Executive Compensation Issues
Author: Jennifer Kowal
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC |
A large portion of the rise in executive pay over the last two decades has come in the form of deferred compensation. Stock options, annuities, and life insurance policies, in addition to more traditional nonqualified deferred compensation plans, are all common means of compensating highly paid executives.
This on-demand course addresses the numerous tax rules that reach deferred compensation arrangements and often discourage their use, including I.R.C. sections 162(m), 409A, and 280G, It also addresses the taxation of common incentive based compensation arrangements such as stock appreciation rights and payments triggered upon changes in control. Finally, it will briefly address SEC rules such as the "say for pay", "pay ratio", and "performance based compensation rules."
Publication Date: October 2018
Designed For
Tax practitioners at all levels who advise on the taxation of executive compensation.
Topics Covered
- Section 409A's penalty provisions affecting deferred compensation
- Section 162(m) and section 280G
- SEC rules applying to executive compensation, including pay ratio, say on pay, and pay for performance
- Tax consequences of compensation based life insurance policies and annuities
- Tax consequences of various perquisites
Learning Objectives
- Differentiate the tax treatment of various types of employee stock options
- Identify situations where IRC rules may limit or disallow deduction of executive compensation payments
- Describe situations in which penalty taxes may apply to payments received by executives
- Gain familiarity with pay ratio and pay for performance rules
- Identify the form a large portion of the increase in executive pay over the last two decades
- Differentiate correct statement about Code Section 409A
- Describe the reasonable compensation doctrine of Code Section 162
- Differentiate code sections and how they apply
- Recognize which rules became effective in 2011
- Describe backdating
- Identify what is included in nonqualified deferred compensation
- Recognize how a company must disclose the ration of pay of its CEO under the SEC pay ration disclosure rule
- Describe in-the-money options
- Identify which practices related to options is illegal
Level
Intermediate
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
Basic understanding of executive compensation.
Advance Preparation
None
