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When Companies Make Tax Reimbursements to Executives, Shareholders Pay
Business WeekLink to more items from this source
[Opinion]
June 20, 2002
Excerpt: Let's say a company makes $100,000 in payments into a supplemental retirement plan on the executive's behalf (perk No. 1). This has tax consequences, but often companies will pay their top executives extra to cover the expense. These are called 'gross-up' payments. So a CEO will get an extra $67,000 -- $40,000 to pay the 40% tax rate on the retirement plan contribution (perk No. 2) and $27,000 to pay the taxes on the $67,000 (perk No. 3).

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