disparity between the new proxy disclosure rules and 162(m) covered employee

[Steelerfan]

Has anyone looked at the effect that the new SEC proxy disclosure rules will have on the determination of who is a "covered employee" for the 162(m) 1 million dollar deduction limit?

Specifically, e.g., if a CFO's comp must be disclosed under SEC rules, would he be a "covered employee" under 162(m) even if he is not one of the high four?

[Guest Harry O]

I believe the IRS has said they will issue guidance shortly on this question. That said, the issue is whether they have authority to deviate from what some argue is the express terms of 162(m): that only the CEO and executives reported in the proxy by reason of being one of the four highest paid are covered employees. Arguably, the CFO is no longer required to be reported in the proxy "by reason of" being one of the four highest paid execs; he or she is required to be reported simply because they are the CFO. Stay tuned . . .

[Steelerfan]

Thanks Harry O, this is exactly the issue. If the IRS doesn't act, the result would seem to be a bit anomolous in a situation where the CFO must be disclosed in the proxy regardless of the amount of his total comp, but might not be a covered employee under 162(m) by virtue of the fact that a CFO is neither the CEO nor one of the high four as defined under 162(m); then the CFO falls b/w the cracks. I don't think I'll be able to sleep until they fix this one