DealLawyers.com Blog

This Orrick memo discusses the new edition of the IRS’s “Golden Parachute Audit Techniques Guide” – a reference tool for its auditors to use in their review of compliance with the golden parachute rules.  A couple of the “new additions” to the document caught my eye:

The 2017 ATG expands and updates the list of documents for IRS examiners to review in connection with a golden parachute examination. The additional documents include:

– Information Statements (Schedules 14A and 14C). The schedules disclose information regarding golden parachute payments in connection with the solicitation for shareholders’ approval. Additionally, any parachute payments actually made upon a change in control must be reported.

– Registration Statements (Forms S-4 and F-4). The Forms are used to provide information to investors when registering securities, and provide information related to mergers, acquisitions, or when securities are exchanged between companies.

Seriously? You mean IRS auditors weren’t already being told to look at these?  There’s a vast amount of information about change-in-control payments in merger proxies & S-4 registration statements.  It’s kind of astonishing that the IRS doesn’t seem to have told its auditors to look at any of that stuff before now.

In fairness, this guide hasn’t been updated since 2005 – before the SEC adopted its current golden parachute disclosure requirements – so maybe the IRS is just catching its guidance documentation up with actual practice.  I wonder though. . .

For more details on this new Golden Parachute Audit Techniques Guide, check out Mike Melbinger’s blog on CompensationStandards.com.

– John Jenkins