December 20, 2021
SEC Revisiting Pay-for-Performance & Bank Bonuses?
The SEC recently posted its Reg Flex Agenda – which reflects rulemaking priorities of the Chair. It contemplates revisiting a couple of Dodd-Frank rules that had previously been relegated to the “Long-Term Actions” list and seemed like they might fade into oblivion:
– Pay-for-performance – considering reopening the comment period, in April 2022, on rules to implement Section 953(a) of the Dodd-Frank Act, which would require companies to disclose the relationship between executive compensation actually paid and the company’s financial performance
– Bank bonuses – considering reproposed regulations under Section 956 of Dodd-Frank in October 2022, which would prohibit incentive-based payments that encourage inappropriate risks at a covered financial institution
Clawbacks are also still on the agenda – the SEC reopened the comment period for those rules back in October. The SEC isn’t obligated to accomplish what’s on the Reg Flex Agenda – within the specified timeframes or at all. But Chair Gensler has said several times that he wants to complete Dodd-Frank rulemaking, and so far, he appears to be taking steps to do that.
– Liz Dunshee