Among the many provisions of the new Dodd-Frank Wall Street Reform and Consumer Protection Act is a revised policy on clawbacks. While Sarbanes-Oxley required companies to have a clawback policy in the event of a financial restatement caused by executive misconduct, Dodd-Frank takes it one step further, requiring clawbacks for any financial restatement, regardless of whether misconduct occurred. Companies that don’t comply with this regulation will be prohibited from appearing in the national securities exchanges and associations, meaning that we’ll likely see clawback policies adopted universally in 2011 or soon thereafter.

In the meantime, we’ve taken our annual look at how clawback policies shake out in the Fortune 100. These policies continue to be on the rise, with 82.1 percent of companies adopting them. It’s hard to believe that only four years ago, in 2006, a mere 17.6 percent of companies had them. 2009 has been the biggest year yet for clawbacks, with 44.2 percent of companies implementing or amending them, but 2010 is right on its heels with 30.8 percent. A few other statistics from the report:

• 81.3 percent of 2010’s clawback policies had a provision for clawbacks in the event of a financial restatement, 78% had provisions in the event of unethical behavior by an executive, and 63.7 percent had both.
• Financial and insurance companies were most likely to have clawbacks. 90.5 percent of F100 financial and insurance companies had a clawback policy in 2010, compared to 82.4 percent in 2009 and 50 percent in 2008. This is partially because TARP requires clawback policies for senior executives.
• Most clawback policies include key executives and employees. 67.4 percent include this group, while 13.04 percent include all of a company’s employees.
• The first clawback policies mainly focused on cash incentives, but 81.5 percent now cover equity incentive compensation, and 26.1 percent cover outstanding options. Cash incentives still lead the pack, with 87 percent of policies covering them.

To learn more about clawback trends in the Fortune 100, including specific examples of proxy disclosures, request the 2010 report.

With pay for performance still on everyone’s minds, Equilar has released two recent reports on stock ownership guidelines for executives and directors in the Fortune 250. Based on the CD&A disclosures of 237 companies in FY 2009, this report shows that a large majority of CEOs and directors are placed under some kind of stock-ownership policy– 84.4 percent of CEOs and 84.0 percent of directors, respectively.

Here are a few other interesting findings from the two reports:

• Ownership guidelines and holding requirements, alone or combined, have increased for both groups from 2008 to 2009. While CEOs are increasingly asked to maintain a combination of both, however, very few directors are asked to meet holding requirements– only 19.8 percent see them, whether alone or combined with ownership guidelines. 40.1 percent of CEOs, on the other hand, have some kind of holding requirement.
• Multiples of base salary is still the overwhelming favorite in terms of ownership target design for CEOs, with 82.2 percent of companies using it. The field for directors, however, is much more mixed: while most companies use multiples of the retainer (54.8 percent) or setting a fixed number of shares (23.9 percent), both of these plans have been decreasing in popularity. Setting a fixed value of shares, or coming up with a totally unique plan, are both increasingly common for directors.
• The median target ownership for CEOs is $6 million in stock, compared to $262,850. Both of these values have either stayed static or slightly risen from 2008. At most companies, stock options aren’t counted toward ownership targets for either CEOs or directors.
• Companies are disclosing more details about ownership guidelines than ever: compliance status, anti-hedging policies, non-compliance penalties, hardship provisions, and retirement clauses were all discussed in CD&As in 2009. The full reports provide key disclosure examples for all of these areas.

For more info on stock ownership guidelines, click the relevant link to request the full report:

• 2010 Executive Stock Ownership Guidelines
• 2010 Director Stock Ownership Guidelines

This proxy season has been the first big test of the SEC’s new policies on disclosing risk-management practices when it comes to pay, and anyone who has a hand in their company’s proxies is likely anxious to know if they’re conforming to the correct standards. Our researchers decided to take a look at the new proxies for a Risk Disclosure and Pay Practices article. Our sample group was 100 large public companies ($14.5+ billion in revenue) who filed proxies on or before April 12, 2010. Here are some of our findings:

• The greatest percentage (72%) of companies cited the tying of long-term performance to compensation as a risk-management policy, with many citing executive stock ownership as a key element in reducing risk.
• The second-greatest percentage (59%) of companies said that ownership guidelines contributed to their mitigation of risk. (NOTE: This figure refers to the number of companies disclosing ownership guidelines specifically as a risk-management strategy, not the number of companies utilizing them overall.)
• 56% of firms cited the balance of short-term and long-term incentives as part of their risk strategy.
• 50% of firms cited the use of clawbacks as part of their risk strategy.
• No firms concluded that their pay practices encouraged excessive risk, but 16% made adjustments to better align executive pay with shareholder interests.
• Only 1% of firms cited elimination of perquisites as a risk-management policy.

We’ll be keeping an eye on any major changes in risk disclosure practices throughout the year. If you’d like to see the full report, click here.

With the spotlight still firmly on executive pay in the nascent recovery, many companies are considering–or being coaxed into by shareholders–a “say on pay” policy that gives shareholders a say in the compensation of top executives. In this week’s Say on Pay article, we examined 2009 proxy filings to look at the specifics of this emerging trend. Here’s what we found:

• Large-cap companies are most likely to see say on pay. Our report examined the S&P 1500 by company size, and we found that 21.0% of large-cap companies had undergone some kind of say on pay effort, compared to 4.3% of mid-caps and 5.3% of small-caps.
• Advisory votes are more likely to gain approval than shareholder proposals. Only 22.9% of shareholder proposals in the S&P 1500 succeeded in instituting say on pay, but 100% of advisory votes did.
• Some companies are getting ahead of the debate. The boards of four S&P 500 companies adopted internal policies on say on pay, instead of having them proposed by shareholders or as advisory votes. Among the quartet: Bed Bath & Beyond and Intuit, Inc.

While say on pay may be on a company-by-company basis for the time being, the Obama administration supports instituting it at all companies. In June 2009, Treasury Secretary Geithner said that the administration would authorize the SEC to institute system-wide say-on-pay requirements, pending Congressional approval. It remains to be seen whether the proposal will pass muster on Capitol Hill.

The complete article is provided to all Equilar Knowledge Center subscribers. Non-subscribers can request a copy of the article by visiting Equilar’s Executive Compensation Reports section.

As we adjust to the new SEC disclosure regulations and reflect back on the storms that lead up to the current economic climate, we are left to wonder – what is in the forecast for 2010? While market uncertainties make it tough to predict what will happen next in the world of executive compensation, one thing is for sure: All companies are exploring new ideas and practices to help them comply with stricter regulations, avoid excessive risk taking, and keep their shareholders happy.

Our newly published report, 2010 Executive Compensation Outlook, provides a follow-up to the companies studied in our 2009 Executive Compensation Outlook Report and explores trends and practices likely to affect us this year.

Some of the things we encountered:

• Salary reinstatements are on the rise. Of the 40 executive salary reductions we studied at the end of 2008, nearly a quarter have been reinstated.
• Incentive compensation is changing. Performance awards are being amended to provide longer performance periods, some firms have put relative measures in place, and others have adjusted threshold, target, and maximum level.
• Companies are getting creative with equity compensation. Performance-based awards are being amended to become time-based, option terms are being extended to give stocks a chance to rise, and some companies are adding more restricted shares and stock units to their equity mix.

The complete report is provided to all Equilar Knowledge Center subscribers. Non-subscribers can request a copy of the report by visiting Equilar’s Executive Compensation Reports section or the individual report page here.