{"id":78333,"date":"2021-03-25T16:27:19","date_gmt":"2021-03-25T20:27:19","guid":{"rendered":"https:\/\/www.bu.edu\/law\/?post_type=bu-article&#038;p=78333"},"modified":"2021-03-25T16:27:45","modified_gmt":"2021-03-25T20:27:45","slug":"david-walker-c-suite-scholarship","status":"publish","type":"bu-article","link":"https:\/\/www.bu.edu\/law\/record\/articles\/2021\/david-walker-c-suite-scholarship\/","title":{"rendered":"C-Suite Scholarship"},"content":{"rendered":"\t<div class=\"wp-block-editorial-leadin record-block-editorial-leadin is-style-emphasis-on-text has-media has-box has-media-focus-center-middle has-primary-theme\">\n\t\t<div class=\"container-lockup\">\n\n\t\t\t<div class=\"wp-block-leadin-media\">\n\t\t\t\t\n\t\t\t\t<img width=\"1500\" height=\"1000\" src=\"\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash.jpg\" class=\"\" alt=\"A black and white photo of the street signs at the intersection of Wall St. and Broadway in New York City\" loading=\"lazy\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash.jpg 1500w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-636x424.jpg 636w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-1024x683.jpg 1024w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-768x512.jpg 768w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-1200x800.jpg 1200w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-992x661.jpg 992w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-500x333.jpg 500w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-1000x667.jpg 1000w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-900x600.jpg 900w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-450x300.jpg 450w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/wall-street-sign-chris-li-unsplash-600x400.jpg 600w\" sizes=\"(max-width: 1500px) 100vw, 1500px\" \/>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\n\n\t\t\t\n\t\t\t\t<div class=\"container-words-outer\">\n\n\t\t\t\t\t\t\t\t\t\t\t<p class=\"wp-block-editorial-leadin-caption wp-prepress-component-caption\">Photo by Christian Wiediger via Unsplash<\/p>\n\t\t\t\t\t\n\t\t\t\t\t<div class=\"container-words-inner\">\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"wp-prepress-tag\">Tax Law<\/span>\n\t\t\t\t\t\t\t\t<h1 class=\"head\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<br>C-Suite Scholarship\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/h1>\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t<h4 class=\"deck\">Professor David Walker\u2019s research and writing focuses on executive pay and taxation, including a recent piece on compensation clawbacks.<\/h4>\n\t\t\t\t\t\t\n\t\t\t\t\t<\/div>\n\n\t\t\t\t<\/div>\n\n\t\t\t\n\t\t<\/div>\n\n\t\t\n\t<\/div>\n\n\t\n<div class=\"wp-prepress-component-metabar js-block-editorial-metabar record-prepress-layout-metabar\">\n\t<div class=\"wp-prepress-component-metabar-wrapper\">\n\t\t\t\t\t<div class=\"wp-prepress-component-metabar-date\">March 25, 2021<\/div>\n\t\t\n\t\t\t\t<div class=\"wp-prepress-component-metabar-credits\">\n\t\t\t\t\t\t\t\t<ul data-credit-type=\"By\">\n\t\t\t\t\t\t<li><a href=\"https:\/\/www.bu.edu\/law\/record\/authors\/rebecca-beyer\/\">Rebecca Beyer<\/a><\/li>\n\t\t\t\t\t<\/ul>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"wp-prepress-component-metabar-share js-bu-prepress-share-tools\">\n\t\t\t<span class=\"icon-twitter\"><span>Twitter<\/span><\/span>\n\t\t\t<span class=\"icon-facebook\"><span>Facebook<\/span><\/span>\n\t\t\t<span class=\"icon-action\"><\/span>\n\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\t\n\n\n<div class=\"wp-block-editorial-introparagraph record-block-editorial-introparagraph is-style-dropcap-default has-dropcap has-dropcap-color-primary\"><div class=\"wp-block-editorial-introparagraph-content\"><p>After the Great Recession of 2008, US lawmakers passed legislation to ensure that companies and shareholders could claw back previously paid compensation from corporate executives who commit wrongdoing or because of accounting restatements.&nbsp; &nbsp;<\/p><\/div><\/div>\n\n\n\n<p>But, despite the high-profile nature of executive pay clawbacks and the vast sums of money at stake\u2014McDonald\u2019s is <a href=\"https:\/\/news.bloomberglaw.com\/antitrust\/mcdonalds-advances-effort-to-claw-back-millions-from-ex-ceo\" target=\"_blank\" rel=\"noreferrer noopener\">currently seeking $37 million in severance it paid to a former chief executive who had affairs with subordinates<\/a>\u2014no one seems to have considered how taxation related to clawbacks should be handled: Should executives whose pay is rescinded be able to, in turn, recoup the taxes they previously paid on that compensation?