United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 7, 2021 Decided July 5, 2022

No. 20-5314

F. SCOTT BAUER AND JEFFREY T. CLARK,

APPELLEES

v.

FEDERAL DEPOSIT INSURANCE CORPORATION,

APPELLANT

SOUTHERN COMMUNITY FINANCIAL CORPORATION, ET AL.,

APPELLEES

Consolidated with 20-5315, 20-5322

Appeals from the United States District Court

for the District of Columbia

(No. 1:18-cv-03047)

Duncan N. Stevens, Counsel, Federal Deposit Insurance 

Corporation, argued the cause for appellant. With him on the 

briefs were J. Scott Watson, Senior Counsel, Paul K. Sun, Jr.,

Curtis J. Shipley, and Kelly Margolis Dagger.
2

Christopher T. Graebe argued the cause and filed the 

briefs for appellees F. Scott Bauer and Jeffrey T. Clark.

Adam L. Sorensen argued the cause as amicus curiae in 

support of the District Court’s Order. With him on the brief 

was Joseph R. Palmore, appointed by the court.

Before: MILLETT and KATSAS, Circuit Judges, and 

RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge MILLETT.

MILLETT, Circuit Judge: In the wake of a proposed 

merger, two high-level bank executives, F. Scott Bauer and 

Jeffrey T. Clark, were fired because they refused to accept a 

reduction in the amount of a payment that had been

contractually provided for them if control of the bank changed 

hands. Bauer and Clark filed suit in state court against the bank 

that terminated them, as well as the bank with which it had 

merged. They alleged that they were legally entitled to the full 

change-in-control payments set out in their original 

employment agreements and other relief. 

The banks turned to the Federal Deposit Insurance 

Corporation (“FDIC”) for guidance as to whether any 

payments made to Bauer and Clark in the state court litigation 

would constitute statutorily restricted “golden parachute 

payment[s],” 12 C.F.R. § 359.2, and, if so, whether the FDIC 

would grant an exception to the general bar on such payments. 

After reviewing the parties’ submissions, the FDIC responded 

that any such payments would constitute golden parachutes,

and that it would not grant consent for them to be made. 
3

Bauer and Clark then filed suit in federal district court,

challenging the FDIC’s determination as unlawful under the

Administrative Procedure Act (“APA”), 5 U.S.C. § 706(2). 

Over the collective objection of the banks, Bauer, Clark, 

and the FDIC, the district court declined to reach the merits, 

instead holding that the FDIC lacked authority to render a 

golden parachute determination at all because the banks’ 

application to the FDIC did not identify a specific proposed 

payment amount. 

We reverse. Nothing in the relevant statute or regulations 

requires that the FDIC be presented with a precise dollar figure 

before it has the power to determine whether a proposed 

payment qualifies as a golden parachute payment. As for the 

language in the regulations on which the district court relied, 

stating that the application “shall contain * * * [t]he cost of the 

proposed payment[,]” that provision imposes a procedural 

requirement only on the applicant. 12 C.F.R. § 303.244(c)(4). 

It does not constrain the FDIC’s authority to act. For those 

reasons, we reverse the district court’s holding that the FDIC 

exceeded its authority in issuing its golden parachute 

determination, and remand for the district court to address the 

merits of Bauer’s and Clark’s APA claims. 

I

A

Under the Federal Deposit Insurance Act, the FDIC 

regulates the activities of both “insured depository 

institution[s],” which are banks and savings associations with 

deposits insured by the Corporation, and “institution-affiliated 

part[ies],” which include the directors, officers, employees, and 

controlling shareholders of insured depository institutions. 12 

U.S.C. § 1813(c)(2), (u)(1). The FDIC’s responsibilities 
4

include supervising and examining covered institutions to 

ensure financial stability and soundness. See id. §§ 1816–

1818, 1822. If the FDIC finds that a bank is engaging in

“unsafe or unsound” practices, the FDIC may issue a consent 

order under which it lays out remedial conditions that must be 

met and monitors the bank’s compliance with those conditions. 

Id. § 1818(b).

One of the financial practices the FDIC closely 

superintends is the doling out of so-called “golden parachute 

payment[s].” 12 U.S.C. § 1828(k)(1). These are large

payments promised in advance to executives in the event that 

they are fired or the company is acquired. See Wollschlager v. 

FDIC, 992 F.3d 574, 578 (6th Cir. 2021). Companies may 

promise golden parachute payments to entice sought-after 

executives or to ensure that those executives act in the best 

interests of the company even when doing so might put them 

out of a job (as in the case of a merger or takeover). But making 

good on those promised payments may put more financial 

stress on an already struggling institution or unjustly reward 

those who contributed to the financial woes of the institution.

