The Golden Parachute Rules: Tips and Strategies to Mitigate Impact on Your Bottom Line
When a private or public company undergoes a change in control, if excessive payments are made to certain executives, and such payments are determined to be made in connection with a change control (often referred to as golden parachute payments), such payments are subject to additional tax penalties under Internal Revenue Codes Sections 280G and 4999. Golden Parachute Payments may include severance payments, benefits, deal bonuses, acceleration of vesting of equity (including stock options, restricted stock and other short or long-term incentive awards) and any other cash or non-cash benefit to the Executive that was triggered by the change in control. Although these tax penalties can be severe, if Companies take appropriate action in the design of their compensation arrangements, such penalties can be significantly reduced or avoided entirely.
In this LIVE Webcast, a panel of distinguished professionals and thought leaders brought together by The Knowledge Group will help companies understand the important aspects of this significant topic. They will provide an in-depth discussion of the golden parachute payment rule and will also offer best tips and strategies in mitigating its impact to businesses’ bottom line.
Key topics include:
- Golden Parachute Rule – An Overview
- Recent Trends and Developments
- Best Governance Practices
- Impact to Businesses’ Bottom Line
- 280G Mitigation Techniques
Golden Parachute Rule – An Overview
- Cover the legislative history and stated goals for Section 280G
- Define and identify what are parachute payments, who is subject to the rules
Impact to Businesses’ Bottom Line
- Cover the tax impact to the executive and the company
- Provide example calculations of excess parachute payments and the related excise taxes
- Compare the differing parachute calculation impact between time- and performance-vested awards
Compensation Advisory Partners LLC (CAP)
Recent Trends and Developments & Best Compliance Practices
- Recent market trends in gross-ups, severance and equity treatment upon a change in control
- Proxy advisory firms and shareholder perspective of golden parachute
- Say of golden parachute what it is and market data
- Examples of companies that implemented gross-ups in anticipation of a CIC
Golden Parachute Tax Solutions LLC
280G Mitigation Techniques
- Because of the way in which 280G rules were written, mitigation of the tax could be as simple as cutting back benefits where the amounts which exceed the 280G Threshold amount created more taxation than the net benefit received for the amount of payment which exceeds the threshold.
- In order to minimize 280G tax exposure, Section 280G often requires the use of various valuation disciplines.
- One key area of mitigation is to show by clear and convincing evidence that a payment constitutes’ reasonable compensation for services rendered prior to or after a Change in control
- Another common area of planning involves the valuation of an Executive’s Restrictive Covenants.
- When structuring change in control/ employment agreements the provisions contained within such agreements should consider 280G impact.
Who Should Attend:
- Tax Attorneys
- Tax Advisers
- Corporate Tax Professionals
- Finance Executives
- Executive Officers
- Employee Benefits and Executive Compensation Counsel
- HR Executives
- Executive Compensation Practicing Lawyers
- Benefits Managers
- Compensation and Benefits Consultants
- Senior Management
- Other Related/Interested Professionals
Don has more than 25 years of experience designing executive compensation and pay-for-performance programs, as well as advising management and board of public, private and tax-exempt companies. Prior to joining FGMK, he spent the last 20 years working for Andersen Consulting, PricewaterhouseCoopers LLC, and most recently, Grant Thornton.
Don has worked with companies across virtually every industry and size. These engagements include total compensation benchmarking, annual and long-term incentive plan design, equity incentives, phantom stock arrangements, and non-qualified deferred compensation plans.
Don has also worked with numerous clients on regulatory matters, including ASC 718, Section 409A, Section 280G and SEC proxy/CD&A disclosure.
Don is a frequent speaker and has published numerous thought leadership articles on topics related to executive compensation and pay-for-performance.
Don has more than 25 years of experience designing executive compensation and pay-for-performance programs, as well as advising management and …
Lauren Peek is a Principal at Compensation Advisory Partners LLC (CAP). She has 15 years of experience advising on executive compensation strategy development, evaluating the pay and performance relationship, annual and long-term incentive plan design and corporate governance issues. Lauren advises Compensation Committees and senior management for both public and privately-held organizations with significant experience in the pharmaceutical, manufacturing and consumer products industries.
