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GRASSLEY TO HOLD EXECUTIVE COMP HEARINGS

August 29, 2006

Senate Finance Committee Chairman Grassley will hold a hearing September 6 to look at stock option backdating and executive compensation tax issues. The press release says:

Chairman Grassley is exploring the extent of abuse of executive compensation tax restrictions with an eye toward possible legislation.

It's hard to say any tax law changes are needed here. The backdating of stock options already violates tax rules and has led to some securities law indictments.

The last time Congress tackled executive compensation issues, the result was the awful "Section 409A" rules on deferred compensation. Passed in the Enron political preening frenzy, these rules apply to every business with non-qualified deferred compensation, even if just a simple retirement bonus plan. They are so complicated and poorly written that after nearly two years the IRS still hasn't been able to come up with workable regulations. The situation is so bad that the AICPA threw up its hands earlier this month and called for either drastic revisions or outright repeal.

It's probably too much to hope that Senator Grassley will decide that they should undo the damage done already, rather than add yet more complexity to the already baroque tax code.

Link: BenefitsBlog Section 409A link collection.

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