The Federal Deposit Insurance Act expressly provides that 

the FDIC “may prohibit or limit, by regulation or order, any 

golden parachute payment[.]” 12 U.S.C. § 1828(k)(1). The 

Act’s technical definition of “golden parachute payment” is:

any payment (or any agreement to make any 

payment) in the nature of compensation by any 

insured depository institution or covered 

company for the benefit of any institutionaffiliated party pursuant to an obligation of such 

institution or covered company that—
5

(i) is contingent on the termination of such 

party’s affiliation with the institution or 

covered company; and

(ii) is received on or after the date on which

* * * the institution’s appropriate 

Federal banking agency determines that 

the insured depository institution is in a 

troubled condition[.]

12 U.S.C. § 1828(k)(4)(A).

The FDIC’s regulatory definition of “golden parachute 

payment” largely tracks that of the statute, though it adds that 

(1) the payment can be made by the insured depository 

institution itself or that institution’s holding company, (2) the 

recipient can be either a former or current institution-affiliated 

party, (3) the payment can be contingent on, or by its terms 

payable on or after, the termination of the party’s affiliation, 

and (4) the payment can be received on or after, or be made in 

contemplation of, the institution falling into a financially 

troubled condition. Compare 12 C.F.R. § 359.1(f), with 12 

U.S.C. § 1828(k)(4)(A). The regulations also clarify that, to 

qualify as a golden parachute, the payment must be made to a 

party whose affiliation with the institution is terminated at a 

time when the institution is in a troubled condition. 12 C.F.R. 

§ 359.1(f)(1)(iii).

The Act directs the FDIC to “prescribe, by regulation, the 

factors to be considered” in prohibiting or limiting golden 

parachute payments, adding that those factors “may include[,]” 

among other things, “[w]hether there is a reasonable basis to 

believe that the institution-affiliated party is substantially 

responsible for * * * the troubled condition of the depository 

institution[,]” and whether “the payment reasonably reflects 
6

compensation earned over the period of employment[.]” 12

U.S.C. § 1828(k)(2)(B)(iii), (k)(2)(F)(i). 

The FDIC’s regulations generally prohibit golden 

parachute payments, stating that “[n]o insured depository 

institution * * * shall make or agree to make any golden 

parachute payment, except as provided in this part.” 12 C.F.R. 

§ 359.2. The regulations then identify four narrow exceptions 

to that prohibition. See Id. § 359.4(a). One exception is if the 

FDIC “determines that such a payment or agreement is 

permissible[.]” Id. § 359.4(a)(1). But for that exception to 

apply, the applicant seeking FDIC consent must “demonstrate 

that it does not possess and is not aware of any information” 

indicating “a reasonable basis to believe, at the time such 

payment is proposed to be made,” that the anticipated recipient 

of the payment “is substantially responsible for * * * the 

troubled condition” of the institution. Id. § 359.4(a)(4). 

The regulations also provide that, in determining whether 

to make an exception, the FDIC “may consider: (1) [w]hether, 

and to what degree, the [recipient] was in a position of 

managerial or fiduciary responsibility; (2) [t]he length of time 

the [recipient] was affiliated with the [financial institution], and 

the degree to which the proposed payment represents a 

reasonable payment for services rendered over the period of 

employment; and (3) [a]ny other factors or circumstances 

which would indicate that the proposed payment would be 

contrary to the intent” of the statute or regulations. 12 C.F.R. 

§ 359.4(b) (emphasis added). 

Any entity seeking the FDIC’s consent to a golden 

parachute payment must submit an application to the 

appropriate FDIC regional director. 12 C.F.R. § 303.244(b). 

That application “shall contain[:]”
7

(1) The reasons why the applicant seeks to 

make the payment;

(2) An identification of the institution-affiliated 

party who will receive the payment;

(3) A copy of any contract or agreement 

regarding the subject matter of the filing;

(4) The cost of the proposed payment and its 

impact on the institution’s capital and 

earnings;

(5) The reasons why the consent to the payment 

should be granted; and

(6) Certification and documentation as to each 

of the points cited in § 359.4(a)(4)

[including that the recipient of the payment 

is not substantially responsible for the 

troubled condition of the institution].

Id. § 303.244(c). 

B

1

Bauer and Clark were senior executives at Southern 

Community Bank and Trust and the bank’s holding company, 

Southern Community Financial Corporation (collectively, 

“Southern Community”). Bauer founded the bank and was its 

Chief Executive Officer and Chairman of the Board of 

Directors. Clark joined the bank in its first year and served in 

the roles of President and Chief Commercial Banking Officer. 

