Equity Compensation says: "Reports of my death have been greatly exaggerated"


Equity Compensation says: "Reports of my death have been greatly exaggerated"

I have recently read of my passing and that of my family. I am happy to announce that I am alive. Dan Walter, the President and CEO of Performensation wrote my obituary a bit prematurely ("Obituary for Equity Compensation"). Like any famous personality I fully expect people to have an obituary ready to go, but I dislike having it published before I am actually gone.

The first draft of the Tax Cuts and Jobs Act (H.R. 1 or the 2017 Tax Reform Bill) included a Section 3801 that would have so fundamentally changed the income and taxation for equity compensation and Non-Qualified Deferred Compensation as to make these tools inadvisable for most companies and individuals.

Although not generally reported as major components of this new bill, professionals involved in executive compensation, stock options, start-ups, non-qualified deferred compensation plans, and related specialities immediately opined on the short-sightedness of the proposed rules. I AM HAPPY TO ANNOUNCE that U.S. House of Representatives released an amendment that has stricken Section 3801 from the bill. I HAVE BEEN GIVEN A NEW LEASE ON LIFE.

What does come across as a great concern is why the language trying to kill me and my family was written at all. In my experience, language like this exists as a "shot across the bow" to warn of future battles. As my existence is critical to privately-held and publicly traded companies that help drive the growth and success of our nation, it seems odd that anyone in government would find my demise to be a benefit.

Perhaps it is time to gather together and reeducate our elected officials on my importance. Stock options, RSUs, performance equity and NQDC programs are tools that help align employees and executives with shareholders and company success. They provide delays in income and taxation due to limited liquidity, unpredictable outcomes and as a motivation for long-term performance. All of these are desired by companies and their investors. All of them have value to individuals and our country.

I am happy to offer Dan Walter at Performensation as a resource for these issues. Since he was the one to prematurely reported my death, he will happily be someone to help inspire my continued existence.

6 Whipsaw Lessons about Pay and Tax Reform

Obituary for Equity Compensation