Transcript
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"My work is a little outside of the norm of the standard compensation consulting. I specifically work with companies who are going through changes in control, mergers, acquisitions, transactions. I'm specifically working with companies either in anticipation of those changes in control or when they're actually going through a change-in-control. A lot of my work revolves around the 280G, which is the golden parachute liabilities and their rules, so I'm specifically working with companies quantifying the liabilities and assisting them through those rules. The IRC Section 280G rules are not new. They were implemented back in the 80's, but companies are continually being surprised by the level of impact these rules may have on the executives’ benefits when they go through a change-in-control. |
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Companies will lose a tax deduction on anything that's considered excessive. The first thing that companies should be doing is evaluating whether or not it makes sense to regularly quantify and know where they stand with respect to all the payouts that get paid in the event of a change-in-control. It's a big deal to quantify your golden parachute liabilities. There are technical rules that are very complicated. You can't just rely on logic to feel your way through those calculations—it's an effort. You have to gather up all your programs and understand the contractual provisions and how they pay out. You can have multiple agreements piling on top of each other, working in different ways. In anticipation of a transaction, if they know they are likely a takeover candidate, then they should evaluate and understand what all of their change-in-control liabilities are, what their payouts are, and where they stand with respect to the 280G." |