<\/p>\n\n\n\n<p>That\u2019s the question Boston University School of Law Professor <a href=\"https:\/\/www.bu.edu\/law\/profile\/david-i-walker\/\" target=\"_blank\" rel=\"noreferrer noopener\">David I. Walker<\/a> set out to explore in \u201c<a rel=\"noreferrer noopener\" href=\"https:\/\/scholarship.law.bu.edu\/faculty_scholarship\/1051\/\" target=\"_blank\">Executive Pay Clawbacks and Their Taxation<\/a>,\u201d a forthcoming <em>Florida Tax Review<\/em> article.<\/p>\n\n\n\n<div class=\"wp-block-image alignfarright\"><figure class=\"alignright size-full\"><img loading=\"lazy\" width=\"500\" height=\"600\" src=\"\/law\/files\/2021\/03\/david-walker.jpg\" alt=\"Professor David Walker\" class=\"wp-image-78403\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2021\/03\/david-walker.jpg 500w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/david-walker-287x344.jpg 287w, https:\/\/www.bu.edu\/law\/files\/2021\/03\/david-walker-441x529.jpg 441w\" sizes=\"(max-width: 500px) 100vw, 500px\" \/><figcaption>BU Law Professor David Walker<\/figcaption><\/figure><\/div>\n\n\n\n<p>For Walker, the intersection of executive pay and tax is fascinating and fruitful, providing never-ending fodder for scholarship with real-world implications. Before joining the faculty, Walker worked in the tax department at Ropes &amp; Gray, where he handled everything from mergers and acquisitions to charitable giving and specialized in the taxation of executive compensation plans. In addition to clawbacks, his recent scholarship includes <a rel=\"noreferrer noopener\" href=\"https:\/\/scholarship.law.bu.edu\/faculty_scholarship\/806\/\" target=\"_blank\">a <em>Washington &amp; Lee Law Review<\/em> article<\/a> examining the rationale behind deferred compensation plans and <a rel=\"noreferrer noopener\" href=\"https:\/\/scholarship.law.bu.edu\/faculty_scholarship\/592\/\" target=\"_blank\">a <em>Boston University Law Review<\/em> piece<\/a> debunking the theory that the increase in large, institutional investors owning broad swaths of the economy\u2014including shares in competing companies\u2014has led to less competitive executive pay practices.<\/p>\n\n\n\n<p>For the clawback piece, Walker\u2019s goal was simple: \u201cI wanted to understand how the tax rules would affect\u201d the practice by which companies recover executive compensation, he says.<\/p>\n\n\n\n<p>He also wanted to get ahead of potential regulations in the area. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the US Securities and Exchange Commission (SEC) is supposed to finalize a rule requiring compensation recovery policies at publicly traded companies. So far, <a href=\"https:\/\/news.bloomberglaw.com\/securities-law\/four-unfinished-dodd-frank-rules-to-watch-at-sec-in-2020\" target=\"_blank\" rel=\"noreferrer noopener\">the agency hasn\u2019t acted<\/a>, but <a href=\"https:\/\/www.foley.com\/en\/insights\/publications\/2020\/10\/compensation-clawbacks-trends-and-lessons-learned\" target=\"_blank\" rel=\"noreferrer noopener\">by some accounts<\/a> over 90 percent of the largest publicly traded companies have voluntarily adopted clawback policies.<\/p>\n\n\n\n<p>It turns out\u2014perhaps not surprisingly\u2014that the relationship between taxes and clawbacks is, as the <em>New York Times<\/em> DealBook <a href=\"https:\/\/www.nytimes.com\/2021\/02\/26\/business\/dealbook\/bond-market-fed.html\" target=\"_blank\" rel=\"noreferrer noopener\">column noted when it succinctly summed up Walker\u2019s article<\/a>, \u201creally complicated.\u201d<\/p>\n\n\n\n<p>Basically, Walker says, the situation depends. \u201cOne executive might have no tax penalty because they had deferred compensation, and another may end up with a big tax penalty.\u201d<\/p>\n\n\n\n<p>But the issue is worth exploring. As Walker explains in his paper, up to 50 percent of executive pay goes to the government in taxes.<\/p>\n\n\n\n<p>\u201cThat\u2019s a huge portion,\u201d he says. \u201cI don\u2019t think people realize how much is at stake in the tax treatment of clawbacks.