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covered by the Agreements (i.e., late 1991 through 1995), as
compared to the total compensation paid to comparable executives
over a similar period. In the view of petitioner and Ms. Meyer,
this aggregate approach is appropriate because the Retention
Payments covered approximately 4 years of services;43 thus, the
Retention Payments should be combined with the other compensation
earned by the Retained Executives for these 4 years of services
(e.g., salary, STIP, LTIP) and the resulting 4-year total
compared to the 4-year total compensation earned by comparable
executives to determine reasonableness.
We disagree. Section 280G(b)(4) provides that a parachute
payment “shall not include the portion of such payment which the
taxpayer establishes by clear and convincing evidence is
reasonable compensation for personal services to be rendered on
or after the date of the change” in control. Sec. 280G(b)(4)(A).
While the statute is broad enough to encompass a contingent-on-
control-change payment made for services spanning more than one
taxable year, we believe that proof by clear and convincing
evidence requires a taxpayer to demonstrate the reasonableness of
43 We note that the Retention Payments paid in December 1992
were subject to a “clawback” provision if a Retained Executive
failed to serve out the 4-year term of his 1991 Employment
Agreement (as amended). However, the 1991 SRP Benefits paid in
December 1992 were not subject to any similar forfeiture.
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