In a hearing this week by the House Financial Services Committee Subcommittee on Investor Protection, Entrepreneurship and Capital Markets titled “Reviewing Proposals to Hold Executives Accountable”, House Democrats reviewed two recently introduced bills which would require the SEC to complete the unfinished Dodd-Frank clawbacks and pay for performance rules within 60 days of becoming law.   The Committee examined the two bills along with several other measures, including those aimed specifically at forced arbitration and insider trading which garnered significant attention during the hearing. 

In an exchange on the clawback and pay for performance bills, Freshman Democrats Cynthia Axne (D-IA) brought up the need for the pay for performance rule, citing the Well Fargo scandal and the pay of former CEO John Stumpf as evidence for the “simple, common sense” information.  Tom Quaadman of the U.S. Chamber of Commerce noted that companies already disclose extensive information which are approved by investors in say on pay votes.  Rep. Axne responded that the information was not transparent enough and the rule was necessary. 

Each bill has little chance of being ultimately passed into law given the makeup of the Senate.  However, the discussion of legislation on Capitol Hill can impact the SEC's rulemaking agenda.  Both rulemakings are mandated by the Dodd-Frank Act, although no timetable is specified.  That means a future SEC could decide to complete the rules if the current SEC does not do so.  For this reason, the Center will continue to engage on the Hill on the issue and reinforce the needed changes expressed to the SEC on both the clawbacks and pay for performance rules.