Compensation paid by a publicly traded company to its chief executive officer and its three other most highly compensated officers (other than its chief financial officer) is generally not deductible by the company to the extent it exceeds $1 million per person per year under limits prescribed by Internal Revenue Code Section 162(m). There is an exception, however, for qualified “performance-based compensation,” which does not count against the $1 million limit if applicable requirements under Section 162(m) are met. One of the requirements is that the compensation be based on performance goals that are approved by shareholders. If, as is often the case, the plan governing the performance-based compensation includes a list of types of performance goals from which the compensation committee may select the specific performance target for a given performance period, then shareholders must reapprove the list of goals every five years. If shareholders do not reapprove the list of goals every five years, then any compensation (typically other than stock options or stock appreciation rights) that is based on one of the goals will not qualify for the performance-based exemption, and the company may be denied a deduction to the extent it pays more than $1 million in compensation in a given year to one of the covered executives.