Rationalizing the Dodd-Frank Clawback
69 Pages Posted: 14 Apr 2016 Last revised: 29 Sep 2016
Date Written: September 26, 2016
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
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