The following Share Incentives practice note produced in partnership with Michael Falk of Kirkland & Ellis LLP and Sherene Awad Jodrey of Aon plc provides comprehensive and up to date legal information covering:
In the United States, deferred compensation arrangements appeal to executives and other highly paid employees because they allow them to postpone the recognition of income and other taxes until a future year. A qualified plan—such as a 401(k) arrangement—provides one mechanism through which to defer compensation. However, for executives, qualified plans are of limited use due to the limits on the amount of compensation that can be deferred through such arrangements and other applicable restrictions.
Alternatively, non-qualified deferred compensation plans have no caps on the amount that may be deferred and are not subject to the various restrictions applicable to qualified plans. While non-qualified plans do not have caps on the amounts that employees may contribute, they carry risk. The assets used to fund the plan must remain subject to the claims of the sponsoring company’s creditors until they are paid out, which may be years or decades down the road. They also must comply with one of the most complex provisions of the tax code—US Internal Revenue Code (IRC) Section 409A (section 409A).
Section 409A governs almost every aspect of US non-qualified deferred compensation, from the election to defer compensation to the timing of eventual payment. Failure to comply with section 409A is costly. The amounts
Free trials are only available to individuals based in the UK
Complete all the fields above to proceed to the next step.
**Trials are provided to all LexisPSL and LexisLibrary content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Scotland: the Accountant in BankruptcyThe office of the Accountant in Bankruptcy (AiB) was created by section 156 of the Bankruptcy (Scotland) Act 1856 . Previously, the functions of the AiB were limited but since 1993, with the enactment of the Bankruptcy (Scotland) Act 1993 (B(S)A 1993), the role
Common financial covenantsThis Practice Note explains certain common financial covenants used in commercial finance transactions including:•minimum net worth test•gearing ratio•leverage ratio (or debt to equity ratio)•current ratio (or acid test ratio)•cashflow ratio•interest cover ratio, and•loan
ECHR, art 5(4)—rights and dutiesThe scope of article 5(4) Article 5(4) of the European Convention of Human Rights (ECHR) provides that: 'Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided
False imprisonmentLiabilityFalse imprisonment consists of the complete deprivation of liberty without a lawful basis. Claims will in practice be made against a public body that exercises detention powers, usually a local police force, the Secretary of State for the Home Department or the Secretary
0330 161 1234