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A N A LY Z I N G E X E C U T I V E S C O M P E N S AT I O N A N D G O L D E N PA R AC H U T E S As part of Alvarez & Marsal Tax Advisory Services, our Compensation and Benefits Practice has designed the Golden Parachute Analyzer. Mergers and acquisitions are common in business these days. So, too, are the executive compensation packages called golden parachutes, which can help soften the blow to executives when they are unexpectedly forced to leave the company due to a merger, acquisition, hostile takeover, or downsizing. Designing and maintaining executive compensation packages so that they comply with strict tax laws and still offer protection to skilled executives can be challenging for even the most competitive organizations. S E R V I N G YO U R N E E D S Alvarez & Marsals Compensation and Benefits Practice has designed the Golden Parachute Analyzer to assess the tax effect on corporations and employees when golden parachutes are triggered by a change in control of the employer. Under the Internal Revenue Code (IRC), corporations that make excess parachute payments lose significant tax deductions. The recipient of parachute compensation is also subject to a 20 percent excise tax on such excess payments. Our clients generally find our Golden Parachute Analyzer helpful in various circumstances: Executive Compensation Disclosure. Proposed SEC regulations will require greater disclosure of executive compensation, including the amount payable upon a change in control and the excise tax amount. The Golden Parachute Analyzer Program helps your organization to quantify these amounts. Change in Control Planning. Your business needs to design and implement competitive control provisions. We can assist your team in this process, and gauge the potential tax implications of existing agreements to make recommendations for remedial redesigns. Change in Control in Process: Once the process of a change in control is underway, it is critical to calculate the amount of the parachute payment and the amount of any excess parachute payments that would trigger excise tax consequences under various scenarios. In addition, planning opportunities still exist to mitigate the excise tax and lost deduction.

T H E A LV A R E Z & M A R S A L A P P R O A C H Alvarez & Marsal looks at your executive compensation packages and develops a set of services that best fit the needs of your company and executives. Our services in a Golden Parachute Analyzer include: For each affected individual, calculation of the parachute payments received, such as severance payments, acceleration of equity awards, enhanced benefits, and other non-cash compensation. For each affected individual, assessment of whether excess parachute amounts exist and, if so, calculating the excise tax due for each individual. Calculation of overall parachute costs, gross-ups, and deduction losses to the company.

N O R T H A M E R I CA E U R O P E A S I A L AT I N A M E R I CA

T H E A LV A R E Z & M A R S A L A P P R O A C H ( C o n t i n u e d ) Implementation of alternative calculations based on different assumptions and scenarios (e.g., best payment, cutback and gross-ups). Development of a detailed written report, outlining individual parachute calculations and combined cost to the company, and fact-based recommendations to avoid triggering the application of IRC section 280G deductions denials and IRC section 4999 excise taxes.

C O N TA C T I N F O R M AT I O N As part of Alvarez & Marsal Tax Advisory Services, LLC, the Compensation and Benefit Practice assists tax, finance, and human resource departments in designing new compensation and benefit plans, evaluating and enhancing existing plans, and reviewing programs for compliance with changing laws and regulations. Our goal is to help your business minimize the tax, financial, and regulatory burdens related to such plans. For more information about Alvarez & Marsals Golden Parachute Analyzer and other compensation and benefit service offerings, contact Brian Cumberland, Managing Director, Compensation and Benefits, at (214) 599-8311 or bcumberland@alvarezandmarsal.com.

ABOUT ALVAREZ & MARSAL TAX ADVISORY SERVICES, LLC Alvarez & Marsal Tax Advisory Services, LLC is an independent tax group comprised of experienced tax professionals dedicated to providing customized tax advice to clients in a broad range of industries. Our professionals extend Alvarez & Marsal's commitment to offering clients a choice in tax advisors not subject to audit-based conflicts of interest. We serve clients with knowledge, experience and a commitment to excellence in client service. Our professionals advocate our clients interests with the highest integrity. Alvarez & Marsal Tax Advisory Services, LLC, is a founding member of the Taxand global alliance, which is comprised of independent tax firms in countries around the world that provide our multinational clients with international tax advice. With tax professionals worldwide, Taxand provides clients with an alternative to the Big Four audit firms for global tax services. Alvarez & Marsal Tax Advisory Services, LLC is a division of Alvarez & Marsal, a global professional services firm that excels in problem solving and value creation for businesses around the world.

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