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Calculating Excess Parachute Payments


Guest stakri

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Guest stakri

Does anyone know of a calculator, spreadsheet or similar tool for calculating excess parachute payments? Any help/suggestions would be greatly appreciated!

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Taking the time to create one involves so much work and time, that I'd be surprised if anybody would give it away for free. The Final Four accounting firms charge very substantial fees to do those computations, so my guess is that anybody who has done the work to create the spreadsheet to do the computations would keep it as a revenue source for himself or herself.

Also, I'd be somewhat concerned about whether the computations were done correctly in something that you got for free. You know the saying about getting what you paid for.

You'd have to know the golden parachute rules pretty well to be able to check to see that the formulae in them are right. You'd also have to have a good working knowledge of spreadsheets. If you know those rules that well and are that computer proficient, you could create those spreadsheets yourself.

Finally, these computations are done for the most senior executives, so that the focus is upon making sure that they are done correctly, not cheaply. I wouldn't worry about trying to save a company some money, particularly because the computations are done when the company is being acquired, so that it will generally have the cash to pay to have the computations done. Those fees are just considered to be part of the costs of doing the deal.

Bottom line. This isn't a good area for people to dabble in, because large dollars can be at stake and the computations are generally done for very senior executives. You don't want to make a mistake in computing the amount of taxes that the CEO owes.

For example, there are many attorneys at high-powered law firms that are extremely knowledgeable about the golden parachute rules, but refuse to do those computations. If they don't feel comfortable performing them, do you think it would be prudent for you to do them?

Kirk Maldonado

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