In 2006 and 2007, Bauer and Clark entered into a series of 

employment agreements with Southern Community. Under 

the agreements, Southern Community had the right to 
8

terminate Bauer and Clark without cause as long as it provided 

60 days’ notice. If they were terminated without cause, Bauer 

and Clark would be entitled to their most recent base salary for 

the unexpired term of the employment agreement. But if a 

change in control of Southern Community occurred during the 

term of the employment agreement, such as through a merger, 

Bauer and Clark would be entitled to a lump-sum cash payment

equal to three times their annual compensation. The estimated 

total amount of these change-in-control payments was 

$4,869,087 for Bauer and $2,588,444 for Clark.

The employment agreements specified that they would “be 

binding upon * * * any successor” to Southern Community,

and that Southern Community would “require any successor 

* * * to expressly assume and agree to perform [the 

employment agreements] in the same manner and to the same 

extent [Southern Community] would be required to perform if 

no such succession had occurred.” Joint Appendix (“J.A.”) 

154; accord J.A. 206. 

During the Great Recession of 2007–2009, Southern 

Community began to experience financial difficulties, and in 

2011, it entered into a consent order with the FDIC, giving the 

agency supervisory authority over it. As part of the consent 

order, Southern Community was deemed to be in a “troubled 

condition” under the Federal Deposit Insurance Act and its 

implementing regulations.

The consent order required Southern Community to 

maintain a certain amount of capital on hand, to prepare a 

written plan to improve its financial condition, and to send 

regular progress reports to the FDIC and other regulators. It 

also required Southern Community’s Board of Directors to 

increase its supervision of the bank and hire an independent
9

third party to review and produce a report on the bank’s 

management and practices.

The external reviewer hired by Southern Community 

subsequently concluded that deficiencies in Bauer’s and 

Clark’s management styles and performance had contributed to 

the bank’s financial troubles. The review recommended that 

they be assigned to positions of lesser responsibility.

In March 2012, Southern Community entered into a 

merger agreement with Capital Bank. One of Capital Bank’s 

merger conditions required certain employees, including Bauer 

and Clark, to enter into amended employment agreements. The 

amended agreements would have substantially reduced the 

amount of the change-in-control payments to which Bauer and 

Clark were entitled. Bauer and Clark refused to sign the 

amended agreements. Southern Community then issued 

notices of termination without cause to Bauer and Clark, 

effective September 22, 2012. The merger between Southern 

Community and Capital Bank closed on October 1, 2012.

2

In November 2014, Bauer and Clark filed suit against 

Southern Community and Capital Bank in North Carolina state 

court, alleging breach of contract, tortious interference with 

contract and prospective economic advantage, and unfair and 

deceptive trade practices. Bauer v. Southern Cmty. Fin. Corp., 

No. 14-CVS-7208 (N.C. Super. Ct. Feb. 11, 2016). They 

alleged that Southern Community had breached its contractual 

obligation to ensure that its successor assume and agree to 

perform the terms of their original employment agreements, 

including the obligation to provide the full change-in-control 

payments. They also asserted that, but for Capital Bank’s 

tortious interference in requiring them to sign the amended 

employment agreements, they would have been retained as 
10

employees of the new merged entity and continued to receive 

compensation and benefits. Bauer and Clark sought judgment 

against the banks “in an amount to be determined at trial,” 

treble damages under North Carolina’s unfair and deceptive 

trade practices law, and attorneys’ fees. J.A. 133. 

After the banks’ motion to dismiss was denied, they sought 

guidance from the FDIC as to whether the monetary relief 

sought by Bauer and Clark in the lawsuit would constitute a 

prohibited golden parachute. In September 2016, the banks 

submitted a letter to the regional FDIC director with the subject 

line, “12 C.F.R. § 303.244 Application as to Golden Parachute 

Payments Sought by F. Scott Bauer and Jeffrey T. Clark[.]” 

J.A. 90. The letter stated that the banks were “unable to certify 

that [Bauer and Clark] had no substantial responsibility for the 

Bank’s troubled condition[,]” as required by 12 C.F.R. 

§ 359.4(a)(4) for a payment to receive FDIC approval. J.A. 96. 

They also asked whether the FDIC would consent to the banks 

making such payments even though they were unable to 

provide the required certification. 

