November 6, 2017

House’s Tax Reform Bill: Would Dramatically Alter Executive Pay!

Last week’s tax bill from House Republicans would have a tremendous impact on executive pay if enacted into law. We’re posting memos in the “Regulatory Reform” Practice Area on – but here’s a teaser from Skadden that will blow you away:

If enacted, the newly proposed “Tax Cuts and Jobs Act” would effectively put an end to many of the most widely used forms of executive compensation:

– Deferred compensation and stock options would disappear

– Use of performance-based compensation would be severely limited

– Compensation over $1 million to senior executive officers would be nondeductible for public companies and subject to an excise tax for tax-exempt organizations.

Of course, the tax reform bill released by the House Republicans today (November 2) is likely to change, perhaps drastically, in the coming days.

House Passes Two Bipartisan Bills to Facilitate Offerings

Here’s news from this Davis Polk memo:

On November 1, the House passed two bills designed to encourage capital formation by extending JOBS Act testing-the-waters provisions to all companies, codifying the SEC’s earlier expansion of confidential submission of draft registration statements by a non-emerging growth company for its IPO and during the one-year period after going public, and modifying the definition of an accredited investor to make more individuals eligible to participate in private placements.

The bills were passed on a bipartisan basis and echo proposals that were part of the Financial Choice Act passed by the House in June 2017 and the Treasury Department’s recent regulatory reform report on capital markets. We expect the bills would likely be passed and signed into law if they reach the Senate floor for a vote.

Farewell to Walter Schuetze

I note the sad news of the passing of Walter Schuetze. Walter served both the profession & public admirably. He was a courageous & staunch advocate for improving financial reporting through the use of fair value accounting.

As noted in this bio, Walter had an amazing career – one of the original founding members of the FASB. A leader of the KPMG’s National Accounting Technical Office, and the Chair of the AICPA’s Accounting Standards Committee. Served as both the SEC Chief Accountant and SEC Enforcement’s Chief Accountant. He will be missed by many.

Farewell to Dean Hunt

Sadly, former SEC Commissioner Dean Hunt passed away too. Here’s what the SEC’s statement says:

Appointed to the Commission in 1996 at the dawn of the digital age and a truly transformative era of our capital markets, Ike was a powerful voice for making sure our mission of protecting investors, fostering fair and efficient markets, and facilitating capital formation remained timeless in the face of dramatic change.

Always a thoughtful advocate for the rule of law and its fair and consistent application, Ike started his legal career as an SEC staff attorney in 1962. From then, whether in private practice, academia, or serving at the Commission, Ike set a shining example for generations of SEC staff to follow. We thank Ike for his passion and distinguished public service, and offer his family and friends our deepest condolences.

Broc Romanek