MOLX » Topics » Tax Considerations

This excerpt taken from the MOLX DEF 14A filed Sep 12, 2008.
Tax Considerations
 
Under Section 162(m) of the Internal Revenue Code, executive compensation in excess of $1 million paid to certain executive officers is generally not deductible for purposes of corporate federal income taxes unless it qualifies as performance-based compensation. The Committee intends to rely on performance-based compensation practices and such practices will be designed to fulfill, in the best possible manner, future corporate business objectives. We will take appropriate action to maintain the tax deductibility of our executive compensation. However, when warranted due to competitive or other factors, the Committee may decide in certain circumstances to exceed the deductibility limit or to otherwise pay non-deductible compensation.
 
Section 409A of the Internal Revenue Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose executive officers to accelerated income tax liabilities and penalty taxes and interest on their vested compensation under such plans or arrangements.


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Accordingly, it is our intention to design and administer, and where applicable to amend, our compensation and benefits plans and arrangements for all executive officers so that they are either exempt from, or satisfy the requirements of, Section 409A.
 

Tax Considerations

Under Section 162(m) of the Internal Revenue Code, executive compensation in excess of $1 million paid to certain executive officers is generally not deductible for purposes of corporate federal income taxes. However, qualified performance-based compensation within the meaning of Section 162(m) and applicable regulations remains deductible. The Compensation Committee intends to continue reliance on performance-based compensation programs, consistent with sound executive compensation policies and practices. Such programs will be designed to fulfill, in the best possible manner, future corporate business objectives. We will take appropriate action to maintain the tax deductibility of our executive compensation. However, when warranted due to competitive or other factors, the Compensation Committee may decide in certain circumstances to exceed the deductibility limit or to otherwise pay non-deductible compensation.

Section 409A of the Internal Revenue Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose executive officers to accelerated income tax liabilities and penalty taxes and interest on their vested compensation under such plans or arrangements. Accordingly, it is our intention to design and administer, and where applicable to amend, our compensation and benefits plans and arrangements for all executive officers, including the Named Executive Officers, so that they are either exempt from, or satisfy the requirements of, Section 409A.

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