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ARTICLE · 22 OCTOBER 2009

Executive Compensation Tax Rules May Require Year-End Planning

Jones Day
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As 2009 winds down, companies should consider a number of executive compensation tax rules that are sensitive to year-end deadlines.

United StatesEmployment and HR
John Cornell
John Cornell
Dennis Drapkin
Dennis Drapkin
Daniel Hagen
Daniel Hagen
Rory Lyons
Rory Lyons
Manan Shah
Manan Shah
Charmaine Slack
Charmaine Slack
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As 2009 winds down, companies should consider a number of executive compensation tax rules that are sensitive to year-end deadlines. This Commentary discusses (i) planning opportunities under Code Section 409A to address potential tax rate increases on deferred compensation, (ii) how typical severance benefits, including bonus termination payments, may cause problems under the Code Section 162(m) $1 million deduction cap (the "$1 Million Cap"), and (iii) the need to consider the IRS' corrections program for Code Section 409A operational failures.

Compensation: Defer, Accelerate, or Stand Pat?

With federal budget deficits growing at unprecedented rates, tax increases seem all but inevitable. The Bush administration's tax reductions are due to expire at the end of 2010. The Obama administration has proposed retaining existing rates only for married taxpayers earning not more than $250,000 per year ($200,000 for individuals). As a result, executives have become

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