On July 1, 2015, following a 3-2 vote, the U.S. Securities and
Exchange Commission (SEC) announced proposed rules that would
implement the incentive-based compensation recovery (clawback)
provisions of the Dodd-Frank
Wall Street Reform and Consumer Protection Act. With
this announcement, the SEC has completed its task of producing
proposals on all executive compensation rules required by
Dodd-Frank.
The proposals would significantly expand the range of situations
in which such clawbacks would be required. Under existing rules,
clawbacks are triggered only in a narrow set of circumstances
involving misconduct that results in the restatement of a
company's financial statements. Under this proposal, clawbacks
would apply to all manner of accounting restatements due to
material non-compliance of the company, including non-compliance
that is the result of erroneous data.
