Executive Comp Limits When Companies Receive Stimulus Aid

Executive Comp Limits When Companies Receive Stimulus Aid

June 10, 2020

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Previously, we’ve shared updates to help companies and their key executives with regard to executive comp limits for organizations that receive certain types of COVID-19 loans, loan forgiveness, or stimulus aid. See: CESA Act Loans: Further Information* and Insights and Executive Compensation Restrictions and the CARES Act

Today, we’re sharing with you a summary on the topic that has been provided by IslerDare PC, a Virginia-based law firm that specializes in matters of management, labor, employment, and employee benefits.

This excerpt comes from the firm’s Employee Benefits Update, “The Impact of the COVID-19 Pandemic on Your Employee Benefit Plans: Part 3”.

“Executive Compensation Changes

Fulcrum Partners shares Isler Dare NewsQ10. Does the CARES** Act impose compensation limits on businesses receiving financial aid?

“Yes. Businesses that qualify for loans, loan guarantees, and other investments to obtain liquidity, pursuant to some of the stimulus and financial aid measures provided under the CARES Act, will face caps on the compensation provided to their highly-compensated executives, for a restricted time period beginning on the date that they receive the loan, guarantee or investment until one year after that aid is no longer outstanding.

    • “The limits are imposed on two tiers:
      • For executives whose total compensation in 2019 exceeded $425,000, their total compensation in any 12-month period during the restricted time period cannot exceed their 2019 pay; if they are terminated, their severance cannot exceed twice their total 2019 compensation.
      • For executives whose total compensation in 2019 exceeded $3,000,000, the total compensation paid in any 12-month period during the restricted time period cannot exceed the sum of (i) $3,000,000, plus (ii) 50% of the excess over $3,000,000 that the individual received in 2019.”

 An Additional Resource

Over the past three months, IslerDare PC has devoted its newsletter publication to pandemic-related topics, creating a 6-part series. We’ve compiled these six publications in one PDF to provide you a single-source reference on many of today’s most pertinent employee benefits topics. See: The Impact of the COVID-19 Pandemic on Your Medical and Retirement Plans

The collective of six reports offers guidance and guidelines on health plans, life insurance, qualified retirement plans, flexible spending accounts, and other timely employee benefits issues.

*CESA Coronavirus Economic Stabilization Act of 2020; Title IV, Subtitle A of the CARES Act

** Coronavirus Aid, Relief, and Economic Security Act or the CARES Act https://www.congress.gov/bill/116th-congress/house-bill/748

#COVID-19 #CESA #executivecomp


This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.

Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through Lion Street Advisors, LLC (LSA) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI and LSF/LSA are non-affiliated entities and separate entities from OneDigital and Fulcrum Partners.

Unless otherwise noted, VAI/VSI, LSF/LSA are not affiliated, associated, authorized, endorsed by, or in any way officially connected with any other company, agency or government agency identified or referenced in this document.

Lion Street Advisors // Lion Street Financial

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