Some experts say that the Securities and Exchange Commission is overstepping its authority in demanding the return of an officer’s base salary as part of disgorgement.
Historically, disgorgement penalties were targeted at bonuses and other incentive-based compensation. But in recent years, the Commission has also sought to have officers cough up their base salary, or parts of it, as well.
For example, in the SEC’s enforcement action against Tyco International, the base salaries of former Chairman Dennis Kozlowski and ex-CFO Mark Swartz are within the Commission’s sites as part of its effort to recover “ill-gotten gains.” Efforts to get at base salaries, ...