title: Executive pay trends and golden parachute tax: a collision on the horizon.
abstract: 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.
authors.affiliation: Ernst & Young's Human Capital Practice, Cleveland, Ohio, USA.
authors.forename: David G
authors.initials: DG
authors.lastname: Johnson
mesh_terms: D000066:Accounting; D000288:Administrative Personnel / Q000191:economics*; D003132:Commerce / Q000191:economics; D004649:Employee Incentive Plans / Q000191:economics* / Q000331:legislation & jurisprudence; D006801:Humans; D007221:Industry / Q000191:economics; D007449:Investments / Q000191:economics* / Q000331:legislation & jurisprudence; D019982:Organizational Case Studies; D012308:Risk Management; D012456:Salaries and Fringe Benefits; D013660:Taxes / Q000331:legislation & jurisprudence*; D014481:United States