Tax Bill Alert: Newly Released Senate Version of Tax Bill Retains Troublesome Deferred Compensation

By David Gordon, Kenneth H. Sparling

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Yesterday evening, Senate Finance Committee Chairman Hatch released details of the Senate’s version of the Tax Cuts and Jobs Act. 

The most notable development for executive compensation is that the Senate bill generally contains the same executive compensation related provisions that were included in the first, and now outdated, release of the House bill (H.R. 1). 

As previously reported, H.R. 1 was amended yesterday to remove Section 3801 of the bill, which provided for sweeping changes to the tax treatment of non-qualified deferred compensation, including stock options, under a new “Section 409B.”

For the moment, the new deferred compensation rules may be back on the table.  The Senate Finance Committee meets for the first time on Monday, November 13 to begin consideration of the bill.  Both the House and Senate versions are subject to further change, votes, and eventually reconciliation before final passage. 

Portrait of David Gordon, Managing DirectorDavid Gordon
Managing Director

Dave Gordon’s practice as an executive compensation consultant stretches back over a decade. He has covered a variety of industries, including extensive experience with financial institutions and utilities. In addition to engagements for his own clients, based on his years of experience as an executive compensation lawyer, he acts as the senior resource on numerous technical issues for the Firm. He frequently acts as an expert witness, where his prior background as a lawyer litigating executive compensation cases gives him a unique perspective when called upon to perform services as an executive compensation expert witness.

Portrait of Kenneth H. Sparling, PrincipalKenneth H. Sparling
Managing Director

Ken Sparling’s assignments have been with both public and privately-held companies in various industries. His consulting engagements focus on all aspects of executive and board compensation including annual and long-term incentive programs, employment agreements and change-in-control arrangements. Ken holds an MBA from University of Chicago and is an author and frequent contributor to the firm’s technical papers and studies.