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This excerpt taken from the HBI DEF 14A filed Mar 12, 2009. Impact
of Certain Regulatory Requirements
Section 162(m) of the Internal Revenue Code limits the tax
deductibility of certain compensation paid to our chief
executive officer and our three other executive officers, other
than our chief financial officer, with the highest total
compensation. This provision disallows the deductibility of
certain compensation in excess of $1 million per year
unless it is considered performance-based compensation under the
Internal Revenue Code. We have adopted policies and practices
that are intended to take into account the maximum tax deduction
possible under Section 162(m) of the Internal Revenue Code
for our annual bonus payments and stock option awards; however,
there can be no guarantee that the IRS will agree on the amount
of those deductions. In
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addition, we may forgo any or all of the tax deduction if we
believe it to be in the best long-term interests of our
stockholders. Time-vested restricted stock units are not deemed
“performance based,” and therefore are not tax
deductible if the value at vesting, in combination with other
non-performance-based compensation such as salary, exceeds
$1 million for an executive officer. Although most
compensation paid to our named executive officers for the fiscal
year ended January 3, 2009 is expected to be tax
deductible, we expect that approximately $305,925 and $65,982 of
the compensation payable to Mr. Nictakis and
Mr. Evans, respectively, will not be deductible.
In making decisions about executive compensation, we also
consider the impact of other regulatory provisions, including
the provisions of Section 409A regarding non-qualified
deferred compensation and the “golden parachute”
provisions of Section 280G of the Internal Revenue Code.
For example, we have attempted to structure the Severance
Agreements so that they will not result in adverse tax
consequences under Section 409A. In making decisions about
executive compensation, we also consider how various elements of
compensation will impact our financial results. In this regard,
we consider the impact of SFAS 123(R), which determines how
we recognize the cost of employee services received in exchange
for awards of equity instruments.
This excerpt taken from the HBI DEF 14A filed Mar 10, 2008. Impact
of Certain Regulatory Requirements
Section 162(m) of the Internal Revenue Code limits the tax
deductibility of certain compensation paid to our chief
executive officer and three other executive officers, other than
our chief financial officer, with the highest total
compensation. This provision disallows the deductibility of
certain compensation in excess of $1 million per year
unless it is considered performance-based compensation under the
Internal Revenue Code. We have adopted policies and practices
that are intended to take into account the maximum tax deduction
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possible under Section 162(m) of the Internal Revenue Code
for our annual bonus payments and stock option awards; however,
there can be no guarantee that the IRS will agree on the amount
of those deductions. In addition, we may forgo any or all of the
tax deduction if we believe it to be in the best long-term
interests of our stockholders. Time-vested restricted stock
units are not deemed “performance based”; and
therefore are not tax deductible if the value at vesting, in
combination with other non-performance-based compensation such
as salary, exceeds $1 million for an executive officer. For
the fiscal year ended December 29, 2007, the compensation
paid to our named executive officers is expected to be tax
deductible.
In making decisions about executive compensation, we also
consider the impact of other regulatory provisions, including
the provisions of Section 409A of the Internal Revenue Code
regarding non-qualified deferred compensation and the
“golden parachute” provisions of Section 280G of
the Internal Revenue Code. For example, we have attempted to
structure the Severance Agreements so that they will not result
in adverse tax consequences under Section 409A of the
Internal Revenue Code. In making decisions about executive
compensation, we also consider how various elements of
compensation will impact our financial results. In this regard,
we consider the impact of Statement of Financial Accounting
Standards No. 123(R), “Share-Based Payment,”
which determines how we recognize the cost of employee services
received in exchange for awards of equity instruments.
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