\u201d<\/p>\n\n\n\n<div class=\"wp-block-bu-pullquote record-block-bu-pullquote alignwide is-style-modern has-image-focus-center-middle has-primary-theme\"><div class=\"wp-block-bu-pullquote-inner\"><blockquote><div class=\"container-lockup\"><div class=\"container-icon-outer\"><div class=\"container-icon-inner\"><\/div><\/div><div class=\"container-text\"><hr\/><div class=\"quote-sizing\">I\u2019m not convinced that we aren\u2019t still overpaying executives\u2014my guess is they\u2019re getting more than they would if the market worked perfectly. But the ways we\u2019re paying them have gotten better.<\/div><footer class=\"caption\">BU Law Professor David Walker<\/footer><hr\/><\/div><\/div><\/blockquote><\/div><\/div>\n\n\n\n<p>Walker argues that executives should be able to recover the taxes they paid on compensation later clawed back. That idea aligns with the general principle that tax rules should be neutral; people should neither be penalized nor given an advantage for following them (exceptions are so-called Pigovian taxes\u2014such as taxes on cigarettes or sugary sodas\u2014that seek to deter some behavior detrimental to society as a whole).<\/p>\n\n\n\n<p>\u201cI\u2019m in favor of rigorous clawback rules,\u201d Walker says. \u201cIt\u2019s never made sense to me that executives could hold onto money that wasn\u2019t earned. But, if we are going to have government-enforced clawbacks, I want them to be implemented honestly and accurately.\u201d<\/p>\n\n\n\n<p>Walker says allowing recovery of taxes also increases the likelihood that executives will comply with clawback proceedings.<\/p>\n\n\n\n<p>\u201cIf tax treatment is neutral, if it\u2019s viewed as being fair, you get better compliance,\u201d he says.<\/p>\n\n\n\n<p>Walker says existing tax laws should be interpreted liberally to allow executives to recover previously paid taxes because the likelihood of passing new laws to benefit highly paid executives\u2014especially those accused of wrongdoing\u2014is probably politically unpalatable (as Walker writes in the paper, the idea has \u201cparticularly poor optics\u201d even though it \u201csimply restores the status quo ante.\u201d)<\/p>\n\n\n\n<p>After more than two decades exploring corporate governance through the lens of executive pay and taxation, Walker says \u201cpay practices are getting better,\u201d including through the use of relative performance evaluation that takes into an account how a company is doing compared to its peers, improved board oversight, and tax and accounting rules, which Walker focuses on in his own scholarship.<\/p>\n\n\n\n<p class=\"has-text-color has-very-dark-gray-color is-style-end-of-article\">\u201cI\u2019m not convinced that we aren\u2019t still overpaying executives\u2014my guess is they\u2019re getting more than they would if the market worked perfectly,\u201d he says. \u201cBut the ways we\u2019re paying them have gotten better.\u201d<\/p>\n\n\n\t<aside class=\"wp-block-editorial-relatedstories is-style-card has-three record-block-editorial-relatedstories\">\n\t\t<h3 class=\"wp-block-editorial-relatedstories-title\">Related<\/h3>\n\t\t<ul class=\"wp-block-editorial-relatedstories-list\">\n\t\t\t\t\t\t\t<li class=\"wp-block-editorial-relatedstories-list-item\">\n\t\t\t\t\t<article class=\"wp-block-editorial-relatedstories-article\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<figure class=\"wp-block-editorial-relatedstories-article-image\">\n\t\t\t\t\t\t\t\t\t<img width=\"700\" height=\"500\" src=\"\/law\/files\/2020\/01\/Frank-Morrissey.jpg\" class=\"attachment-post-thumbnail size-post-thumbnail wp-post-image\" alt=\"Lecturer Francis C. Morrissey (\u201994)\" loading=\"lazy\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2020\/01\/Frank-Morrissey.jpg 700w, https:\/\/www.bu.edu\/law\/files\/2020\/01\/Frank-Morrissey-636x454.jpg 636w, https:\/\/www.bu.edu\/law\/files\/2020\/01\/Frank-Morrissey-482x344.jpg 482w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/>\t\t\t\t\t\t\t\t<\/figure>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"wp-block-editorial-relatedstories-article-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"wp-block-editorial-relatedstories-article-category\"><span>Financial Law<\/span><\/p>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h4 class=\"wp-block-editorial-relatedstories-article-title\"><a href=\"https:\/\/www.bu.edu\/law\/record\/articles\/2020\/lecturer-helps-client-discharge-student-loan-debt-sets-precedent-in-mass-bankruptcy-law\/\" class=\"wp-block-editorial-relatedstories-article-title-link\">Lecturer