Dodd-Frank Act Executive Compensation Provisions Get Mixed Review

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The sweeping Dodd-Frank Wall Street Reform and Consumer Protection Act have significant positive and negative impacts on executive compensation and the role of the compensation committee, according to an analysis of the Act's executive compensation provisions using principles developed by the Independent Directors Executive Compensation (IDEC) Project.

Executive compensation principles provide a common language for a more meaningful dialogue with shareholders and employees

The sweeping Dodd-Frank Wall Street Reform and Consumer Protection Act have significant positive and negative impacts on executive compensation and the role of the compensation committee, according to an analysis of the Act's executive compensation provisions using principles developed by the Independent Directors Executive Compensation (IDEC) Project.

The IDEC Project is a collective effort by directors, academics, and compensation experts to create executive compensation principles that independent directors and boards will voluntarily adopt to help incent optimal performance and efficiency.

"Overall, the Dodd-Frank executive compensation provisions may result in improved alignment with shareholders, greater accountability to shareholders, and more transparency," said Don Delves, President of The Delves Group and primary author of the analysis. "However, the provisions may impose significant cost in terms of executive engagement, motivation, and positive risk taking."

The IDEC analysis rates the executive compensation provisions of Dodd-Frank in terms of each IDEC principle. The IDEC executive compensation principles are designed to guide boards of directors and management in making and explaining compensation decisions. "Executive compensation principles provide a common language for a more meaningful dialogue with shareholders and employees," Delves said.

Best Buy Co. (BBY) in June became the first major company to adopt a custom version of the IDEC executive compensation principles. The principles are listed in the company's proxy statement, filed on May 11 and posted on the Market Watch website at http://bit.ly/bKYZpn.

The full IDEC evaluation, "Evaluation of Dodd-Frank Act Executive Compensation Provisions Using IDEC Project Principles" is available for download at this link: http://bit.ly/d54PLw.

About The Independent Directors Executive Compensation Project
The Independent Directors Executive Compensation (IDEC) Project is an outgrowth of the great concern on compensation governance felt by independent directors, academics and executive compensation experts. Its origin was a series of small group meetings and individual conversations starting in 2009 and held throughout the U.S. These gatherings and discussions have involved nearly 200 directors and professionals. For more information and links to executive compensation principles, visit the website at http://www.idecproject.org.

Contact:
Don Delves
IDEC
ddelves(at)delvesgroup(dot)com
312 441-9714

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