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ARTICLE · 23 APRIL 2013

Necessary Shareholder Approval Of Certain Employee Compensation

Waller Lansden Dortch & Davis
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A discussion on the necessity of obtaining shareholder approval of certain employee compensation.

United StatesEmployment and HR
Jennifer Faucett
Jennifer Faucett

With the 2013 Proxy Season almost upon us, "shareholder approval" is on the minds of many at both public and private companies.Certain components of a company's executive compensation program are not immune to shareholder approval requirements.This includes "qualified performance-based compensation" under Code Section 162(m) and incentive stock options under Code Section 422.

Qualified Performance-Based Compensation

Shareholder approval of the material terms of applicable performance goals is necessary for certain compensation paid by a publicly-traded company to be considered "qualified performance-based compensation" under Code Section 162(m).The material terms that must be approved by shareholders include:

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