This excerpt taken from the MOLX DEF 14A filed Sep 13, 2006.
Tax Deductibility 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 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. Where it deems advisable, Molex will take appropriate action to maintain the tax deductibility of its executive compensation.