He Must be a Huge Red Sox Fan

I was studying executive compensation, and I found the following article regarding the compensation package of Bank of America chairperson, Charles Gifford, upon his retirement:

“But Mr. Sosa’s prospective goody bag seems meager when compared with the retirement piñata that the Bank of America plans to bestow on Charles K. Gifford when he steps aside as its chairman at the end of this month…The bank guarantees him $50,000 a year in consulting fees, 120 hours of free flight time a year in the company’s jet, and an office and a secretary, according to federal securities filings. All of this is on top of the $38.4 million in company stock that he has accrued over his 38-year career… Wait. There is more: Mr. Gifford, a Bostonian, has also been offered the right to buy 60 Red Sox tickets from the bank annually for the rest of his life.”.” “Mayday? Payday? Hit the Silk!”, New York Times (January 8, 2005).

I will admit to not yet being an expert on executive compensation packages, but I thought the lifetime use of the jet and the Red Sox tickets funny.

The intellectual exercise here is whether the Red Sox tickets are subject to IRC Section 409A. If so, will buying a ticket early subject him to millions of dollars of taxes? Answer: yes.