SEC Delays Implementation of Several Executive Compensation Provisions Required Under Dodd-Frank Act
Last Friday, July 29th, the SEC revised the Dodd-Frank implementation timeline on its website, delaying many of the executive compensation provisions that were previously scheduled for adoption by the end of 2011.
Under the revised schedule, the SEC plans to adopt the following rules between January and June of 2012:
- Section 953 – Disclosure rules regarding pay-for-performance and CEO pay ratios
- Section 954 – Rules regarding recovery of executive compensation (clawbacks)
- Section 955 – Disclosure rules regarding employee and director hedging
- Section 956 – Rules regarding incentive compensation arrangements at financial institutions to be published in conjunction with other regulatory bodies
While final rules regarding Sections 953 and 955 are not expected until 2012, the SEC does expect to propose rules on these items sometime in the August to December 2011 timeframe.
Still On Time?
The SEC still expects to adopt final rules under Section 952 (requiring exchange listing standards for compensation committee and adviser independence and disclosure rules regarding compensation consultant conflicts of interest) by the end of 2011. This makes it likely that disclosure requirements regarding consultant conflicts of interest may be in place for the 2012 proxy season.
CEO Pay Ratio
Congress is currently considering proposed legislation that would repeal Section 953(b) of Dodd-Frank, which requires companies to disclose the ratio between CEO pay and median employee pay. The odds of such a repeal are unclear at this time.
We believe it highly unlikely that Sections 953-956 will be implemented in time for the 2012 proxy season. And even if approved, Section 954’s clawback rules are to be implemented via exchange listing standards, which will likely create additional delays in final implementation.