close

For more than four decades, Fenwick & West LLP 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.  MORE >

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.  MORE >

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.  MORE >

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.  MORE >

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:

  • Named Technology Group of the Year by Law360
  • Ranked #1 in the Americas for number of technology deals in 2015 by Mergermarket
  • Nearly 20 percent of Fenwick partners are ranked by Chambers
  • Consistently ranked among the top 10 law firms in the U.S. for diversity
  • Recognized as having top mentoring and pro bono programs by Euromoney

MORE >

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.  MORE >

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.   MORE >

Mountain View Office
Silicon Valley Center
801 California Street
Mountain View, CA 94041
650.988.8500

San Francisco Office
555 California Street
13th Floor
San Francisco, CA 94104
415.875.2300

Seattle Office
1191 Second Avenue
10th Floor
Seattle, WA 98101
206.389.4510

New York Office
1211 Avenue of the Americas
32nd Floor
New York, NY 10036
212.921.2001

Shanghai Office
Unit 908, 9/F, Kerry Parkside Office
No. 1155 Fang Dian Road
Pudong New Area, Shanghai 201204
P.R. China
+86 21 8017 1200


Executive Compensation Alert: IRS Releases Guidance for 162(m) Compensation

Update to our Client Alerts of February 8, 2008 and February 14, 2008

On February 21, 2008, the IRS released Revenue Ruling 2008-13, confirming the position taken in PLR 200804004 that compensation intended to qualify as deductible performance-based compensation pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, will not qualify as such if the recipient's employment agreement provides for payment of the performance compensation upon a termination of employment without cause or for good reason, even if the performance metrics applicable to such compensation are satisfied.

Revenue Ruling 2008-13 provides that if otherwise performance-based compensation is also payable to the executive on a termination of employment (i) without cause, (ii) for "good reason" or (iii) due to voluntary retirement (this is an expansion on PLR 200804004), such compensation is not classifiable as performance-based compensation and will not be deductible under Section 162(m) if compensation exceeds one million dollars in the taxable year.

The good news is that this Revenue Ruling is prospective, it is not retroactive. The IRS's position as announced in the Revenue Ruling will not apply with respect to (i) compensation for performance periods that begin on or before January 1, 2009, or (ii) compensation under an employment contract in effect on February 21, 2008 (without respect to future renewals or extensions, including renewals or extensions that occur automatically absent further action of one or more of the parties to the contract).

What is Section 162(m)?

Section 162(m) denies a tax deduction to a company if compensation paid to certain individuals (known as "covered employees") exceeds one million dollars for the taxable year, but compensation that is "performance-based" within the meaning of Section 162(m) is excepted from this limit. Section 162(m) applies only to public companies. A "covered employee" is defined as the public company's Chief Executive Officer and its 3 other most highly compensated officers (excluding the CFO) whose compensation is required by the SEC to be disclosed for a given year.

What Should Companies Do?

Public company employers need to review their outstanding compensation arrangements, plans and employment contracts that are intended to provide performance-based compensation or that permit the payment of such compensation upon certain events (a common example being the acceleration of performance-based restricted stock units upon a covered employee's termination of employment without cause, even if the performance factors applicable to such restricted stock units is not satisfied) to determine whether such arrangement may require amendment in light of Revenue Ruling 2008-13.


For more information on this, or related matters, please contact any attorney in the Executive Compensation and Employee Benefits Group:

Scott P. Spector (650.335.7251–sspector@fenwick.com),
Blake W. Martell (650.335.7606–bmartell@fenwick.com),
Tahir J. Naim (650.335.7326–tnaim@fenwick.com), and
John E. Ludlum (650.335.7872–jludlum@fenwick.com) in the Executive Compensation and Employee Benefits Group.


©2008 Fenwick & West LLP. All Rights Reserved

This alert is intended by Fenwick & West LLP to summarize recent developments in the law. It is not intended, and should not be regarded, as legal advice. Readers who have particular questions about these issues should seek advice of counsel.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice in this communication (including attachments) is not intended or written by Fenwick & West LLP to be used, and cannot be used, for the purpose of (i) avoiding penalties under the internal revenue code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.