IRS Changes "Covered Employees" Subject To Code Section 162(m) Limitations

On June 4, 2007, the Internal Revenue Service issued Notice 2007-49 addressing identification of "covered employees" subject to the limit on deductible compensation imposed by section 162(m) of the Internal Revenue Code, and eliminating the uncertainty that had existed since the Securities and Exchange Commission amended its executive compensation disclosure rules on September 6, 2006.

Effective immediately, "covered employees," for purposes of section 162(m), will include only the employees, who as of the close of the employer's taxable year are either: (i) the principal executive officer, or an individual acting in that capacity, or (ii) employees whose total compensation for that year is required to be reported to shareholders pursuant to the Securities Exchange Act because that employee was among the three highest compensated officers for the taxable year, other than the principal