Delays in Compensation, Pay-for-Performance and Clawback Rules May be Problematic

Conflict minerals disclosure, mine safety disclosure, resource extraction issuer disclosure, new exchange listing standards for compensation committee and compensation consultant independence, pay-for-performance and pay ratios, clawback rules for executive compensation packages. Which one of these doesn't belong?

Actually, it's a trick question because actually they are all part of the voluminous Dodd-Frank Act. And that's not the only thing they share in common. Final rules for those sections of the law have been delayed by the SEC at least until the end of this year. (In the case of a study on the use of compensation consultants, until July-December 2012.) [See the April 12 Mondaq Business Briefing.]

For shareholders and those corporate governance activists who believe exorbitant CEO compensation was partly responsible for the financial crisis, the delay in issuing final rules for the compensation-related issues doesn't bode well. When you consider that the rule calling for the stock exchanges to develop listing standards for independent compensation committees and compensation consultants is on the same track as non-governance related issues as the disclosure for conflict minerals or mine safety,  it's hard to believe there will be new rules anytime soon.

Read the rest of this article on the Corporate Governance Blog, a blog by Gary Larkin

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