Excess Pay and the Dodd-Frank Clawback
Jesse M. Fried
Harvard Law School; European Corporate Governance Institute (ECGI)
Peking University School of Transnational Law; Israel Securities Authority
October 2, 2011
Director Notes, No. DN-V3N20, pp. 1-8, October 2011
[This article is a revised and condensed version of Jesse Fried and Nitzan Shilon, Excess-Pay Clawbacks, available at http://ssrn.com/abstract=1798185]
The Dodd-Frank Act requires firms to adopt clawback policies for recovering certain types of excess pay — overpayments resulting from errors in performance measures (such as reported earnings). We discuss the costs of excess pay to investors, explain why most firms’ existing arrangements fall far short of what the Dodd-Frank Act is likely to require, and offer guidance to boards seeking to eliminate the types of excess pay not reached by Dodd-Frank.
Number of Pages in PDF File: 9
Keywords: Dodd-Frank, clawback, executive compensation, bonuses, stock options, restricted stock, Sarbanes-Oxley
JEL Classification: G18, G28, G34, G38, J33, K22, M52
Date posted: November 3, 2011
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