Rationalizing the Dodd-Frank Clawback

69 Pages Posted: 14 Apr 2016 Last revised: 29 Sep 2016

Jesse M. Fried

Harvard Law School; European Corporate Governance Institute (ECGI)

Date Written: September 26, 2016

Abstract

On July 1, 2015, the Securities and Exchange Commission (SEC) proposed an excess-pay clawback rule to implement the provisions of Section 954 of the Dodd-Frank Act. I explain why the SEC’s proposed Dodd-Frank clawback, while reducing executives’ incentives to misreport, is overbroad. The economy and investors would be better served by a more narrowly targeted “smart” excess-pay clawback that focuses on fewer issuers, executives, and compensation arrangements.

Keywords: Executive pay, Dodd Frank, clawback, excess pay, securities regulation, misreporting, recovery, erroneously awarded compensation, restatement, accounting, financial reporting, financial results, manipulation

JEL Classification: G18, G28, G38, K22, M40, M52

Suggested Citation

Fried, Jesse M., Rationalizing the Dodd-Frank Clawback (September 26, 2016). European Corporate Governance Institute (ECGI) - Law Working Paper No. 314/2016. Available at SSRN: https://ssrn.com/abstract=2764409

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 )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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