A Plan for Dodd-Frank Incentive Pay Reform

Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires that the US Securities and Exchange Commission (SEC) and other bodies propose executive incentive compensation reform that discourages excessive risk-taking by large financial institutions. To date, these federal agencies have not adopted a formal rule on executive incentive compensation. The SEC is currently considering executive compensation reforms to address Section 956 of the Dodd-Frank Act as it impacts financial companies, and to enhance transparency of the relation between manager pay and company performance for all companies (both financial and nonfinancial). The SEC is planning to finalize these reforms by spring 2022...

Charles Elson is the Edgar S. Woolard Jr. Chair in Corporate Governance at the John L. Weinberg Center for Corporate Governance at the University of Delaware. He is a director of Encompass Health and Blue Bell Creameries.