Managing Director Deb Lifshey was quoted in the Agenda article, “Clawback Reviews Up Sharply as Recoupment Practices Shift."
At the very beginning of a clawback process, it can be hard for companies to know what the actual cost of pursuing a clawback will be, said Deb Lifshey, managing director at executive compensation and governance consulting firm Pearl Meyer.
Furthermore, once companies have done the analysis of figuring out the financial impact of an accounting restatement on executive pay outcomes, the company has typically already spent a lot of money on the situation at hand, said Lifshey. Therefore, some boards will go through the steps of pursuing a clawback once they've passed a certain point of investing company resources into the process—but every situation is different, she said.
In either case, it's imperative that companies have both their standard, Dodd-Frank Act-oriented clawback policy and a separate, secondary clawback policy tied to misfeasance and other, broader matters, said Lifshey.
The secondary clawback policy allows directors more discretion with regard to recoupment and is a sign of strong corporate governance that major investors and proxy advisors are looking for, she added.
The full Agenda article is available to subscribers.