Many companies have announced employee bonuses, raises, or other benefits as a result of the tax reform bill. Our Quick Poll results offer detailed data on the trend, including the fact that roughly 20% of respondents have already provided some enhanced benefits to employees and 35% are considering additional or new benefits.

For more than 25 years, the tax deduction of compensation paid to certain executives has been limited to $1M unless it was performance-based. We outline several ways that the elimination of Section 162(m) could affect executive pay.

In the absence of one long-standing rule governing executive compensation plan design, boards now have more options. Is the new found flexibility a freedom to be enjoyed or a path to be feared? 

That is the question. Potential new earnings charges (or losses) might affect incentive plan payouts based on financial criteria. Decisions on this technical point should balance executive and shareholder concerns.

The new tax law offers boards an opportunity to review—and possibly reset—the ratios of salary, annual, and long-term incentives in their executive compensation plans.