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Excess Pay and the Dodd-Frank Clawback

Jesse M. Fried

Harvard Law School; European Corporate Governance Institute (ECGI)

Nitzan Shilon

Harvard Law School

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

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Date posted: November 3, 2011  

Suggested Citation

Fried, Jesse M. and Shilon, Nitzan, Excess Pay and the Dodd-Frank Clawback (October 2, 2011). Director Notes, No. DN-V3N20, pp. 1-8, October 2011. Available at SSRN: http://ssrn.com/abstract=1953317

Contact Information

Jesse M. Fried (Contact Author)
Harvard Law School ( email )
1575 Massachusetts
Griswold Hall 506
Cambridge, MA 02138
United States
617-384-8158 (Phone)
HOME PAGE: http://www.law.harvard.edu/faculty/directory/10289/Fried
European Corporate Governance Institute (ECGI) ( email )
B-1050 Brussels
Nitzan Shilon
Harvard Law School ( email )
5163 Massachusetts Ave
Cambridge, MA 02138
United States
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