Goldman Sachs has accelerated nearly $100 million in stock awards to top executives before the end of the year in order to avoid unfavorable changes in the new tax code, according to public filings posted Friday.
The most sweeping overhaul of U.S. tax code in 30 years includes a provision which caps a corporate deduction for executive pay; under current law, corporations can deduct up to $1 million per executive's base salary, however there's no cap on deductions for performance-based pay, such as bonuses.
Provisions - Salary - Performance - Bonuses - Towards
Under the new provisions, both base salary and performance bonuses count towards to $1 million cap - which is why Goldman accelerated $94.8 million in bonuses originally scheduled for January, 2018. By paying the bonuses early, the bank will save money on its own tax bill.
Most of Goldman's executives received early payouts - including of course, CEO Lloyd Blankfein.
Move - Netflix - Executive - Compensation - Plan
In a similar move, Netflix also announced it would change its executive compensation plan for 2018 in response to the new Tax Law. The company said in a public filing posted Thursday that it's going to start paying some of its top executives higher salaries, and tie less of their compensation to performance, citing the law change.
Accelerated bonuses aren't the only thing at least temporarily grinding Goldman's gears about the new tax code. As we discussed yesterday, in a Friday 8-K filing with the SEC, Trump's "repatriation tax" is going to knock approximately $5 billion off the company's profits in Q4 2017 in the form of a one-time repatriation charge.
T - Enactment - Tax - Legislation - Reduction
[T]he enactment of the Tax Legislation will result in a reduction of approximately $5 billion...
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