In response, Bauer and Clark filed their own letter with the 

FDIC, arguing that the prohibition on golden parachutes was 

not implicated in their lawsuit because any relief they could 

receive would be paid post-merger by Capital Bank, a nontroubled financial institution. They asked that the FDIC issue 

a determination making clear that the relevant statute and 

regulations would “not preclude Capital Bank from settling or 

paying a judgment” in the state court action. J.A. 655. 

In June 2017, the FDIC issued its decision, concluding that 

“[t]he change-in-control payments sought in the [s]tate [c]ourt 

[a]ction * * * meet the golden parachute payment definition” 

in the FDIC regulations. J.A. 812. The agency reasoned that:

(1) “Bauer and Clark are [institution-affiliated parties] of 
11

[Southern Community]”; (2) “[t]he change-in-control 

payments sought * * * arise directly from the [employment 

agreements] and under their terms would have been paid to 

Bauer and Clark at or following their termination”; and (3) 

Southern Community “terminated Bauer[’s] and Clark’s 

employment * * * at a time when [it was] in [a] troubled 

condition.” J.A. 812. The FDIC determined that not only 

would the change-in-control payments sought in Bauer’s and 

Clark’s breach-of-contract claim constitute golden parachutes, 

so too would any recovery based on Bauer’s and Clark’s tort 

claims and any attorneys’ fees. It explained that such relief

would constitute a benefit to Bauer and Clark arising out of the 

same set of facts as the contract claims directly seeking changein-control payments.

The FDIC rejected Bauer’s and Clark’s argument that the 

change-in-control payments would not be golden parachutes 

because they would be paid by non-troubled Capital Bank. The 

FDIC noted that it “has consistently maintained that golden 

parachute payments by a healthy acquirer are subject to the 

Golden Parachute Rules to prevent [institution-affiliated 

parties] from circumventing the golden parachute regulation as 

a result of the timing or the structure of a purchase by a healthy 

acquirer.” J.A. 813. 

Next, the FDIC said that it would not consent to payment 

of the golden parachutes because the banks did not certify that 

Bauer and Clark were not substantially responsible for 

Southern Community’s troubled condition. The FDIC 

explained that this “lack of appropriate certifications 

independently warrants denial of the applications[.]” J.A. 813. 

The FDIC also determined that, based on the available 

information, the banks could not have provided such a 

certification because Bauer and Clark were in fact substantially 

responsible for Southern Community’s troubled condition. 
12

The agency noted that Bauer’s and Clark’s high-level executive 

positions and their “substantial managerial and fiduciary 

responsibility” put them “in a position to make decisions and 

policies regarding the [b]ank that directly contributed to [the 

bank’s] troubled conditions.” J.A. 814. “This factor alone 

would [also] independently support denial of the 

applications[,]” the FDIC concluded. J.A. 814. Consequently, 

the FDIC declared that it “could not concur in the payments to 

Bauer and Clark in any amount[,]” J.A. 816, and “denie[d] the 

application in its entirety,” J.A. 809. 

The state court litigation was then stayed to allow Bauer 

and Clark to challenge the FDIC’s golden parachute 

determination in federal court.

3

Bauer and Clark brought an APA action in federal district 

court, challenging the FDIC’s determination that any recovery 

they obtained in the state court litigation would be a prohibited 

golden parachute payment. See Bauer v. FDIC, 486 F. Supp. 

3d 93, 97 (D.D.C. 2020). They made clear, however, that they 

were not challenging the FDIC’s secondary, discretionary

determination that it would not grant permission for the banks 

to make an otherwise prohibited payment. The FDIC moved 

for judgment on the administrative record, the banks moved for 

summary judgment, and Bauer and Clark cross-moved for 

summary judgment.

The district court then directed the parties to file 

supplemental briefs addressing a matter not raised by any 

party: “Whether the FDIC acted inconsistently with 12 C.F.R. 

§ 303.244 by issuing a decision about hypothetical damages 

payments or settlement payments at issue in the ongoing North 

Carolina state court action.” J.A. 9. The FDIC, the banks, 

Bauer, and Clark all agreed that the FDIC had acted in 
13

accordance with its regulations in issuing a golden parachute 

determination despite the ongoing nature of the state court 

action and urged the court to review the merits of the FDIC’s 

determination.

The district court disagreed. It held that the FDIC lacked 

authority to issue a final decision on the banks’ golden 

parachute application because the decision was “based on 

hypothetical payments in ongoing litigation.” Bauer, 486 F. 

Supp. 3d at 99–100. The court relied on 12 C.F.R. § 303.244, 

which states that an application for an FDIC determination 

“shall contain[,]” among other things, “[t]he cost of the 

proposed payment and its impact on the institution[.]” Id.

