There are 10 key challenges for HR under Dodd Frank and its various “Say on” requirements, says consultant Deborah Lifshey. Although about half are not currently in force, it’s still a significant hassle.
The Dodd Frank Act (Dodd Frank Wall Street Reform and Consumer Protection Act) was signed in 2010 as a culmination of efforts to regulate and limit Wall Street as result of the mortgage fallout, says Lifshey, Managing Director at the New York Office of Pearl Meyer & Partners.
Lifshey’s tips came at a recent webinar sponsored by BLR and HR Hero.
Status of Dodd Frank Obligations
Two and one-half years after its signing, major parts of the law are still delayed. In the table below, Lifshey clarifies the status of the main aspects of Dodd-Frank that relate to compensation.
HR budget cuts? Let us help. HR.BLR.com is your one-stop solution for all your HR compliance and training needs. Take a no-cost, no-obligation trial and get a complimentary copy of our special report Critical HR Recordkeeping—From Hiring to Termination. It’s yours—no matter what you decide.
|
Provision |
Original DFA Scheduled Effective Dates |
Current Status |
Effective |
|
Shareholder advisory votes: Shareholders’ rights with respect to advisory votes |
Proxy statements for meetings on or after |
SEC issued final rules Jan. 25, 2011 |
Yes |
|
Financial Institution Excessive Compensation Rules Restrict pay with special regulations (only regulate certain financial institutions) |
Rules to be issued by 04/21/2011 |
Proposed rules issued April 2011 |
final rules still pending |
|
Compensation Committee & Has to do with responsibilities for hiring advisors, rules governing advisors’ other relationships with the company or its executive officers |
Effective by 07/16/2011 |
Proposed rules issued March, 2011 |
? |
|
Disclosure of Compensation Consultant Conflict of Interest Company needs to talk about whether there is conflict of interest and how comp committee considered independence of consultants |
Proxy statements for meetings occurring on or after 07/21/2011 |
Final rules issued June 20, 2012 |
Yes |
|
Clawback Policy If there is a restatement and there were incentive payments, company has to get excess incentive payments back |
None stated |
Proposed and final rules “pending” |
? |
|
Pay-For-Performance Disclosure “We still don’t know what it looks like and don’t know what it means.” |
None stated |
Proposed and final rules “pending” |
? |
Find out what the buzz is all about. Take a no-cost look at HR.BLR.com, solve your top problem, and get a complimentary gift.
|
Internal Equity Ratio Disclosure This most ridiculous requirement calculates a ratio between CEO pay and median performance of all other employees. No one has figured out how to calculate or what it means. |
None stated |
Proposed and final rules “pending” |
? |
|
Disclosure of Hedging Execs can’t hedge their company stock, (many companies already have this) |
None stated |
Proposed and final rules “pending” |
? |
|
Disclosure of COB/CEO Roles Requires the company to reveal whether or not is has a separate CEO and Chairman. |
None stated, but it is so similar to 2010 rulethat most companies have complied in the |
SEC has not committed to dates for |
Yes |
|
Proxy Access Batted around by SEC for about 10 years—hard for shareholder to get new director on the slate—court struck it down. |
SEC issued final proxy rules August 25, 2010. Courts struck “universal” rule in July 2011. Companies may still submit proposals to change bylaws under Rule 14a-8 |
Rule 14a-8 currently implemented |
Yes |
In tomorrow’s Advisor, more on Say on Pay, Say on Frequency, and Say on Golden Handcuffs, plus an introduction to the all-HR-in-one website, HR.BLR.com.
With so many of the rules still pending and in proposed form, and therefore subject to significant change, it sure makes it difficult to do compensation and other planning.