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This excerpt taken from the WYN DEF 14A filed Apr 2, 2009. Impact of
Accounting and Tax
As a general matter, the Committee considers the various
accounting and tax implications of compensation vehicles
employed by us.
When determining amounts of long-term incentive grants to
executives and employees, the Committee examines the accounting
cost associated with the grants. Under
SFAS No. 123(R), grants of options, restricted stock,
restricted stock units and other share-based payments result in
an accounting charge. The accounting charge is equal to the fair
value of the instruments being issued. For restricted stock and
restricted stock units, the cost is equal to the fair value of
the stock on the date of grant multiplied by the number of
shares or units granted. This expense is amortized over the
requisite service period, or vesting period of the instruments.
Section 162(m) of the Code generally disallows a federal
income tax deduction to public companies for compensation in
excess of $1,000,000 paid to the CEO and the named executive
officers during any
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taxable year, unless such compensation is performance based and
meets certain requirements. Since our spin-off from Cendant,
with respect to our 2006 Equity and Incentive Plan, we have
relied on the transition period applicable to newly spun-off
companies provided under Section 162(m) of the Code. As
this transition period has expired, we are now submitting our
2006 Equity and Incentive Plan to the shareholders for
Section 162(m) approval. If our 2006 Equity and Incentive
Plan is not approved by the shareholders, future grants made
pursuant to our 2006 Equity and Incentive Plan will not qualify
as performance based and, depending on the applicable facts and
circumstances, may not be tax deductible. Although it is the
Committee’s goal to maximize the effectiveness of our
executive compensation plans, the Committee may determine that
it is appropriate and in our best interest as well as the best
interests of our shareholders to have the flexibility to pay
compensation that is not performance-based for
Section 162(m) purposes in order to provide a compensation
package consistent with our program and objectives.
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