SEC Divided On Incentive-Based Pay Disclosure; Schapiro Fears Unintended Consequences


The vote passed 3-2. Based on Dodd-Frank, the new rule will mandate that all financial firms with $1 billion or more in AUM submit their bonus programs to the SEC, with the understanding that "excessive" rewards for risk-seeking behavior will be rejected. 


Firms that are "too big to fail" -- with $50 billion or more in AUM -- will need to defer at least 50% of all executive bonuses for at least three years in order to encourage sustainable leadership that aims beyond the recent "I won't be here / you won't be here" short-term mentality.


Since there are vague areas in the rule as currently written, Commissioner Mary Schapiro has already solicited feedback from fee-based advisors in particular to determine how they will be affected.


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