§ 303.244(c), (c)(4). The court reasoned that this language 

unambiguously requires that the applicant “put forward the 

planned, actual amount of the golden parachute[,]” and does 

not permit the FDIC “to make a final determination on a 

hypothetical payment that might be forthcoming from ongoing 

litigation.” Bauer, 486 F. Supp. 3d at 100. The court added

that without a proposed payment amount, “too much [would 

be] left unknown”—for example, which claims would be 

successful, how much Bauer and Clark would be entitled to in 

damages, and who would be responsible for paying the 

damages—“for the FDIC to make a proper exercise of its 

discretion[.]” Id. at 101 n.6. 

The district court clarified that the FDIC is not 

“categorically prohibited from reviewing a request under 

[Section] 303.244 while underlying litigation is pending.” 

Bauer, 486 F. Supp. 3d at 101 n.5. “But such a request would 

have to include the specific payment sought in the underlying 

litigation.” Id. The court noted that, here, the parties could not 

agree on a specific proposed payment, or even a proposed 

payment range.
14

Based on its conclusion that the FDIC had acted outside of 

its authority, the district court vacated the FDIC’s final 

determination as contrary to law. The court expressly declined 

to reach the merits of the FDIC’s decision. Accordingly,

Bauer’s and Clark’s motion for summary judgment was 

granted in part and denied in part, and both the FDIC’s motion 

for judgment on the administrative record and the banks’ 

motion for summary judgment were denied.

The FDIC, banks, Bauer, and Clark all appealed. While 

continuing to disagree about the merits, they uniformly agree 

that the district court was wrong to conclude that the FDIC 

exceeded its authority in issuing the golden parachute 

determination without knowing the exact amount of the 

proposed payment. This court consolidated the three appeals 

and appointed an amicus curiae to defend the district court’s 

decision.1

II

The district court exercised jurisdiction under 28 U.S.C. 

§ 1331. This court has jurisdiction under 28 U.S.C. § 1291. 

We review the district court’s adjudication of the parties’ 

cross-motions for summary judgment de novo. Defenders of 

Wildlife v. Zinke, 849 F.3d 1077, 1082 (D.C. Cir. 2017). 

Likewise, purely legal questions of statutory and regulatory 

1 The court appointed Joseph R. Palmore as amicus curiae to 

argue in support of the district court’s decision. He, along with cocounsel Adam L. Sorensen, have ably discharged that duty, and the

court greatly appreciates their service.
15

interpretation are reviewed de novo. United States v. Wilson, 

290 F.3d 347, 352 (D.C. Cir. 2002).2

III

The FDIC’s golden parachute decision came in two 

distinct steps. At Step One, the FDIC determined whether the 

proposed payments constitute golden parachutes within the 

statutory and regulatory definitions, and so are generally 

proscribed. See 12 C.F.R. § 359.2. At Step Two, the FDIC 

decided whether to nevertheless make a discretionary 

exception under the regulations and permit the payments. See 

id. § 359.4(a).

3

The district court ruled that the FDIC lacked authority to 

act at all on the golden parachute application. That was legal 

error with respect to both Steps of the FDIC’s decisional 

process. 

2 The FDIC contends that its interpretation of the Federal 

Deposit Insurance Act warrants Chevron deference. FDIC Opening 

Br. 41 n.15 (citing Chevron U.S.A. Inc. v. Natural Res. Def. Council, 

467 U.S. 837 (1984)). Amicus counters that an interpretation implicit 

in a letter issued by a Deputy Regional Director in the course of an 

informal adjudication is not the type of authoritative agency position 

entitled to Chevron deference. See Amicus Br. 30–31. We need not 

address the applicability of Chevron deference because, employing 

the “traditional tools of statutory construction,” the “intent of 

Congress” on “the precise question at issue * * * is clear.” 467 U.S. 

at 842, 843 n.9. 

3 See Bauer and Clark Opening Br. 3–4 (laying out this twostep framework). 
16

A

1

The Federal Deposit Insurance Act and its implementing 

regulations straightforwardly authorize the FDIC, upon 

request, to provide its views on whether certain payments 

would qualify as golden parachutes. Nothing conditions that 

authority on the parties’ identification of a precise dollar 

amount for the payment. 

The Act gives the FDIC general authority to “prohibit or 

limit * * * any golden parachute payment[.]” 12 U.S.C. 

