Neutrality, signaling and exposé are the tonics served up on executive compensation in the new law nominally aimed against Wall Street and for consumers. The 848-page statute also named for its sponsors, Senator Dodd and Representative Frank, makes public companies put neutral committees at the pay-setting helm, lets shareholders cast precatory votes on the results, and shines a potentially embarrassing spotlight on prevailing pay realities and ratios. It puts a heavy hand on big bank pay setting.
Those incrementally averse to regulation will be appalled while those fearing serious flaws in pay practices enthralled. But neither group seems right, as these efforts reflect real problems, yet they are not likely to achieve their objectives. Even so, here’s a run-down of our new federal executive compensation laws, and predicted effects.