March 26, 2012
Robert Spielman, Tax & Business Services Partner, Quoted in State Tax News Article "Executives Beware: States May Look To Equity Compensation for Revenue"
By Cara Griffith
This article is focused on the taxation of equity-based compensation and does not specifically address deferred compensation. Since equity compensation awards may include some level of deferral because of vesting requirements, the terms ‘‘equity compensation’’ and ‘‘deferred compensation’’ are sometimes used interchangeably. However, some forms of equity-based compensation plans do not result in deferral of income, and equity-based compensation may not fall within the definition of a qualified or nonqualified deferred compensation (NQDC) plan. As noted by Robert Spielman, a partner with Marcum LLP, ‘‘equity compensation is in a sense deferred compensation,’’ although with equity compensation the employee would have some participation in the upside of the award. That is, the employee would benefit when the company does well and the value of its stock increases. By contrast, with most deferred compensation plans, the value of an employee’s award would not be tied to the company’s performance.