Tag Archives: clawbacks

New revenue recognition standard— don’t ignore the impact on compensation

by Cydney Posner

At the recent Bloomberg BNA Conference on Revenue Recognition,  a Deloitte partner observed that, to the extent that, in awarding compensation, companies use metrics that are keyed to revenue, the new revenue recognition standard could affect compensation or bonus plans because the ways of measuring and the timing of recognition of revenue change. He reminded attendees that, “‘when those plans were put into place, whatever they were, they overlap years. You then have the question of, ‘they set up some sort of benchmark and we’re going to pay someone a bonus based on how they do against this metric’— the problem is that metric was designed based on the old rules and you basically changed how you’re going to keep score.’” (See this article in Bloomberg BNA.) Continue reading

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Filed under Accounting and Auditing, Executive Compensation

Likely interim SEC Chair spells out his priorities

by Cydney Posner

According to this article in the WSJ,  SEC Commissioner Michael Piwowar, who will probably become acting Chair when current Chair Mary Jo White steps down this month, has agreed with fellow Commissioner Kara Stein about various rulemakings that they might pursue in the interim until nominee Jay Clayton is confirmed as Chair. Apparently, they don’t include rules required by Dodd-Frank. Continue reading

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Filed under Corporate Governance, Executive Compensation, Securities

Companies take clawbacks into their own hands — ouch, is it always a good thing?

by Cydney Posner

As Compliance Week reports, this study from PwC showed that many companies are adopting clawbacks related to their executive compensation arrangements, even before the SEC acts to implement the Dodd-Frank clawback provisions.  The PwC study looked at 100 large public companies and found that 40% had made “some type of change to their compensation plans to modify clawback provisions in the past year.”

According to the study, the policies used a wide range of triggers – e.g., some pharma companies would trigger clawbacks based on failures to follow company policies or protocols – but the most common triggers remained restatements or misconduct. Slightly over 60% applied clawbacks only to executives and senior management, while 9% applied only to NEOs, and 28% applied to a broad-based employee population. Only 42% had a look-back period, the most common being three years; however, 10% of companies had no limitation on the duration of the look-back period.  Continue reading

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Filed under Accounting and Auditing, Executive Compensation, Securities