In Case You Missed It - Interesting Items for Corporate Counsel - January 2018

by Stoel Rives LLP

Stoel Rives LLP

  1. The little bird who suggested to us (see last month's ICYMI) that the Oregon Secretary of State would clarify new requirements for Oregon company articles of incorporation and articles of organization (effective January 1, 2018) sang true. See here. The guidance should help law-abiding Oregon companies avoid some significant, unnecessary pain.
  2. In the wake of the Tax Cuts and Jobs Act (the acronym for which, disappointingly, doesn’t even spell anything), the SEC issued a statement, here, alerting public companies to guidance in Staff Accounting Bulletin 118, here, that covers treatment of deferred tax assets, among other things, and sets forth the SEC’s expectations for disclosure. The SEC also adopted new Compliance and Disclosure Interpretation 110.02, here, which gives public filers comfort that they have not already blown their obligation to report a material impairment to deferred tax assets under Item 2.06 of Form 8-K. Summaries and commentary on the guidance are here, here, and here. A few thoughts on other public company disclosures related to tax law changes are here.
  3. Also of interest in the TCJA (see? terrible!) to corporate governance and public company types are changes to Internal Revenue Code Section 162(m), which addresses the deductibility of compensation paid to public company executives. The law was changed:
    • To include the CFO in the scope of employees covered. Previously, through a quirk in referencing the old definition of “named executive officers” in SEC regulations, the CFO slipped through the cracks.
    • To provide that, once a covered employee, always a covered employee, even if you are fired or die. Previously, the group of covered employees changed depending on who was a “named executive officer" in any given year.
    • To eliminate the performance-based compensation exemption from the $1 million cap on deductibility. Many companies previously designed performance compensation around this exemption.
    • To extend the $1 million cap to companies required to file SEC reports under Securities Exchange Act Section 15(d). Previously, only companies with publicly traded equity were subject to 162(m). This is important because those who issue public debt are now subject to the rule; public debt issuers must file Exchange Act reports for at least a year after the sale and then may exit the reporting requirements if they have fewer than 300 holders of record at year-end and make the right filings to terminate the filing obligation. That means some public debt issuers may jump in and out of the 162(m) limits, which is weird.

Binding contractual payments in place on November 2, 2017 are grandfathered. Modestly lengthier summaries of the changes to 162(m) are here and here. A collection of early proxy statement disclosures that describe the changes in 162(m) is here.

  1. The TCJA also imposes a tax on “excess” compensation and “excess parachute payments” paid to a “covered employee,” which is any of the five highest-compensated employees of non-profit organizations . Like IRC Section 162(m), once you’re a covered employee, you stay a covered employee even if you fall out of the top five. The new law echoes provisions in IRC Sections 162(m) and 280(G) but, because it’s a non-profit that doesn’t otherwise pay taxes, the law works a bit differently – rather than prohibiting deductions or imposing a hefty excise tax on the employee, the non-profit must pay a 21% tax on compensation in excess of $1 million and on “excess” severance benefits (if severance benefits are more than three times annual base compensation, the tax applies to all benefits in excess of one times annual base compensation, even if three times the covered person’s base pay is not very much). We’re not entirely sure what the point is with this tax law change. According to the Charity Navigator, here, of the 4,587 charities in its 2016 report on non-profit CEO compensation, 10 rewarded CEOs with more than $1 million in compensation, including one-time payouts, and in the grand scheme of things, 21% of not very much is not very much. Of course, the laws will affect some entities one might not consider “traditional” non-profits, like health care providers (but compensation paid to doctors and veterinarians for providing medical services is excluded) and schools (look out, football coach). Of course, it is unconscionable that a non-profit executive should make anything resembling what a private company executive makes, so maybe that’s the point? (That’s sarcasm. It’s not unconscionable. We have no idea why people get worked up about it.) Summaries of the effect of the tax bill on nonprofits are here (compensation) and here (general).
  2. To round out our coverage, some general summaries of the TCJA are here, here, and here.
  3. Perhaps as notable as the Trump Administration’s push to fill federal courts with young conservatives has been its slow progress in filling administrative positions. Minor progress, at least, was made in late December when Robert Jackson and Hester Peirce were confirmed as new SEC Commissioners, filling two slots that have gone unfilled since before Trump took office. See here and here. Will that mean a renewed spate of SEC rule-making, say to implement lingering requirements of the seven-and-a-half-year-old Dodd-Frank Act? No. (See the Long-Term Actions agenda, aka the “don’t hold your breath” agenda, here, which among other things lists action on clawbacks, pay-for-performance disclosure, and stock hedging.)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Stoel Rives LLP | Attorney Advertising

Written by:

Stoel Rives LLP

Stoel Rives LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.