Once the change in the control and trigger rules is completed, the gold parachute payment must be fixed. In 1984, Congress passed the Deficit Reduction Act as a tax fine in response to a period of intense corporate takeover activity, in which entrenched management teams used golden parachutes to maintain control. Senate Comm. on Finance, 98th Congress, Deficit Reduction Act of 1984, Explanation of Provisions Approved by the Committee on March 21, 1984. The Act created two new sections of the 280G internal income code, which does not allow deductions for excess parachute payments, and Section 4999, which applies a 20% excise duty to the executive for excess payments by parachute. The specific provisions of the two sections can be summarized as follows: a “parachute payment” is any payment to a “disqualified person” in the nature of the compensation, where that payment depends on a change of control of the company and the total value of all these payments equals or exceeds three times the “basic amount” of the individual. The basic amount is the average compensation of the person who is included in the gross income in the five years of taxation prior to the fiscal year in which the change of control occurs. An “oversupply payment” is any parachute payment greater than the portion of the base amount allocated to that payment. A “disqualified person” is any person who is an employee or contractor independent of a company and who is a public servant, shareholder or highly compensated person. The severance agreements provide for payments to managers in the event of voluntary or involuntary dismissal and can play a constructive role in the recruitment and hiring of important staff. Severance agreements are a way to reduce the risk that an aspiring executive takes when leaving other employment opportunities and are therefore often included in agreements for executives recruited from outside the company to encourage him to leave a former employer if the new agreement expires. The severance pay for service managers can be directed in such a way as to protect the executive`s income, which maximizes the link, while the company enjoys some visual protection through the application of non-competition agreements and “Good Reason” rules guaranteeing that a redundancy agreement is not an incentive to leave. When considering similar provisions, the executive and its board must carefully consider each word and its use in the agreement.