If you are involved in SEC reporting, you have likely been hearing about clawbacks of executive compensation. The SEC, as required by Dodd\/Frank, has proposed a new rule about clawbacks. You can see the SEC\u2019s press release about the proposed rule at:<\/p>\n
www.sec.gov\/news\/pressrelease\/2015-136.html<\/span><\/a><\/p>\n The press release also has a good summary of the proposal and a link to the text of the proposed rule. (The link is near the top of the press release on the right side of the page.)<\/p>\n This rule proposal has created a fair amount of commentary and discussion, as anyone would expect.<\/p>\n That said, courtesy of Section 304 of SOX<\/strong>, clawbacks have been in play before this proposed rule. And this SOX provision has some teeth. Diebold Corporation, in the wake of a settled accounting fraud enforcement action, was required to clawback compensation from its CEO. Here is an interesting quote from the press release announcing the various enforcements:<\/p>\n \u201cThe complaint does not allege that (the CEO) engaged in the fraud.\u201d<\/p>\n You can read the release at:<\/p>\n www.sec.gov\/litigation\/litreleases\/2010\/lr21543.htm<\/span><\/a><\/p>\n So, what is the reason that Dodd\/Frank requires more rule making about clawbacks? One of the principal differences concerning clawbacks between Dodd\/Frank and SOX is that SOX requires clawbacks when a restatement arises from accounting fraud.<\/p>\n Dodd\/Frank moves things to a higher level because it will require clawbacks for any material restatement, regardless of cause<\/strong>. So even an unintentional error will trigger a clawback requirement.<\/p>\n In a sense, this is a bit like the SOX whistleblower hotline compared to the Dodd\/Frank whistleblower hotline. SOX requires an anonymous hotline to the audit committee, Dodd\/Frank goes a step further and created the anonymous hotline directly to the SEC.<\/p>\n As always, your thoughts and reactions are welcome!<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" If you are involved in SEC reporting, you have likely been hearing about clawbacks of executive compensation. The SEC, as required by Dodd\/Frank, has proposed a new rule about clawbacks. You can see the SEC\u2019s press release about the proposed rule at: www.sec.gov\/news\/pressrelease\/2015-136.html The press release also has a good summary of the proposal and … Continue reading A Bit of Perspective about Clawbacks in the News<\/span>