SEC Delays Planned Implementation for Dodd-Frank Executive Compensation Requirements

On Friday, July 29, the SEC revised the Dodd-Frank implementation timeline posted on its website. The revisions include a delay of several executive compensation provisions that had previously been scheduled to be adopted by the end of 2011. According to the newly revised schedule, the SEC now plans to adopt each of the following rules between January and June of 2012:

• Disclosure rules regarding pay-for-performance and CEO pay disparity ratio (Dodd-Frank Section 953)
• Rules regarding compensation clawbacks for executive officers (Dodd-Frank Section 954)
• Disclosure rules regarding employee and director hedging (Dodd-Frank Section 955)
• Final rules (to be published jointly with other Federal regulators) regarding incentive compensation arrangements at financial institutions (Dodd-Frank Section 956)

The revised timeline means that it is highly unlikely that any of the above requirements will be implemented in time for the 2012 proxy season. Additionally, the clawback rules under Section 954 are subject to implementation by the national securities exchanges, which could delay implementation beyond mid-2012.

The SEC’s timeline indicates that it still expects to adopt final rules under Section 952 (exchange listing standards for compensation committee and adviser independence and disclosure rules regarding compensation consultant conflicts of interest) by the end of 2011. The proposed rules under Section 952 contemplated that the national securities exchanges would have an additional 12 months following publication of the final SEC rules to implement the new listing standards; however, assuming the SEC meets its schedule, it is likely that the new disclosure requirement regarding consultant conflicts of interest will be effective for the 2012 proxy season.