SEC Adopts Rules On Clawback Of Executive Compensation

On October 26, 2022, the Securities and Exchange Commission (the "SEC"), implementing a requirement of the Dodd-Frank Act, adopted final rules on the recovery of erroneously awarded incentive-based executive compensation – that is, incentive-based compensation awarded based on a misstated financial performance measure (including stock price and total shareholder return).

The rules primarily require:

• national securities exchanges to establish listing standards that would require listed issuers to adopt and comply with a policy for the recovery of such erroneously awarded compensation (commonly known as a "clawback policy"); and
• listed issuers to disclose information about such policy and their compliance.