These are proposed regulations relating to the deduction limitation for certain employee remuneration in excess of $1,000,000 under the Internal Revenue Code. The proposed regulations clarify that qualified performance-based compensation attributable to stock options and stock appreciation rights must specify the maximum number of shares with respect to which options or rights may be granted to each individual employee. The proposed regulations also clarify the application of the transition rule for taxpayers that are not publicly held corporations and then become publicly held corporations.