CCCs
Joined: 07 Jul 2003
Posts: 762
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Posted: Sun Mar 19, 2006 11:24 pm Post subject: Gross up...gross out
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CEO pay has been a topic here before. Even with all of the supposed reforms that have happened, manipulation continues.
Why don't you pay my taxes?
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And how much tax will Kanas owe on this windfall? Um, $0. The shareholders of North Fork, and ultimately, Capital One, will pay some $44 million to cover Kanas' substantial Internal Revenue Service bill. This tax buy-off is known as a "gross-up" because beneficiaries receive "gross" pretax sums rather than net post-tax sums—though it is also well-named because of the reaction it provokes in shareholders: a pressing need to vomit. The gross-up is becoming increasingly common in the executive suite, with Kanas' merely the grossest.
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