When a President of the United States takes the oath of office and a new administration begins, it marks the start of a marathon effort to address pressing issues, implement an ambitious agenda, and rectify perceived missteps and misdeeds by the former administration. In less than two years, the Biden administration has already done a remarkable job in all these respects.
However, administrations must also peer further into the past to identify loose ends that impede progress, such as when parts of beneficial legislation have failed to get fully implemented for whatever reason. With the passage of time and shifting priorities, it becomes easy for unresolved issues to fall through the cracks or get kicked even further down the road. The Biden administration is also proving it has a firm handle on this aspect of governing.
Twenty years ago, Congress passed The Sarbanes-Oxley Act of 2002, which included a requirement that any CEO and CFO who receives incentive-based pay following misconduct with company financials must return it. Years later, under President Barack Obama, Congress revisited the larger issue of corporate executives benefiting from material errors in financial statements whether or not there was fraud. This effort led to a requirement in the Dodd-Frank Act (passed in 2010) that required the Securities and Exchange Commission (SEC) to adopt “clawback” rules to recover excess executive pay.
Although the SEC followed up with proposed clawback rules in 2015, the Trump administration put the process on hold. Two impeachments and one lost election later, Trump finally left the White House, and President Joe Biden appointed Gary Gensler as the new SEC Chair. At long last, the clawback rules were back on the table and reopened for public comment.
This week, this slow-moving, wonkish saga finally resolved when the SEC adopted its clawback rules. Not surprisingly, two Democratic commissioners voted with Gensler in favor of the rules while two Republican commissioners voted against them, according to reporting from Reuters. Once the rules take effect, companies with restated financials will be required to recover any excess compensation from their executives.
Thanks to President Biden’s leadership, the United States is making progress in many ways and on all fronts. Focusing on today and looking ahead while also addressing lingering issues from the past, the Biden Administration is improving our society, growing our economy, and — most importantly — getting the job done.