Fuzzy math?

June 19, 2006

Late Friday, UT Starcom (UTSI) filed its proxy statement which included an interesting disclosure about a $2.58 million "tax equalization payment" for vice chairman Ying Wu. The company described this payment "as a way to mitigate the tax differential arising from an employee’s international work assignment."

That may sound pretty reasonable on the surface, but the math doesn’t quite make sense. Last year, Ying’s salary was $500K, so how could he possibly owe five times that amount in taxes? There was no bonus last year, no options granted and no options exercised, which makes the payment seem even odder. Of course, given the stock’s performance over the past two years, it’s probably pretty important that the company come up with a pleasant-sounding name.

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