Describe in a brief essay what say-on-pay policies and clawback policies are. Why do corporations implement these policies?

What will be an ideal response?

Answer: For many years executive compensation practices in U.S. companies has created much debate on the public stage, regarding whether CEOs is truly based on performance and the fairness of CEO pay relative to pay of other employees. The provision for say on pay gives shareholders in all but the smallest companies an advisory vote on executive pay. This is something that governance advocates have long wanted. Those who support the concept of say on pay believe that the vote will cause greater accountability on executive pay decisions. The Dodd-Frank Act requires 5,000 companies to hold nonbinding shareholder say-on-pay votes at least every three years. Companies must also hold shareholder votes on the frequency of say on pay with the option of one, two, or three years, or to abstain. Frequency votes are required to be held every three years. A clawback policy allows the company to recover compensation if a later review indicates that payments were not calculated accurately or performance goals were not met. The Dodd-Frank Act requires companies to develop clawback policies to recover compensation later deemed excessive. The clawback is a procedure included in an executive's employment contract that allows the company to recover payments made through performance-based incentives under certain circumstances. It requires executives to return incentive pay if the results on which it was granted are later adjusted downward for any reason.