Executive Compensation and the New SEC Dodd-Frank Clawback Rules: Key Considerations

Description

On Oct. 26, 2022, the SEC adopted its long-awaited final rules on compensation clawbacks. Under these rules, national securities exchanges must adopt formal listing standards that will require publicly listed companies to establish compensation clawback policies that meet the standards prescribed in the new clawback rules. At the time of this webinar, the exchanges are expected to have released their proposed listing standards.

Under the new SEC clawback rules, companies will be required to recover incentive-based compensation received by any current or former executive officer if such compensation was based on erroneously reported financial information. Furthermore, any publicly-traded company that does not adopt and enforce a clawback policy that complies with the applicable exchange’s listing standard and in accordance with SEC rules risks being delisted from the exchange.

Executive compensation, securities and corporate governance counsel must have a thorough understanding of what constitutes an "accounting restatement," who is an "executive officer," what types of compensation should be treated as "incentive-based compensation," and the three-year lookback period which must be considered in connection with any clawback. With limited exclusions under the new SEC clawback rules, it is imperative that companies implement new or modify current policies in light of the new clawback rules.

Listen as our authoritative panel discusses the key requirements under the final clawback rules, their impact on incentive-based compensation, reporting and disclosure requirements, exclusions, and next steps for companies subject to the new clawback rules.