Today’s column focuses on several of the provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203 (July 21, 2010) affecting executive compensation. These are (i) Say on Pay (including discussion of Proxy Access as it relates to Say on Pay), (ii) the so-called “clawback” provisions and (iii) the new requirement that a ratio of CEO pay to the median of the pay of all other employees be disclosed in the proxy statement. (These are only some of the provisions of Dodd-Frank that will impact on the executive pay process; a longer list of provisions relating to executive pay is noted separately below.)

Taken together, the provisions in Dodd-Frank that affect the executive pay process quite arguably will have the broadest and most significant impact on that pay process of any set of new rules ever contained in one law. The federal government, of course, has impacted for a long time on executive pay through tax and securities laws (and through temporary rulemaking such as that under Pay Controls (1971) and the Troubled Asset Relief Program (TARP) (2008)). But it is unlikely that there has ever been a single law that contains the potential long-term consequences for the process of setting executive pay that are contained in these provisions of Dodd-Frank.

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