IRS Issues Guidance On Identifying Covered Employees Under Section 162(m)

On June 4, 2007, the IRS issued Notice 2007-49 (the "Notice"), which provides guidance on identifying covered employees for the purpose of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").

Generally, in the case of any publicly-held corporation, compensation for personal services by covered employees in excess of $1 million is not deductible, unless certain requirements are met as set forth under Code Section 162(m).

Section 162(m) of the Code defines a "covered employee" as any employee of a corporation, as of the close of the taxable year, who is the chief executive officer or who is acting in such capacity or any employee whose total compensation is required to be reported to shareholders in the annual proxy statement under the Securities Exchange Act of 1934 (the "Exchange Act") because such employee is among the four highest compensated officers for the taxable year (other than the chief executive officer).