Dodd-Frank’s Got Your Clawback: New F100 Data

Among the numerous shakeups that will result from the new Dodd-Frank Act is a tougher clawback policy that will be required of all companies (well, all companies that want to list their securities on a national exchange–we doubt anyone will disobey). Unlike Sarbanes-Oxley, which triggers clawbacks in the event of executive misconduct causing a financial restatement, Dodd-Frank triggers clawbacks in the event of any financial restatement– regardless of whether or not misconduct was involved. The message is clear: get your proxy statement right the first time, or feel the consequences.

The good news is that most of the Fortune 100 is already on the clawback train, with a good chunk more or less Dodd-Frank compliant. 82.1 percent of F100 companies had a 2010 clawback policy, up from a mere 17 percent just four years ago. 81.3 percent of these policies cover any financial restatement, 78 percent cover executive misbehavior, and 63.7 percent require both. Cash incentives are covered at 87 percent of companies, and equity incentives are included at 81.5 percent.

Unsurprisingly, the financial industry leads the clawback field, with 90.5 percent disclosing a policy (as required by TARP). Once Dodd-Frank goes into effect, the Wall Street wizards will have plenty of company in the clawback arena, and a number of other exec comp arenas as well. You can request the full report for more information.