If you think absurb results only occur in the corporate & securities world, look at the recent decision by the Patent Office in Ex parte Lundgren, overturning a patent examiner’s rejection of a patent claim to a “method of compensating a manager ….” Learn more about this case in the Conglomerate Blog.
Long Live SARs!
When they came out at the end of September, Julie blogged about the proposed IRS regulations regarding implementation of Section 409A of the Internal Revenue Code (as enacted in last year’s deferred compensation legislation). Mike Melbinger has blogged multiple times about various aspects of this topic in his blog.
Let me focus a little more on how SARs are proposed to be treated – the proposed regulations exempt all SARs from Section 409A so long as the exercise price of the SAR is not less than the fair market value of the underlying shares on the date the SAR is granted. This change should make SARs more attractive, particularly since 123(R) will value SARs in much the same manner as stock options for purposes of determining an employer’s compensation expense. The bottom line is that stock-settled SARs now offer many advantages to companies and, under FAS 123(R), are an attractive alternative to stock options.
Those of you attending the NASPP Annual Conference will want to attend these two panels: “The New Cashless Exercise: Stock Settled SARs” and “How to Implement a Broad-Based Stock-Settled SAR Program.”
Memos about the New 409A IRS Regulations
A number of members have asked if we have posted law firm memos on the proposed IRS regulations. We have hordes of them in Section E.29 of our “Law Firm Memos.”