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Who Needs the Kardashians? We’ve Got Dodd-Frank

The Dodd Frank Act

Financial services companies aren’t the only ones under heavy media scrutiny these days. Executives at all publicly traded companies now are subject to increased media scrutiny thanks to Dodd-Frank’s “say on pay” provisions. Suddenly, the relatively arcane subject of corporate governance is potential tabloid fodder.

Dodd-Frank’s “say on pay” provisions

For example, publicly traded companies now must obtain shareholder approval for “golden parachute” provisions for executives. In addition, all public companies must enact “clawback” policies, which retract incentive-based executive compensation when financials are restated due to “material noncompliance … with any financial reporting requirement under securities law.”

In today’s turbulent economy, many companies are experiencing heavy losses — making them ripe for investigation and testing under the provisions of Dodd-Frank. Regulators will comb through data — your data — to test whether executives have failed to comply with their duties, which could result in subpoenas for the emails and documents of some very important figures in your company.

Executive compensation is a sexy topic. And that means document reviews carry new risk. Matters related to executive compensation may tempt gossipy reviewers to share juicy tidbits that could damage — or at least embarrass — your company. Protecting the privacy of your top executives is a high priority, and one that your review team should share. Here are a few tips – all of which DiscoverReady regularly employs on reviews – to keep your sensitive information safe:

  1. Employ all standard steps you should be taking protect your sensitive information, such as requiring reviewers to sign matter-specific NDAs. Remind your team members of their ethical obligations as attorneys to keep all client information confidential. That means no discussions on elevators or during lunch breaks in common areas of the review center, where other reviewers who are not involved in the project may overhear. Obviously, there should be absolutely no discussion with spouses or friends.
  2. Consider conducting the document review in a remote location — if your corporate headquarters are in Los Angeles, perhaps New York is a better location for the review.
  3. Require your review vendor to use only full-time employees to review the data of sensitive custodians.
  4. If you must staff up on a large scale, use a vendor with dedicated reviewers who regularly review your data to undertake the task. Those reviewers are likely to have more of a sense of ownership of the client relationship, and will be more likely to protect your sensitive information.

The 24-hour news cycle, social media and reporters’ thirst to land scoops about Fortune 500 companies combine to heighten the complexity of corporate governance under Dodd-Frank. Best practices, performed by experienced document-review professionals, can help make sure the details of your CEO’s compensation plan stay in the boardroom — and out of the headlines.

Maureen O'Neill