Tuesday, May 18, 2010

Exciting Comments from the JP Morgan Chase Exec Comp Trends Conference (Did 162(m) Cause the Tech Stock Bubble?)

Thanks to JP Morgan Chase for sponsoring the Executive Compensation Trends Conference at Baltusrol Country Club in Springfield, New Jersey.

From speaker Brick Susko of Cleary Gottlieb: the implementation of Section 162(m) led to a significant increase in option grants and may have caused the Tech Stock Bubble. Notwithstanding the implementation of 409A, use of deferred compensation is on the rise; seeing "widespread deferrals" reaching lower levels of management. Some companies getting comfortable with informal corrections outside of the IRS procedure for "foot faults" - but sticking with the formal procedure for larger issues. Foreign companies struggle. Current IRS document correction procedure "not sufficient."

From speaker Claude Johnston of Fred W. Cook & Co: executive compensation is in a "recovery" and returning to "2008 levels" after dropping in 2009. Companies are being "less rigid" with respect to analyzing compensation survey data. Salary cuts are being reinstated.

From speaker Robert Barbetti of JP Morgan Chase: "west coast" companies are granting options, and "east coast" companies are granting stock and stock units. Section 83(b) elections are on the rise in anticipation of increasing tax rates.

Executive Compensation attorney in attendance, Michelle Capezza of Epstein Becker & Green, commented that the question of whether or not companies may informally correct 409A errors outside of the formal IRS procedure remains a contraversial question - and that the attorney-attendees at the conference "perked up" when the issue was discussed.

1 comment:

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