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Tax Gross-Up
A provision in perks, benefits, and compensation for executives in which payout is increased to cover the taxes that the executive will owe. Alternatively, the company separately pays the executive an amount equal to the taxes that will be owed. For example, when restricted stock vests, the company may pay the executive an amount equal to the personal income taxes owed. These provisions have become controversial, particularly when they provide a full tax gross-up for excise taxes caused by excessive golden parachute payments.
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