Dialogue

The latest reporting, opinion and research on executive compensation. We don’t necessarily agree with it all, but we provide it here for consideration.

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Week of
August 18, 2014

Quick Picks

Parachute Strategies Save Employee Taxes, Employer Deduction, Practitioners Say | Bloomberg BNA | August 22, 2014

Companies are using several strategies, including caps and cutbacks, to avoid triggering a golden parachute tax. Post change-in-control severance payments in excess of three times an executive's base pay trigger a 20% tax (and loss of tax deductibility). The increase in the use of performance shares has made avoiding the excise tax more difficult, since performance shares receive less favorable treatment than options or RSUs upon acceleration. In addition to the excise tax, companies also face NQDC issues with how they define "change-in-control." Andrew Liazos, a partner at McDermott Will & Emery, suggests employers include language mandating that a change-in-control provision requiring accelerated payment only applies if the change is 409a compliant. Read more

Xi Jinping Targets China's Corporate Titans with Pay Curbs | Financial Times (subscription required) | August 22, 2014

Chinese president Xi Jinping recently announced plans to curb state-owned enterprise ("SOE") management compensation. Senior managers at SOEs are currently paid less than their western counterparts, but are appointed by the Communist party's central organization department and are in charge of companies in protected, quasi-monopoly industries. Li Jin, chief researcher at the China Enterprise Research Academy, believes executive compensation should be capped at 6 to 12 times the average employee's wages. Critics of high senior manager salary believe these reforms will be more impactful than previous efforts in 2004 and 2008. Read more

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