Clawing for blood

SEC clash over bigwig pay rule

Call it the long arm of the “claw.”

Wall Street’s top cops proposed a controversial new rule on Wednesday that would require companies to claw back certain compensation paid to executives caught juicing the books.

The proposal, from Securities and Exchange Commission Chair Mary Jo White, is aimed at stopping executives from keeping incentivebased compensation if they fudged the numbers to achieve the results that triggered the incentives.

“The proposed rules would result in increased accountability and greater focus on the quality of financial reporting, which will benefit investors and the markets,” White said in a statement.

But the 198page proposal, required by the 2010 Dodd Frank financial reform laws, has sparked a deep division at the SEC, with two commissioners engaged in a war of words over how far the rule should go.

Michael Piwowar, a Republican appointed by President Obama, quoted Yankee Hall of Famer Yogi Berra in ripping White’s proposal.

“The future ain’t what it used to be,” Piwowar wrote in prepared remarks.

While a “properly de signed” rule could be good for investors, Piwowar said, this proposal falls short — and could hurt shareholders.

“Unfortunately, the broad approach of today’s proposal is likely to impose a substantial commitment of shareholder resources and, unintentionally, result in a further increase in executive compensation,” he said.

But Kara Stein, also an Obama SEC appointee who usually favors tougher bank regulation, said that clawbacks are nothing new in the wake of Enron, Lehman and WorldCom.

“‘Clawing back’ illgotten compensation is not a new concept,” she said.

“Some public company executives pocketed hefty sums, not for success, but for putting themselves before shareholders and before longterm company performance,” she added.