plans has started the second phase of their pilot Pre-Examination Retirement Plan Compliance Program. As a part of this program, plan sponsors are notified by letter that their retirement plan has been selected for an upcoming examination. The letter gives plan sponsors a 90-day window to review their plan’s document and operations to determine if they meet current tax law requirements.IRS, Employee Plan News (Feb. 7, 2024).
- Health and Welfare Plans. S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) and the National Institute of Standards and Technology (NIST) published a new, final version of their guidance for regulated healthcare entities to follow to improve cybersecurity and compliance with the Health Insurance Portability and Accountability (HIPAA) Security Rule. Special Publication (SP) 800-66 Revision 2, Implementing the Health Insurance Portability and Accountability Act (HIPAA) Security Rule: A Cybersecurity Resource Guide.
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