GM’s First Female CEO Will Make Half Of What Her Predecessor Made

[joeglow3]

75. Sorry for the bluntness

Section 162(m) of the internal revenue code limits the amount a company can deduct for the CEO and others (typically the individuals whose compensation is required to be disclosed with the SEC in the annual report, excluding the CFO - I assume the CFO is excluded because they would have greater access and ability to cook the books and effectively be rewarded for it). Currently, any base compensation in excess of a million dollars a year is permanently non-deductible for tax return purposes for the company.

The limit does not apply to performance based compensation. Companies will have a compensation committee that is typically made up of a couple board of directors and the rest being outside individuals. This committee will approve performance metrics that, if met will result in additional compensation for the individuals included in the plan. These amounts are typically paid out in stock options, RSU's or a combination of the two.

Thus, it is not surprising that the plan has not been decided upon yet for this individual. Therefore, it is not an honest comparison to look at one individual and include their performance based pay AND anything the are getting as a result of the separation with someone's base pay only.

I apologize for the curtness/rudeness.