§ 1828(k)(1). A necessary predicate to exercising that 

authority is determining what counts as a golden parachute 

payment under the statute. See id. § 1828(k)(4)(A). Recall that 

a “golden parachute payment” is defined as (1) “any payment 

(or any agreement to make any payment) in the nature of 

compensation[,]” (2) by a depository institution “for the benefit 

of any institution-affiliated party[,]” (3) based on an obligation 

of the institution that “is contingent on the termination of such 

party’s affiliation with the institution[,]” (4) that is “received 

on or after the date on which” the institution is determined to 

be in a “troubled condition[.]” Id. The statute’s plain text does 

not require a predetermined amount of payment. 

Neither does determining whether those four statutory 

elements are met require having a precise payment amount in 

hand. The FDIC, after all, can readily decide whether money 

exchanged as a result of a settlement or judgment would 

constitute a “payment” (a “direct or indirect transfer of any 

funds[,]” 12 U.S.C. § 1828(k)(5)(C)), “in the nature of 

compensation[,]” id. § 1828(k)(4)(A), without knowing how 

much money would be exchanged. Similarly, the amount of a 

proposed payment is completely irrelevant to determining 

whether that payment would be made by a depository 
17

institution and “for the benefit” of an institution-affiliated 

party. Id. So too with the inquiry into whether the payment 

would be contingent on the termination of that party’s 

affiliation with the institution. And certainly determining when

the payment would be made—whether before, on, or after the 

date when the institution is deemed to be in a “troubled 

condition”—does not require knowing how much the payment 

would be. Id.

Consistent with the statute, FDIC regulations state that, as 

a general matter, no financial institution “shall make or agree 

to make any golden parachute payment[.]” 12 C.F.R. § 359.2

(emphasis added). The use of “any” highlights that the 

presumptive prohibition applies regardless of the payment 

amount. 

The regulations also provide that otherwise-prohibited 

golden parachute payments can be made if the FDIC permits 

them. See 12 C.F.R. § 359.4. Those regulations would be 

meaningless unless the FDIC can police the boundaries of what 

counts as a golden parachute in the first place. And like the 

statutory definition, the regulatory definition of “golden 

parachute payment” makes no mention of the amount of 

payment, and its criteria do not depend on such a 

determination. See 12 C.F.R. § 359.1(f)(1) (“The term golden 

parachute payment means any payment (or any agreement to 

make any payment) in the nature of compensation * * * for the 

benefit of any current or former” institution-affiliated party that 

is “contingent on, or by its terms is payable on or after, the 

termination of [the recipient’s] primary employment or 

affiliation with the institution[,]” if the payment “[i]s received 

on or after” the institution is in a troubled condition and the 

termination occurred while the institution was in a troubled 

condition.). 
18

In this case, the FDIC found at Step One that the critical 

elements of the golden parachute definition were met: Bauer 

and Clark are former institution-affiliated parties who were 

terminated when Southern Community was in a troubled 

condition, and they are seeking payments tied to and payable 

after the termination of their affiliation with Southern 

Community. Having so concluded, the FDIC was able to 

determine that a payment from the banks to Bauer and Clark 

“in any amount” would constitute a golden parachute. J.A. 816 

(emphasis added); cf. Von Rohr v. Reliance Bank, 826 F.3d 

1046, 1049 (8th Cir. 2016) (Even though Von Rohr sought a 

specific amount in breach-of-contract damages, the FDIC 

determined that “any payments being sought by Von Rohr” 

from the bank “constitute[d] prohibited golden parachute 

payments[.]”) (emphasis added). 

The FDIC’s answer would be the same regardless of 

whether the litigation resulted in a $1 or $1,000,000 payment 

to Bauer and Clark. So for the parties to spend years and 

countless resources litigating to a judgment that the FDIC can 

readily tell in advance will be a forbidden golden parachute,

whatever the amount, would be a fool’s errand.

2

In concluding that the FDIC lacks authority to opine on 

whether the proposed payment would be a golden parachute, 

the district court relied principally on 12 C.F.R. § 303.244’s 

direction that the application seeking the FDIC’s consent to a 

golden parachute payment “shall contain * * * [t]he cost of the 

proposed payment[.]” Id. § 303.244(c)(4); see id. § 303.244(c)

(detailing the contents of an “application” for FDIC 

consideration). That regulation is doubly inapplicable in that 

(1) it governs what information the person seeking the FDIC’s 

views must provide, not the actions of the FDIC itself, see id. 
19

§ 303.244(b)–(c), and (2) it applies only to the Step Two

discretionary determination by the FDIC, not the predicate Step 

One question of whether the payment constitutes a golden 

parachute in the first place. 

