A number of tax and securities law issues regarding equity arrangements are raised by mergers, acquisitions and divestitures. Among the tax issues are rules affecting the incentive stock option (ISO) status of stock options, the tax treatment of stock option cash-outs and the vesting of restricted stock, IRC §280G issues, IRC §162(m) issues and, of course, IRC §409A issues. Securities law issues include the logistics of registration under the Securities Act of 1933 and, under the Securities Exchange Act of 1934, the short-swing profit rules of §16 and the executive compensation disclosure rules of Regulation S-K.

Transactions in which a corporation divests itself of a business by means of a spin-off, split-off or an IPO carve-out create a number of opportunities and pitfalls for the treatment of stock options. While the Internal Revenue Service has published some guidance of general applicability for spin-off transactions (in Revenue Ruling 2002-1), many questions remain unanswered.

This program includes expert analysis by Susan P. Serota on audio.

Use of Materials

The user should begin by watching the streamed video segment, if any, or listening to the streamed audio segment, if any, for the program before reading the text. The user may wish to make notes of the most important concepts and any terms that are new. Next, the user should review the learning objectives at the beginning of each chapter and read the chapter. The user should work through each of the examples. After the user has studied each chapter, s/he should click on the link at the left to complete the interactive study questions. If the user answers a study question incorrectly, s/he should review the section of the text that is indicated at the end of the explanation to the study question to assure comprehension of the material. The user should review the learning objectives once more to consider achievement of the objectives. After the user has finished watching the streamed video, if any, or listening to the streamed audio, if any, and reading the text and working through the study questions, s/he may wish to review her/his notes and any sections of the text or video/audio, if any, that were difficult. When the user is ready, s/he should click on the link to the left to complete the quizzer. The user's CPE certificate will be provided immediately upon successful completion of the quizzer.

Chapter 1 discusses plan documentation issues that arise in mergers, acquisitions, and divestitures, the tax treatment that may result in such transactions, as well as the securities laws that apply.

Chapter 2 focuses on the alternatives for handling stock options, including the tax consequences, in corporate spin-offs, split-offs and IPO carve-outs.

Throughout this program, the user will find explanations and discussions regarding some of the issues that often face practitioners. In order to enhance the user's comprehension of the material and highlight important practical considerations, this program includes the following designations:

A Biskalert is intended to warn the practitioner of a particular situation that may require action or other consideration by the client or the practitioner on behalf of the client.

A Biskpoint presents analysis or commentary that attempts to explain or clarify authoritative guidance.

A Bisktip provides practical advice that may be used to help improve client service or service to the practitioner's organization.

Ms. Serota's assignments have included: negotiating and drafting executive compensation arrangements including stock option and other equity or performance award plans, golden parachutes and anti-takeover devices; advising compensation committees of public boards of directors on executive and director compensation arrangements and disclosure of such programs; drafting employer pension, profit sharing plans; plan governance reviews; DOL advisory opinion requests; ESOP structuring and financings, acting as ESOP trustee counsel; advising U.S. and non-U.S. companies on tax and securities issues in equity-based plans; advising on executive employment contracts; advising creditors in bankruptcy proceedings on PBGC issues; serving as company ERISA counsel and advising on ERISA fiduciary litigation; and providing expert testimony in litigation on breach of fiduciary duty and benefit claims. She is also an advisor to both foreign and domestic governmental entities, regarding pensions, deferred compensation and privatizing certain pension/social security/invalidity payment systems.

From August 2006-2007, Ms. Serota was the Chair of the American Bar Association Section of Taxation, the nation's largest organization of tax lawyers. She is the past Chair of the ABA Tax Section's Employee Benefits Committee and is a member of the Executive Compensation subcommittee of the Federal Regulation of Securities Committee of the ABA Section of Business Law where she has actively participated in issues relating to proxy disclosure of executive compensation. Ms. Serota is also a member of the Securities Law Committee of the Society of Corporate Secretaries and Governance Professionals. In 2005, she was honored as the recipient of the 2005 WEBA Achievement in Benefits Service Award. She is also listed in Chambers USA—America's Leading Lawyers for Business 2006, Global Counsel 3000 2006-07 and Best Lawyers 2006.