TheCorporateCounsel.net

It may have a frightening headline — “500+ proxy statements contain up to multi-million dollar XBRL tagging errors” — but don’t be scared away! This Toppan Merrill blog details common PvP tagging errors, with examples, and the first step in avoiding these problems is understanding how they happen!

One common issue involves incorrectly tagging the adjustments necessary to calculate “compensation actually paid.” Multiple numbers in the PvP table must be tagged as reductions to SCT total compensation, not additions, despite being presented in the table as non-negative numbers:

To ensure the XBRL tagging presents the exact same information, the XBRL preparer must know to enter values in column b and d as ‘negative’ (as deductions), even though the values in these two columns are shown as ‘positive’ (with no parentheses) in the table.

When XBRL preparers erroneously entered the values in column b and d as positive, the XBRL calculated value (machine-readable value) of the executive compensation actually paid would be a+b+c+d+e+f+g = $161,425,424 versus the value $120,865,280 as shown in the table.

Double counting is also common in tagging “compensation actually paid” adjustments. The blog recommends that companies develop new processes to ensure that there are no tagging errors in their proxy statements, if they haven’t already, and confirm that the XBRL-tagged data tells the same story as the human-readable information. 

As a reminder, we know this is a focus area for the Staff from a “Dear Issuer” letter posted after the 2023 proxy season and that the Staff is using XBRL tagging to identify PVP disclosures that appeared to be lacking, which the Staff reiterated in recent comments at SEC Speaks and the ABA Business Law Section Spring Meeting.

– Meredith Ervine