DIRECTOR COMPENSATION IN THE ELECTRIC INDUSTRY AFTER THE DODD-FRANK ACT

Wikil Kwak
Xiaoyan Cheng
Kevin Kwak
University of Nebraska at Omaha

ABSTRACT

After the enactment of the Dodd-Frank Act in 2010, the quality of director monitoring
activities was believed to have increased. The core idea of the Sarbanes-Oxley Act new
regulations was to put more pressure on boards of directors to ensure their actions were in line
with shareholders’ needs. The most important incentive in this regard is compensation. This study
investigates if, after the Dodd-Frank Act, director compensation in the electric industry is related
to stock ownership by directors, firm size, firm performance, resource richness, firm investment
opportunity, and the number of board meetings. The results suggest that larger firms and firms
with bigger boards tend to compensate their directors to a greater extent in terms of cash, equity,
and total reward.

Keywords: Dodd-Frank Act in 2010, compensation, electric industry