The “clawback” of pay from high-level executives for malfeasance is a hot but complex topic. Designed properly, such a policy is a significant mechanism for corporate accountability.

The Dodd-Frank bill, passed last month, mandated substantive clawback requirements for any company listed on a U.S. securities exchange if it has material financial restatements. Also in July, the European Parliament passed legislation requiring clawbacks , and the UK’s Financial Services Authority revised a proposed rule on remuneration, effective next January, which has a new provision that will define clawbacks. Prior to these regulatory developments, 212 of the S&P 500 had adopted a variety of “clawback” policies, but hundreds of public companies still don’t have such compensation recovery policies as required by Dodd-Frank.

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