Company: PTPI
Filing Date: 2025-03-14
Form Type: PRER14A
Source: 0001104659-25-024012
Chunk: 68

Company: Petros Pharmaceuticals, Inc.
Filing Date: 2025-03-14
Form: PRER14A
Chunk 68
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 date of the award, and the Company generally will be entitled to a corresponding tax deduction, subject
to applicable limitations.

Company Tax Deduction and Other Tax Matters

Million Dollar Deduction Limit and Other Tax Matters. The Company may not deduct compensation of more than $1,000,000
that is paid to “covered employees” (as defined in Section 162(m) of the Code), which include (i) an individual
(or, in certain circumstances, his or her beneficiaries) who, at any time during the taxable year, is either the Company’s principal
executive officer or principal financial officer, (ii) an individual who is among the Company’s three highest compensated
officers for the taxable year (other than an individual who was either the Company’s principal executive officer or principal financial
officer at any time during the taxable year), or (iii) anyone who was a covered employee for purposes of Section 162(m) of
the Code for any tax year beginning on or after January 1, 2017. This limitation on deductions (x) only applies to compensation
paid by a publicly-traded corporation (and not compensation paid by non-corporate entities), and (y) may not apply to certain types
of compensation, such as qualified performance-based compensation that is payable pursuant to a written, binding contract that was in
effect as of November 2, 2017, so long as the contract is not materially modified after that date. To the extent that compensation
is payable pursuant to a prior plan award granted on or before November 2, 2017, and if the Company determines that Section 162(m) of
the Code will apply to any such awards, the Company intends that the terms of those awards will not be materially modified and will be
constructed so as to constitute qualified performance-based compensation and, as such, will be exempt from the $1,000,000 limitation
on deductible compensation.

While the deductibility of
executive compensation for federal income tax purpose is among the factors the committee considers when structuring the Company’s
executive compensation arrangements, it is not the sole or primary factor considered. The Company retains the flexibility to authorize
compensation that may not be deductible if the Company believes it is in the best interests of the Company.

If an individual’s
rights under the 2020 Plan are accelerated as a result of a change in control and the participant is a “disqualified individual”
under Section 280G of the Code, then