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Dodd-Frank and Executive Compensation – Part 1: Status Update

It’s been over five years since the signing of the Dodd-Frank Wall Street Reform and Consumer Act (“Dodd-Frank”) and we are still waiting for the U.S. Securities and Exchange Commission to finalize rules on several provisions related to executive compensation. Below is a summary of the current landscape of Dodd-Frank as it relates to key executive compensation provisions. Over the coming months, we will be posting a series of blog posts addressing some of the nuances of these provisions.  Stay tuned for more.



Status of Rulemaking

Pay Ratio Disclosure

Requires disclosure of the ratio between the compensation of the company’s median employee and the CEO

Final *Disclosure required for first fiscal year beginning on or after January 1, 2017 (i.e,. 2018 proxy statements)

Say on Pay

Requires companies to hold shareholder advisory votes on executive compensation along with votes on how often to conduct such say on pay votes

Final *Currently Effective

Say on Golden Parachutes

Requires disclosure of and a shareholder advisory vote for any “golden parachute” payments in a transaction where shareholder approval is sought

Final *Currently Effective

Compensation Committee Independence

Requires enhanced independence standards for compensation committee members along with specific disclosure requirements

Final *Currently Effective

Compensation Committee Advisors

Requires compensation committees to evaluate the independence of consultants and advisors

Final *Currently Effective


Requires companies to develop policies to recover incentive compensation that was awarded based on erroneous financial information


Hedging Policy Disclosure

Requires disclosure of whether the company allows employees and directors to engage in certain hedging transactions


Pay-versus-Performance Disclosure

Requires disclosure of the relationship between executive compensation actually paid and company financial performance (i.e., TSR)


Financial Institution Incentive Compensation

Requires disclosure of incentive compensation and a prohibition on certain arrangements that encourage inappropriate risk taking

Proposed (joint-rulemaking between the SEC and several other agencies) *New proposed rules were issued on April 21, 2016 and can be found here.

For the full text of the Securities and Exchange Commission proposed/final rules and the corresponding rules adopted by the securities exchanges, click here and then on the “Executive Compensation” link in the Mandatory Rulemaking Provisions section.

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About this Author

Alexander K. Song, Mintz Levin Law Firm, New York, Labor and Employment Law Attorney

Alex’s practice focuses on all aspects of executive compensation for both public and private companies, including drafting of equity and incentive compensation plans and award agreements as well as employment, change-in-control, and severance arrangements for executive officers. Alex also prepares compensation discussion, analysis, and proxy statement compensation tables for public companies.