The penalty is part of a new section of the tax code clamping down on salary and bonus deferrals, executive retirement and benefit plans, severance packages, discounted stock options and even stock appreciation rights.
Worker unions would like those employees to benefit from a more generous severance package while employers want to stick to existing layoff plans that would limit their obligations.
So, for example, just because a business calls an executive benefit a stock option or a severance pay plan doesn't necessarily remove the plan from the sweep of the law.