Thursday, August 01, 2002
A READER WRITES . . .
A Day Late, Many Dollars Short
To The Rittenhouse Review:
There is irony in Pat M. Holt’s call for a $1 million limit on executive compensation.
Section 162(m) of the Internal Revenue Code prohibits a public company from deducting any compensation of over $1 million to its chief executive officer or to the four other employees with the highest pay. Two exceptions are any pay based on commissions or any “performance-based” compensation.
This limit first affected U.S. corporations in 1994. Until then, compensation was deductible only to the extent that it was “reasonable.”
The burgeoning of stock options in the 1990s was an unintended consequence of this provision. As long as stock option plans were somehow based on the performance of the company, were approved by outside directors and the shareholders, there was no effective limit on executive pay.
All this occurred after Congress thought it had the problem solved.
Never underestimate the power of creative accountants and lawyers!
Signed,
Tim Francis-Wright
Bear-Left.com
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JAMES MARTIN CAPOZZOLA
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James Martin (Jim) Capozzola launched The Rittenhouse Review in April 2002, TRR: The Lighter Side of Rittenhouse, HorowitzWatch, and Smarter Andrew Sullivan in July 2002, and Bulldogs for Kerry-Edwards in October 2004. He is also a contributing member of President Boxer.
He received the 2002 Koufax Award for Best Post> for "Al Gore and the Alpha Girls" (published November 25, 2002). Capozzola's record in the Koufax Awards includes two additional nominations for 2002 (Best Blog and Best Writing), three nominations for 2003 (Best Blog, Best Series, and Best Writing), and two finalist nominations in 2004 (Best Blog and Best Writing).
Capozzola’s experience beyond the blogosphere includes a lengthy career in financial journalism, securities analysis, and investment research, and in freelance writing, editing, ghost-writing, and writing instruction.
He earned his bachelor's degree in political science from the University at Albany and a master's in foreign affairs from the University of Virginia.
Capozzola lives in Philadelphia with his bulldog, Mildred.
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