To be fair to the district court, the banks themselves

labeled their letter a “12 C.F.R. § 303.244 Application” for 

FDIC permission to make a Step Two golden parachute 

payment. They presumably did so because there is no parallel 

regulation providing instructions on how to obtain a Step One 

determination. See generally 12 C.F.R. Part 303 (“Filing 

Procedures”); see also Oral Arg. Tr. 6:7–15 (“Does the FDIC 

have a procedure for parties to come ask the [S]tep [O]ne 

question?” “Your Honor, there isn’t a separate procedure.”). 

But that does not change the FDIC’s legal authority to 

determine what qualifies as a golden parachute as part of its 

statutory responsibility to “prohibit or limit * * * any golden 

parachute payment[.]” 12 U.S.C. § 1828(k)(1). That authority, 

instead, is grounded squarely in the text of the Federal Deposit 

Insurance Act and its implementing regulations, which do not 

limit the FDIC’s decisions to those payments for which a 

precise dollar amount has already been assigned.

3

Taking a different tack than the district court, Amicus 

argues that the statutory definition of the word “payment” 

forbids the FDIC to address the golden parachute status of 

potential monetary relief in litigation while that case is still 

pending. Amicus points out that Congress only authorized the 

FDIC to prohibit “golden parachute payment[s],” and that 

“payment” is defined in the statute as “any direct or indirect 

transfer of any funds or any asset[.]” Amicus Br. 23 (emphasis 

added) (quoting 12 U.S.C. § 1828(k)(5)(C)). “[U]ncertain 

claims in a contested lawsuit are not a ‘payment’ under the 
20

statute[,]” Amicus argues, “because they do not necessarily 

involve a ‘transfer’ of funds or assets.” Amicus Br. 23 (citation 

omitted). He adds that “[w]hile a settlement or judgment might 

entail such a ‘transfer,’ the mere possibility of liability does 

not.” Amicus Br. 24.

Perhaps. But the FDIC did not decide that Bauer’s and 

Clark’s pending legal claims were golden parachute payments. 

Rather, it determined that if those pending legal claims were to 

give rise to a monetary payment—whether through a settlement 

or judgment— any such payment would be a golden parachute. 

Nothing in the statute forbids the FDIC from advising regulated 

parties whether a contemplated future payment would be a 

golden parachute if and when made. See Tennessee Gas 

Pipeline Co. v. Federal Power Comm’n, 606 F.2d 1373, 1380 

(D.C. Cir. 1979) (“[A]gencies are generally free to act in 

advisory * * * capacities.”). 

Notably, the statute and regulations define golden 

parachutes in terms of “any payment” or “agreement to make

any payment[.]” 12 U.S.C. § 1828(k)(4)(A) (emphasis added); 

accord 12 C.F.R. § 359.1(f)(1). The explicit inclusion of mere 

agreements to make payments in the definition reinforces the 

FDIC’s authority to identify golden parachutes before any 

funds have actually changed hands and before the precise 

payment amount is known. In fact, employment agreements 

frequently peg payments to the executive’s level of 

compensation at the time of termination, which may be 

unknown when the FDIC’s approval for the agreement is 

sought. See, e.g., Wollschlager, 992 F.3d at 578, 580 

(separation payment tied to executive’s “base compensation 

through the end of the year” and annual salary); McCarron v. 

FDIC, 111 F.3d 1089, 1092 (3d Cir. 1997) (agreement to pay 

executive “a lump sum severance payment in an amount equal 

to three times his annual salary”). 
21

B

The district court also held that the absence of an identified 

payment amount stripped the FDIC of authority to render its

Step Two decision denying discretionary consent for the banks 

to make otherwise-prohibited golden parachute payments. 

Here too, the district court was mistaken. 

While the regulatory provision cited by the district court, 

12 C.F.R. § 303.244(c)(4), does govern the Step Two process, 

it does not constrain the FDIC’s authority. As noted before, 

Section 303.244 only “contains the procedures to file for the 

FDIC’s consent when such consent is necessary[.]” Id.

§ 303.244(a) (emphasis added). The rule explains that 

“[a]pplicants shall submit a letter application to the appropriate 

FDIC regional director[,]” and then lists the items that the 

“application” “shall contain[.]” Id. § 303.244(b)–(c)

(emphasis added). One of those is the cost of the proposed

payment. Id. § 303.244(c)(4). The burden to provide that 

information, like other required components of the application, 

falls on the party seeking the FDIC’s consent. See id.

§ 303.244(c)(1), (5) (requiring application to contain “[t]he 

reasons why the applicant seeks to make the payment” and 

“[t]he reasons why the consent to the payment should be 

granted”).

