Extra compensation paid to executives and key employees upon a change in control, such as an acquisition of the company. The traditional reasoning for them is that they encourage executives to evaluate the merits of any transaction without concerns over their individual employment or compensation. The IRS has complex rules under Section 280G of the Internal Revenue Code (IRC) that subject excessive payments to an excise tax. The acceleration in vesting of extremely large grants of NQSOs, ISOs, SARs, or restricted stock to highly compensated executives can be deemed "excess parachute payments" under the IRC that could trigger the tax. See a related FAQ on these taxes in M&A situations.