Last Updated: October 1 2015
Article by Brian DeFoe
mondaq
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Monday, October 5, 2015
United States: Securities And Exchange Commission Proposes Rules Regarding Claw-Back Of Executive Compensation
Some five years after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("the Act"), the Securities and Exchange Commission (SEC) continues to work through the rule-making process required by the Act. Today, as part of that effort, the SEC released proposed rules governing the claw-back by public companies of erroneously awarded compensation. If adopted, these rules will require each securities exchange or national securities association that lists securities to adopt listing standards in compliance with proposed Rule 10D-1 (the "Proposed Rule") of the Securities Exchange Act of 1934, as amended.
Safety Suffers as Stock Options Propel Executive Pay Packages
Outsize executive pay packages have frequently been a flash point for stock market investors. Lavish executive compensation at publicly traded companies should be a significant concern for consumers, too.
That’s the message of a new study by three academics at the University of Notre Dame. Their research focuses on companies that rely heavily on stock options in executive compensation. They have found a correlation between generous option grants and the incidence of serious product recalls.
Executive Compensation: Paying High For Low Performance
This essay argues that regulatory reforms introduced by the Dodd-Frank Act of 2010 in the area of executive compensation have not yet achieved their purpose of linking executive pay with company performance. The rule on shareholder say-on-pay appears to have had limited success over the five proxy seasons since its adoption. The rule on pay ratio disclosure, adopted in August 2015, and the rules on pay-versus-performance disclosure and the clawback of certain incentive compensation, proposed in April 2015 and July 2015, respectively, are also unlikely to succeed. For the most part, the rules are intuitive and well-intentioned, but a closer look reveals that they are easy to manipulate, counterproductive, and often interact with one another, and with other regulatory goals, in unintended ways. As a result, five years after the passage of Dodd-Frank, the decades-old goal of aligning pay with performance remains elusive.
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Big hike in executive pay at nonprofit Blue Shield draws state scrutiny
Nonprofit insurer Blue Shield of California boosted executive compensation by $24 million in 2012 — a 64% jump over the previous year — according to a confidential state audit reviewed by The Times.
The health insurance giant won't say who got the money or why. But Blue Shield's former public policy director, Michael Johnson, who left this year and is now a company critic, said senior officials at the insurer told him that former Chief Executive Bruce Bodaken received about $20 million as part of his 2012 retirement package, on top of his annual pay.
Half a dozen other top executives also left the company near the end of 2012, which could have accounted for some of the spike in compensation. Some of this severance or retirement money may be paid out over time, extending beyond 2012.
Chad Terhune, Contact Reporter LA Times, September 1st, 2015
Read more here.
The health insurance giant won't say who got the money or why. But Blue Shield's former public policy director, Michael Johnson, who left this year and is now a company critic, said senior officials at the insurer told him that former Chief Executive Bruce Bodaken received about $20 million as part of his 2012 retirement package, on top of his annual pay.
Chad Terhune, Contact Reporter LA Times, September 1st, 2015
Read more here.
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