Helps Client Discharge Student Loan Debt, Sets Precedent in Mass. Bankruptcy Law<\/a><\/h4>\n\t\t\t\t\t\t\t<p class=\"wp-block-editorial-relatedstories-article-date\">January 24, 2020<\/p>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t\t\t<\/article>\n\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"wp-block-editorial-relatedstories-list-item\">\n\t\t\t\t\t<article class=\"wp-block-editorial-relatedstories-article\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<figure class=\"wp-block-editorial-relatedstories-article-image\">\n\t\t\t\t\t\t\t\t\t<img width=\"700\" height=\"467\" src=\"\/law\/files\/2019\/10\/glass-building-and-sky.jpg\" class=\"attachment-post-thumbnail size-post-thumbnail wp-post-image\" alt=\"Low-angle photo of curtain glass wall building, photo by Christian Wiediger\" loading=\"lazy\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2019\/10\/glass-building-and-sky.jpg 700w, https:\/\/www.bu.edu\/law\/files\/2019\/10\/glass-building-and-sky-636x424.jpg 636w, https:\/\/www.bu.edu\/law\/files\/2019\/10\/glass-building-and-sky-500x334.jpg 500w, https:\/\/www.bu.edu\/law\/files\/2019\/10\/glass-building-and-sky-450x300.jpg 450w, https:\/\/www.bu.edu\/law\/files\/2019\/10\/glass-building-and-sky-600x400.jpg 600w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/>\t\t\t\t\t\t\t\t<\/figure>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"wp-block-editorial-relatedstories-article-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"wp-block-editorial-relatedstories-article-category\"><span>Financial Law<\/span><\/p>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h4 class=\"wp-block-editorial-relatedstories-article-title\"><a href=\"https:\/\/www.bu.edu\/law\/record\/articles\/2019\/should-index-funds-step-up-their-corporate-governance-game\/\" class=\"wp-block-editorial-relatedstories-article-title-link\">Should Index Funds Step Up Their Corporate Governance Game?<\/a><\/h4>\n\t\t\t\t\t\t\t<p class=\"wp-block-editorial-relatedstories-article-date\">October 8, 2019<\/p>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t\t\t<\/article>\n\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"wp-block-editorial-relatedstories-list-item\">\n\t\t\t\t\t<article class=\"wp-block-editorial-relatedstories-article\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<figure class=\"wp-block-editorial-relatedstories-article-image\">\n\t\t\t\t\t\t\t\t\t<img width=\"500\" height=\"500\" src=\"\/law\/files\/2020\/07\/madison-condon.jpg\" class=\"attachment-post-thumbnail size-post-thumbnail wp-post-image\" alt=\"Associate Professor Madison Condon\" loading=\"lazy\" srcset=\"https:\/\/www.bu.edu\/law\/files\/2020\/07\/madison-condon.jpg 500w, https:\/\/www.bu.edu\/law\/files\/2020\/07\/madison-condon-150x150.jpg 150w, https:\/\/www.bu.edu\/law\/files\/2020\/07\/madison-condon-344x344.jpg 344w, https:\/\/www.bu.edu\/law\/files\/2020\/07\/madison-condon-300x300.jpg 300w, https:\/\/www.bu.edu\/law\/files\/2020\/07\/madison-condon-100x100.jpg 100w\" sizes=\"(max-width: 500px) 100vw, 500px\" \/>\t\t\t\t\t\t\t\t<\/figure>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"wp-block-editorial-relatedstories-article-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"wp-block-editorial-relatedstories-article-category\"><span>BU Law News<\/span><\/p>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<h4 class=\"wp-block-editorial-relatedstories-article-title\"><a href=\"https:\/\/www.bu.edu\/law\/record\/articles\/2020\/madison-condon-joins-bu-law\/\" class=\"wp-block-editorial-relatedstories-article-title-link\">Madison Condon Joins BU Law<\/a><\/h4>\n\t\t\t\t\t\t\t<p class=\"wp-block-editorial-relatedstories-article-date\">August 4, 2020<\/p>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t\t\t<\/article>\n\t\t\t\t<\/li>\n\t\t\t\t\t\t<\/ul>\n\t<\/aside>\n\t","protected":false},"excerpt":{"rendered":"<p>After the Great Recession of 2008, US lawmakers passed legislation to ensure that companies and shareholders could claw back previously paid compensation from corporate executives who commit wrongdoing or because of accounting restatements.<\/p>\n","protected":false},"author":18313,"featured_media":78406,"comment_status":"closed","ping_status":"closed","template":"","meta":{"bu_prepress_billboard":"","_bu_prepress_primary_term":"Tax 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