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
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 Committees 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.