A large number of small companies and even some considered large have historically not concerned themselves with the allowability of their executive’s compensation. With annual allowability limits approaching and even exceeding $1,000,000 it was not something that presented an issue in the past. Executive compensation would never reach that high. Time to take another look.
The new limit on allowability of annual executive compensation applicable to contracts awarded on and after June 24, 2014 is $487,000 and is applicable to all employees, not just the top five highest paid employees in executive positions. Employee annual compensation exceeding $487,000 is now a very real potential.