Background. We continue our series of pre-proxy filing updates. Recall that Dodd-Frank, weighing in at more than 2000 pages, required hundreds of rulemakings by dozens of agencies to “flesh out” the application of the law. After an initial spate of rulemaking, the pace has slowed considerably. Perhaps to be expected, the SEC which was tasked with the heaviest load seems to be lagging.
Revised Timetable. I follow Michael Melbinger’s excellent executive compensation blog at Winston & Strawn, LLP, and he recently posted a note on the revised schedule for the SEC to issue regulations on several critical issues. Surprise—the projected dates have been pushed back! Without fanfare, the SEC simply updated its website with respect to executive compensation provisions of the Act, which now appear as follows:
January – June 2012 (planned)
- Adopt rules regarding disclosure by institutional investment managers of votes on executive compensation
- Adopt exchange listing standards regarding compensation committee independence and factors affecting compensation adviser independence; adopt disclosure rules regarding compensation consultant conflicts
- Propose rules regarding disclosure of pay-for-performance, pay ratios, and hedging by employees and directors
- Propose rules regarding recovery of executive compensation (“clawbacks”)
Other rules are now projected to be issued by December.
Conclusion. For those who are trying to structure incentive compensation arrangements that will pass Dodd-Frank muster, this means yet more delay while we wait for how to design and implement clawbacks. Of course, there is good news—none of these must be dealt with during the current proxy-filing cycle. In addition, optimists would like to think that pay-ratio rule (comparing the CEO’s pay to that of a “median” employee) may die a quiet and un-mourned death.
Robert L. Musick, Jr. Richard Deutsch
(804) 249-6027 (804) 249-6026
bmusick@titanhr.com rdeutsch@titanhr.com
