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Compensation Committees and the Stricter Standards of Independence Under SEC Rules and the Internal Revenue Code |
December 6, 2005
Previously published on January 2005
There has been renewed focus on the independence of compensation committee members because of listing requirements adopted by the New York Stock Exchange and Nasdaq Stock Market. Companies should not, however, overlook other independence standards in Securities and Exchange Commission Rule 16b-3 and Internal Revenue Code Section 162(m). These provisions apply stricter standards on transactions with the company, with even small amounts preventing independence in some cases. Failure to comply with these standards could result in lost tax deductions and/or liability for "short-swing" profits.
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The views expressed in this article are solely the views of the author and not Martindale-Hubbell. This article is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. |
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