{"id":2413,"date":"2023-02-09T14:35:20","date_gmt":"2023-02-09T19:35:20","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=2413"},"modified":"2023-02-16T16:26:25","modified_gmt":"2023-02-16T21:26:25","slug":"the-secs-recovery-of-erroneously-awarded-compensation-a-k-a-clawback-rules-a-policy-template-and-timing-and-implementation-details","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/the-secs-recovery-of-erroneously-awarded-compensation-a-k-a-clawback-rules-a-policy-template-and-timing-and-implementation-details\/","title":{"rendered":"<strong>The SEC\u2019s\u00a0\u00a0\u201cRecovery of Erroneously Awarded Compensation\u201d a\/k\/a \u201cClawback\u201d Rules \u2013 A Policy Template and Timing and Implementation Details<\/strong>"},"content":{"rendered":"<p style=\"font-weight: 400;\">The SEC\u2019s October 2022 <a href=\"https:\/\/www.sec.gov\/rules\/final\/2022\/33-11126.pdf\">\u201cListing Standards for Recovery of Erroneously Awarded Compensation\u201d Final Rule<\/a>will require companies whose securities are listed on national securities exchanges to develop and adopt \u00a0policies for the recovery or \u201cclawback\u201d of incentive compensation that has been \u201cerroneously awarded\u201d when a company restates its financial statements. Because the SEC generally cannot directly regulate corporate governance matters, the new requirements are being implemented through listing standards that national securities exchanges will soon be required to adopt.<\/p>\n<p style=\"font-weight: 400;\">Based on the Final Rule, clawback policies will be required to:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Apply to all current and former executive officers,<\/li>\n<li>Require clawback of incentive compensation that was based on a financial measure that is changed when a company restates its financial statements, and<\/li>\n<li>Apply to the three years before the date on which the company restates its financial statements.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"font-weight: 400;\">Gary Brown, Partner at Nelson Mullins Riley &amp; Scarborough LLP, and SEC Institute workshop leader and PLI author, has drafted an \u201cIncentive Compensation Recoupment Policy\u201d template to help companies get a head start in this process.\u00a0 You can find the <a href=\"https:\/\/seciblog.pli.edu\/wp-content\/uploads\/Template-Clawback-Policy-4883-4507-4245-1-1.docx\">policy template here<\/a>.<\/p>\n<p style=\"font-weight: 400;\">If you would like to learn more about the provisions of and timing for the new requirements, some highlights are provided below.\u00a0 You can also learn more in this <a href=\"https:\/\/www.sec.gov\/files\/33-11126-fact-sheet.pdf\">Fact Sheet<\/a> and the <a href=\"https:\/\/www.sec.gov\/rules\/final\/2022\/33-11126.pdf\">Final Rule<\/a>.<\/p>\n<p style=\"font-weight: 400;\">The Final Rule became effective on January 27, 2023.\u00a0 Based on this effective date, the timing requirements of the Final Rule are:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>February 26, 2023 \u2013 last day by which national securities exchanges are to file proposed clawback listing standards;<\/li>\n<li>November 28, 2023 \u2013 last day by which clawback listing standards must become effective; and<\/li>\n<li>January 27, 2024 \u2013 last day by which listed companies must adopt and comply with an appropriate clawback policy.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"font-weight: 400;\">Of course, if the exchanges enact listing standards earlier than the deadlines outlined above, companies will have to adopt policies before January 27, 2024.<\/p>\n<p style=\"font-weight: 400;\">Three important notes:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>These new rules apply to <u>all<\/u> <strong>listed<\/strong> companies \u2013 including SRCs, emerging growth companies and foreign private issuers,<\/li>\n<li>The clawback provisions will apply to both \u201cBig R\u201d and \u201clittle r\u201d restatements, and<\/li>\n<li>The requirement to pursue clawback recoveries will be subject to very limited \u201cimpracticability\u201d exceptions.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"font-weight: 400;\">In our next post we will review the related new disclosure requirements and form changes.<\/p>\n<p style=\"font-weight: 400;\">As always, your thoughts and comments are welcome!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The SEC\u2019s October 2022 \u201cListing Standards for Recovery of Erroneously Awarded Compensation\u201d Final Rulewill require companies whose securities are listed on national securities exchanges to develop and adopt \u00a0policies for the recovery or \u201cclawback\u201d of incentive compensation that has been \u201cerroneously awarded\u201d when a company restates its financial statements. Because the SEC generally cannot directly &hellip; <a href=\"https:\/\/seciblog.pli.edu\/index.php\/the-secs-recovery-of-erroneously-awarded-compensation-a-k-a-clawback-rules-a-policy-template-and-timing-and-implementation-details\/\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\"><strong>The SEC\u2019s\u00a0\u00a0\u201cRecovery of Erroneously Awarded Compensation\u201d a\/k\/a \u201cClawback\u201d Rules \u2013 A Policy Template and Timing and Implementation Details<\/strong><\/span> <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false,"jetpack_post_was_ever_published":false},"categories":[143,242,1],"tags":[],"coauthors":[154],"class_list":["post-2413","post","type-post","status-publish","format-standard","hentry","category-hot-topic","category-reporting","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2413","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/comments?post=2413"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2413\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=2413"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=2413"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=2413"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=2413"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}