Performance-Based Equity Awards: Popular before the Tax Reform – What about After?

Abstract

The Tax Cuts and Jobs Act (“Tax Reform” or “Act”) contains the most significant changes to the US Tax Code in more than thirty years. The biggest change for executive compensation is that public companies will not be able to deduct performance-based compensation. This article details overall considerations for how executive compensation programs will changes in light of the Tax Reform, with a focus on performance-based pay.

Keywords: The Tax Cuts and Jobs Act, tax reform, executive compensation, equity awards, long-term incentive awards, performance-based equity, compensation committees