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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

Michigan Law Firm - Warner Norcross + Judd LLP

The CARES Act authorizes the United States Treasury’s Exchange Stabilization Fund to provide loans, loan guarantees, and other investments to eligible businesses, states, and municipalities that incur losses as a result of the COVID-19 pandemic. To be eligible for this type of CARES Act loan, the eligible business must agree to certain limits on executive pay during the period beginning on the date the loan agreement is executed and ending one year after the loan or loan guarantee is no longer outstanding (the “Limitation Period”). (NOTE: The executive compensation limits do not apply to other CARES Act loan programs, such as the Paycheck Protection Program and the Economic Injury Disaster Loan.)

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The executive compensation limits are as follows:

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Total compensation for these rules includes salary, bonuses, stock awards, and other “financial benefits.”

These provisions raise a number of interpretive issues, particularly around the definition of “total compensation.” Hopefully, the IRS will issue guidance soon. Some questions to consider include:&nbsp;

Employers that want to take advantage of these loan programs need to:

Visit Warner’s <a href="~/About-Us/COVID-19-Updates" target="_parent" rel="noopener">COVID Resource Center</a>.&nbsp;

Warner is here to help! If you need assistance with implementing the CARES Act provisions, please contact a member of Warner’s Employee Benefits and Executive Compensation Practice Group.

Partner

Jennifer A. Watkins

Lisa B. Zimmer

Employee Benefits

Executive Compensation Limits Under Certain CARES Act Loans

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Executive Compensation Limits Under Certain CARES Act Loans

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