Survey Shows Corporate Board Members Hate New Whistleblower Bounty
Only 1% of board members believe the whistleblower bounty program included in the Dodd-Frank financial regulation law will improve governance, a new survey found.
More than 400 board members at the Corporate Board Member and NYSE Euronext’s Annual Boardroom Summit took a survey about what was best and worst about the Dodd-Frank law, and the whistleblower program drew the harshest reaction. The new program, which Corruption Currents recently reported was netting at least one FCPA tip a day, provides up to 30% of the recovered assets to a person who provides information to regulators that results in a penalty of more than $1 million.
The survey asked whether mandatory ’say on pay,’ proxy access, compensation clawback, whistleblowers or “none of the above” was either the best or worst of Dodd-Frank. Almost three-fifths–59%–chose “none of the above,” as the provision most likely to improve governance; no other choice even reached 20%. Two-thirds, or 67%, of respondents said the whistleblower section was the most detrimental provision of the entire financial regulation law.
Huge windfalls from big penalties could result in false positives as employees may overplay small issues, said Robert Daines, a professor at Stanford Law School who co-directs the Arthur and Toni Rembe Rock Center for Corporate Governance. He said the Corporate Board Member survey reflected that boards don’t like the large costs and reputational damage that come from sometimes difficult and irascible employees.