Rationalizing the Dodd-Frank Clawback

Rationalizing the Dodd-Frank Clawback

Jesse Fried

Series number :

Serial Number: 
314/2016

Date posted :

May 01 2016

Last revised :

May 12 2016
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Keywords

  • Executive pay • 
  • Dodd Frank • 
  • clawback • 
  • excess pay • 
  • securities regulation • 
  • misreporting • 
  • recovery • 
  • erroneously awarded compensation • 
  • restatement • 
  • Accounting • 
  • financialreporting • 
  • financial results • 
  • manipulation

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.

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