Key takeaways

• While the House tax bill has been amended to remove the deferred compensation provisions we previously discussed in our firm memo of the House bill, they have been included in the Senate’s newly released version of the tax bill.
• These provisions, if enacted, are likely to impact compensation planning and structure of equity incentives that PE firms use at portfolio companies.
• However, profits interests and restricted stock are largely unaffected by these new rules and our expectation is that, with appropriate modifications, stock options can continue to be used as a primary incentive tool for portfolio company management.