For more than four decades, Fenwick & West has helped some of the world’s most recognized companies become, and remain, market leaders. From emerging enterprises to large public corporations, our clients are leaders in the technology, life sciences and cleantech sectors and are fundamentally changing the world through rapid innovation.
Fenwick & West was founded in 1972 in the heart of Silicon Valley—before “Silicon Valley” existed—by four visionary lawyers who left a top-tier New York law firm to pursue their shared belief that technology would revolutionize the business world and to pioneer the legal work for those technological innovations. In order to be most effective, they decided they needed to move to a location close to primary research and technology development. These four attorneys opened their first office in downtown Palo Alto, and Fenwick became one of the first technology law firms in the world.
From our founding in 1972, Fenwick has been committed to promoting diversity and inclusion both within our firm and throughout the legal profession. For almost four decades, the firm has actively promoted an open and inclusive work environment and committed significant resources towards improving our diversity efforts at every level.
At Fenwick, we are proud of our commitment to the community and to our culture of making a difference in the lives of individuals and organizations in the communities where we live and work. We recognize that providing legal services is not only an essential part of our professional responsibility, but also an excellent opportunity for our attorneys to gain valuable practical experience, learn new areas of the law and contribute to the community.
Year after year, Fenwick & West is honored for excellence in the legal profession. Many of our attorneys are recognized as leaders in their respective fields, and our Corporate, Tax, Litigation and Intellectual Property Practice Groups consistently receive top national and international rankings, including:
We take sustainability very seriously at Fenwick. Like many of our clients, we are adopting policies that reduce consumption and waste, and improve efficiency. By using technologies developed by a number of our cleantech clients, we are at the forefront of implementing sustainable policies and practices that minimize environmental impact. In fact, Fenwick has earned recognition in several areas as one of the top US law firms for implementing sustainable business practices.
At Fenwick, we have a passion for excellence and innovation that mirrors our client base. Our firm is making revolutionary changes to the practice of law through substantial investments in proprietary technology tools and processes—allowing us to deliver best-in-class legal services more effectively.
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Non-qualified deferred compensation arrangements that are not exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), should be reviewed to ensure compliance with Section 409A’s rules governing the timing of release of claims.
Under guidance from the Internal Revenue Service (the “IRS”), if a company has in place a nonqualified deferred compensation plan that is not exempt from Section 409A, and the plan conditions receipt of benefits on execution of a release of claims, the agreement may need to be amended by December 31, 2012 to ensure compliance with Section 409A.
Conditioning payment of deferred compensation upon execution of an agreement (such as a release of claims) by an employee may allow the employee to manipulate the timing of receipt of the deferred compensation. The most common example is an employee who is given a period of time to consider whether to execute a release of claims (generally 21 to 45 days). This period of time (commonly referred to as “release timing”) could span two calendar years if the termination occurs in December, thereby pushing the amount required to be included in income to the next calendar year. It is this potential for manipulation that the IRS sought to avoid in Notices 2010-6 and 2010-80.
Examples of Arrangements with Release Timing Issues
The following agreements are, or may be, subject to Section 409A and also may condition receipt of benefits upon execution of a release of claims;
—nonqualified deferred compensation plan (where the employee defers salary or the employer guarantees a rate of return on deferred amounts);
—employment agreements with severance provisions that contain a definition of constructive termination or a “good reason” definition; and
—severance agreements, separation agreements and change in control bonus plans. The type of severance agreements that may be subject to Section 409A are those that contain a good reason definition, provide for periodic payments of severance paid over time and agreements that provide for separation pay in excess of Section 409A’s prescribed limits (lesser of two times the employee’s annual salary or $500,000 (for 2012)).
Making the Release Requirement 409A Compliant
An agreement that provides for the payment of deferred compensation will satisfy Section 409A’s release requirements if structured in the following two ways:
(1) payment is made on a fixed date (60 or 90 days) following the event that gives rise to the payment; or
(2) payment is made during a specified period of time (not to exceed 90 days following the event giving rise to the payment), and if the specified period can span two calendar years, payment needs to be made in the second calendar year.
Relief for Non-Compliant Release Requirements
IRS Notices 2010-6 and 2010-80 provide transitional relief for release requirements that are not compliant with Section 409A, but the type of relief varies depending on when the agreement was entered into or amended, as set forth in the table below:
|Type of Document||Time Frame for Correction||General Procedure for Correction|
|Agreements entered into on or before December 31, 2010||Must be amended no later than December 31, 2012 with respect to amounts payable in 2013 or thereafter.||Employer must file a statement of correction to its tax return, but the employee does not need to file a statement of correction.|
|Agreements entered into after December 31, 2010,
or amended after December 31, 2012
|No deadline, but must be amended prior to the event giving rise to the payment (such as an employee’s termination date).||Employer and employee must both file a statement of correction with its and his/her respective tax return.|
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