Lauren Peek is a Principal at Compensation Advisory Partners LLC (CAP). She has 15 years of experience advising on executive …
Laurence Wagman is the founding principal of Golden Parachute Tax Solutions LLC. His expertise is in the area of taxation of executive compensation, and is a nationally known resource within the area of golden parachute tax penalties (Internal Revenue Code Sections (“IRC”) 280G and 4999. Laurence has previously written several articles for both the Journal of Compensation and Benefits and the Taxation of Executive Compensation and Retirement on IRC Section 280G related matters this list includes: Structuring Change in Control Arrangements Within the Current Executive Compensation Environment (Sept 2009), The Golden Parachute Excise Tax; Why it’s about to Become More Expensive, Why a Gross-Up May be Necessary and How to Structure it to be Performance Based (July 2010), The Golden Parachute Excise Tax – Not Just a Public Company Issue (Sept 2011), and Canadian Employers – Beware the United Stated Golden Parachute Excise Tax as Not Just a U.S. Problem.
Laurence has had a number of recent speaking engagements. This list includes: Speaking at the 19th Annual National Association of Stock Plan Professionals (“NASPP”) Conference entitled After the Gross-Up Is Gone: Avoiding and Managing the 280G Excise Tax (Nov 2011). In 2012, Laurence gave a 280G Presentation entitled for the benefit of the NASPP NY/NJ (June) and CT (September) Chapters entitled Beware of the Golden Parachute Excise Tax: How Best to Structure Compensation Plans to Minimize 280G Risk. In 2013, Laurence once again spoke at NASPP’s National Conference as the lead panelist for the presentation Using Non-Competes to Reduce 280G Exposure). Also in 2013, Laurence was also a co-panelist at the Practicing Law Institute (“PLI”) for the presentation Hot Issues in Executive Compensation M&A Topics/Change in Control. In 2014 Laurence lead another panel and NASPP National Conference entitledHappy 30th Birthday 280G – The IRS Code Section which has not aged gracefully.
Prior to forming Golden Parachute Tax Solutions, Laurence was a tax manager with a “Big 4” executive compensation/employee benefits tax practice, and thereafter was an executive compensation consultant with James F. Reda and Associates, an independent executive compensation consulting firm. Laurence’s practical experience includes a unique perspective from both an executive compensation tax and executive compensation consulting disciplines.
Laurence is a graduate of Lehigh University (1995), received his Master of Science in Taxation at Seton Hall University (2002) and is a licensed Certified Public Accountant in the state of New Jersey. Laurence can be reached at lwagman@280Gsolutions.com.
Laurence Wagman is the founding principal of Golden Parachute Tax Solutions LLC. His expertise is in the area of taxation …
Print and review course materials
Method of Presentation:
On-demand Webcast; Group-Internet Based
Experience in taxation/executive compensation laws
NY Category of CLE Credit:
Areas of Professional Practice
NASBA Field of Study:
Unlock All The Knowledge and Credit You Need
Leading Provider of Online Continuing Education
It's As Easy as 1, 2, 3
Get Your 1-Year All Access Pass For Only $199
About FGMK, LLC
FGMK is a leading professional services firm providing assurance, tax and advisory services to privately held businesses, global public companies, entrepreneurs, high-net-worth individuals and not-for-profit organizations. FGMK is among the largest accounting firms in Chicago and one of the top ranked accounting firms in the United States.
About Compensation Advisory Partners LLC (CAP)
CAP is a leading independent consulting firm specializing in executive and director compensation and related corporate governance matters. Our consultants have served as independent adviser to Boards and senior management at many leading companies in the areas of compensation strategy, program design and in promoting sound corporate governance principles.
About Golden Parachute Tax Solutions LLC
Golden Parachute Tax Solutions is a nationally recognized Certified Public Accounting firm which specializes in IRC Section 280G Computations & Advisory Services. Based on the number of transactions, our firm is among the top four largest providers of 280G related services in the United States. Although we are an accounting firm, because we do not prepare audits, our firm is not conflicted from handling all aspects of a 280G engagement, specifically valuation work that often is required when preparing 280G computations.
Our services include golden parachute tax computations and advisory services, M&A transaction and due diligence support, proxy computations, golden parachute disclosures required under the Dodd-Frank Act, change-in-control plan design and cost analysis, and providing Section 280G mitigation strategies. We also provide valuation services including non-compete valuations, reasonable compensation studies and actuarial valuations.
Our professionals have been leaders in the golden parachute area for 15 to 25 years. Our experience includes all types of engagements from leading small private company transactions to leading engagements involving Fortune 100 public companies. What distinguishes us from other firms is that our professionals have extensive experience within the 280G arena.