Federal Government Policy and Business

Rule From S.E.C. Would Allow Companies to Take Back Executive Bonuses

The New York Times: Senior executives of companies that publish faulty financial statements would have to give back some of their compensation as punishment for the accounting missteps under a rule proposed on Wednesday by the Securities and Exchange Commission.

The rule, required by the Dodd-Frank financial overhaul law, which Congress passed in 2010, is aimed at increasing accountability within corporate America. It focuses on executive bonuses, also known as “incentive-based compensation,” which have grown consistently larger in recent years. Critics of this pay boom say that it creates incentives for executives to cash out quickly, regardless of whether their companies falter in the ensuing years.

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