Dodd-Frank certainly is meant to address the financial system, but its effects are not limited to financial companies. This 1,000-plus page legislation touches virtually every publicly-traded company. The full name of the statute is the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, commonly called Dodd-Frank. What are some of the key provisions that employers should know about?
More than financial reform
• Will affect all publicly-traded companies.
• New obligations for employers include:
» Shareholder review of executive compensation
» Disclose golden parachutes.
» Explain why same person – different individuals – serves as both CEO and chairman.
» Compensation committee independence.
» Disclose relationship between executive pay and performance.
» Disclose whether hedging is allowed.
» Develop policy to claw back incentive-based compensation if financials are restated.
But probably the most important part of Dodd-Frank, from the standpoint of employment lawyers, is the bounty and whistleblower program. Let’s see how this works.
The program in a nutshell:
• Expands Sarbanes-Oxley whistleblower protection.
• Whistleblower may earn a bounty.
• No retaliation against whistleblower.
• Key statute: 15 U.S.C. § 78u-6.