Does say-on-pay create a Catch-22 for companies?

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Abstract: The “say-on-pay” provision in last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) requires companies to give shareholders a nonbinding “advisory” vote on compensation for top executives. But attempts to modify nonqualified deferred compensation arrangements may run afoul of Internal Revenue Code Section 409A. In fact, making changes to an executive’s nonqualified deferred compensation — even for legitimate business reasons — presents tax risks.