CFOs No Longer Subject to $1 Million Compensation Deduction Limit

The Internal Revenue Service has issued new guidance (IRS Notice 2007-49) that changes the group of public company officers subject to the compensation deduction limit under Section 162(m) of the Internal Revenue Code. Under the new rules, the company’s chief financial officer will never be subject to Section 162(m), even if the CFO is one of the most highly compensated officers. In addition, the total number of officers in addition to the CEO who are subject to Section 162(m) was reduced from four to three. The new rules are effective for company fiscal years ending after December 15, 2006.