Dozens of U.S. companies will not pay certain taxes for top executives this year, reports the Wall Street Journal.
According to a review of 2009 regulatory filings for WSJ by compensation-research firm Equilar, 43 companies in Standard & Poor’s 500-stock index will stop paying certain taxes for their top brass this year.
Criticism of “gross-up” payments, which cover the tax bite for a variety of perks, including club memberships and personal use of corporate jets, as well as “golden parachutes” following takeovers.
Last month, Hewlett-Packard eliminated gross-ups on executives’ personal use of corporate aircraft, including spousal travel.
Many boards believe the present turmoil is a “once-in-a-lifetime opportunity” to remove abusive compensation practices, said Patrick McGurn, special counsel for proxy adviser RiskMetricks Group, to WSJ. RiskMetrics recently added gross-ups to its list of poor executive-pay practices.
A study by RiskMetrics concluded that two-thirds of S&P 500 companies have agreed to cover the 20 percent excise tax owed on change-in-control exit packages that exceed a certain limit.
A growing number of board compensation committees are moving toward scrapping all tax reimbursements. So far this year, 17 S&P 500 companies have disclosed plans to eliminate or reduce tax reimbursements on golden parachutes.