Professionals in executive compensation have long been prepared for the prospect of change following the inevitable shift in political control following November’s elections. At the time of this writing, the SEC was down to just two commissioners, and observers were keenly aware that the new president would have a significant influence on the future of their field, particularly if the scales tipped toward the Republican majority in all branches of government as they now have.
One thing that is certain not to change, however, is uncertainty with what will happen with proposed regulations around executive pay in the near term. Say even the most extreme proposition comes to fruition—the complete “dismantling” of Dodd-Frank hinted at by President Trump—such radical change will not happen overnight. Consider how long the initial rules took to be put in place despite widespread support from the Democratic majority—it’s been more than six years since Dodd-Frank was passed, and at this point, some of these proposals may never find their way to rulemaking.
Panelists at the Compensation Committee Forum, co-hosted by Equilar and Nasdaq in San Francisco on November 10, shared their mixed projections about the future of Dodd-Frank and other compensation-related regulations. Ultimately, nothing about the political environment changes public companies’ and their boards’ responsibilities to their stakeholders. Regardless of what is required by the SEC to be included in annual proxy statements, shareholder engagement and transparency will remain critical for decades to come. While compensation professionals should be prepared for all possible regulatory outcomes, they also should expect to see more of the same—a demand for best governance practices and open disclosure from their investors, employees and other constituents.