Executive pay trends and golden parachute tax: a collision on the horizon.
Ironically, many corporations will likely discover that tying equity-based executive compensation more closely to performance will cost millions of dollars when there is a merger or acquisition. The reason: Internal Revenue Code Section 280G, which is designed to discourage "excess" parachute payments, often assesses a significantly higher toll on performance-based compensation than on time-vested equity payments. There is no magic remedy, but advance planning can often help mitigate the impact. This article describes the dilemma and suggests several approaches to the challenge.
Johnson
David G
DG
Ernst & Young's Human Capital Practice, Cleveland, Ohio, USA.
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