February 14, 2007

More Notes from PLI’s “SEC Speaks” Conference

In our “Conference Notes” Practice Area, we have posted notes from the Accounting panel and workshop from the PLI “SEC Speaks” Conference. No big surprise for those avidly following this blog, SEC Chief Accountant Conrad Hewitt spoke about how he wants to add liability limits for audit firms to AS #5 at the Conference.

By the way, following up on the global accounting “roadmap” announced back in the spring of 2005, the SEC has announced it will hold a Roundtable on this topic on March 6th.

The SEC’s 8-K Rule Changes: How They Impact You

Join SEC Staffer David Lynn, Alan Dye and Ron Mueller tomorrow for the webcast: “The SEC’s 8-K Rule Changes: How They Impact You.” This is Part III of our Web Conference regarding the SEC’s new executive compensation rules.

As an aside, following up on my blog yesterday about the ability to file preliminary proxy statements without exec comp disclosures, Corp Fin tweaked Interp 1.04 of the newly minted Item 402 FAQs (ie. 1.04 relating to FAQs of “General Applicability”; the numbering system for the new interps can be a little confusing) yesterday to reflect what was said at SEC Speaks. Of course, companies can choose to file preliminary proxy statements with the exec comp disclosure as Baker Hughes recently did…

Backdated Options: IRS’ New “Tax Reprieve” Program

Last week, the IRS launched a new initiative for rank and file employees that unwittingly received backdated stock options. Here is the IRS announcement – and here is the related IRS press release.

Under the voluntary initiative, companies are allowed to pay the 20% penalty plus interest tax owed by employees – but they are not allowed to pay for the taxes on backdated options for Section 16 officers and other insiders and directors. This relief is available only for options that vested in 2005 and 2006 and were exercised last year – and the amounts paid to cover these additional taxes will be treated as compensation income for those employees in 2007 tax year.

For companies that plan to participate in the program, they must notify the IRS by February 28th and notify the affected employees by March 15. If they do decide to participate, companies will be expected to provide detailed information about the backdated options, including the tax calculation sufficient to allow the IRS to determine that the Treasury received all taxes owed.

Given the February 28th deadline, this 20-minute podcast on “IRS’ Voluntary Initiative for Backdated Options” on with “Handy” Hevener of Baker & McKenzie is timely and should be very useful for those companies with backdating issues. Handy is one of the more experienced practitioners out there when it comes to dealing with the IRS. The podcast is a big audio file so give it a minute to download…