Beyond that, in analyzing the role of a regulation within 

the agency process, we distinguish between “procedural rules 

benefitting the agency” and “procedural rules benefitting the 

party otherwise left unprotected by agency rules[.]” Lopez v. 

Federal Aviation Admin., 318 F.3d 242, 247 (D.C. Cir. 2003). 

By its plain terms, Section 303.244 falls in the former 

category. It is a regulation “intended primarily to facilitate the 

development of relevant information for the Commission’s use 

in deciding applications[.]” American Farm Lines v. Black 
22

Ball Freight Serv., 397 U.S. 532, 538 (1970). We will not 

invalidate agency action that departs from such agencybenefitting procedures unless the complaining party has shown 

“substantial prejudice[.]” Lopez, 318 F.3d at 247 (citing 

American Farm Lines, 397 U.S. at 539). Here, Bauer and Clark 

do not claim to have been prejudiced at all by the FDIC’s 

failure to strictly enforce Section 303.244’s application 

requirements, much less substantially prejudiced. 

Amicus argues that the FDIC was not free to disregard a 

regulation requiring the collection of information that Congress 

and the agency itself have deemed to be critical in evaluating a 

golden parachute application at Step Two. See 12 C.F.R. 

§ 359.6 (“For filing requirements, consult 12 [C.F.R.] [§] 

303.244.”) (emphasis added); 12 C.F.R. § 303.244(c) (“The 

application shall contain the * * * cost of the proposed 

payment[.]”) (emphasis added).

We disagree. The statute and regulations treat the amount 

of the proposed payment as a factor the FDIC may consider, 

not an essential predicate to the agency’s ability to act. The 

statute, for one, simply directs the agency to “prescribe, by 

regulation, the factors to be considered” in making golden 

parachute determinations, and then offers some suggestions for 

what those factors “may” include. 12 U.S.C. § 1828(k)(2). 

One of those potential factors is “the degree to which * * * the 

payment reasonably reflects compensation earned over the 

period of employment[,]” which is the closest the statute comes 

to possibly referencing a payment amount. Id.

§ 1828(k)(2)(F)(i). 

Likewise, in its implementing regulations, the FDIC set 

out both mandatory and permissive factors to be considered in 

deciding whether to allow a golden parachute payment to be 

made. See 12 C.F.R. § 359.4. In the mandatory camp is the 
23

requirement that the applicant “shall demonstrate that it does 

not possess and is not aware of any information * * * which 

would indicate that there is a reasonable basis to believe” that 

the institution-affiliated party is “substantially responsible” for 

the troubled condition of the institution. Id. § 359.4(a)(4).

In the permissive camp is “the degree to which the 

proposed payment represents a reasonable payment for 

services rendered over the period of employment[.]” 12 C.F.R.

§ 359.4(b)(2). Like its statutory counterpart, that provision at 

most implies that the payment amount is a factor that the FDIC 

“may consider” in evaluating a golden parachute application. 

Id. § 359.4(b) (emphasis added).

Proof in point of the permissive nature of that criteria is 

that the payment amount was entirely extraneous to the FDIC’s 

reasons for denying consent in this case. The FDIC made its 

decision not to authorize the golden parachute payments to 

Bauer and Clark based on the banks’ inability to satisfy a 

mandatory factor—namely, their inability to certify that Bauer 

and Clark were not substantially responsible for Southern 

Community’s troubled condition. Because consent would run 

afoul of that mandatory criterion, there was no need for the 

FDIC even to address the permissive factors, including the 

reasonableness of the proposed payment amount. For that 

reason, the FDIC was well within its rights to deny the 

application despite the banks’ failure to include “[t]he cost of 

the proposed payment” in their application. 12 C.F.R. 

§ 303.244(c)(4). 

IV

Having concluded that the district court erred in holding 

that the FDIC lacked authority to render its golden parachute 

determination, we decline to reach the merits of Bauer’s and 

Clark’s APA claims, and instead remand for the district court 
24

to do so in the first instance. “[W]e are a court of review, not 

of first view[,]” Capitol Servs. Mgmt., Inc. v. Vesta Corp., 933 

F.3d 784, 789 (D.C. Cir. 2019) (citation omitted), so where the 

merits went unaddressed below, it is “our general practice * * * 

to remand to the district court,” Mendoza v. Perez, 754 F.3d 

1002, 1020 (D.C. Cir. 2014). We see no reason to depart from 

that general practice here.

For all of those reasons, we reverse the district court’s 

order vacating the FDIC’s final determination and remand for 

the district court to consider Bauer’s and Clark’s claims on the 

merits.

So ordered.