Now Daniel Gross at Slate.com brings to light another tactic pushing executive compensation higher. Executives involved in mergers and acquisitions would normally face taxes due to the compensation received upon transaction closing. Now these executives are seeing their payments “grossed up” to allow them to avoid the pain of having to write a check to the IRS.
We could go on about the arrogance and inequity of these transactions, but we will leave you to read the Slate article. In conclusion Gross writes:
Gross-ups are an absurd example of CEO-only behavior. Sure, middle managers can receive them for comparatively minor expense reimbursements. But when middle managers and secretaries and traders—and even most senior executives—receive bonuses or sell restricted stock, they pay taxes on the proceeds. It’s only CEOs who get to duck the taxes on their generous payouts.
It is said that death and taxes are the only two sure things in life. Gross-ups have allowed CEOs of large companies to effectively cheat the latter—on their shareholders’ dimes. It’s a safe bet that if science comes up with a super-expensive procedure that can cheat death, the CEOs of big public companies will find a way to get it written into their employment agreements—tax free.
One can see that some writers are covering the topic, there seems to be a noticeable indifference to the tactics employed. Our guess it that will take another bear market to gin up some real outrage to these egregrious tactics.