The 2021 executive compensation season will be more challenging
than usual for most companies due to the financial and economic
consequences of the COVID-19 pandemic. To meet these challenges,
companies should be aware of several key issues relating to
executive compensation as they design their 2021 executive
compensation programs.
1. Revisiting Clawbacks and “Cause”
Definitions
Expanding clawbacks and “cause” definitions to cover
misconduct beyond financial matters may help ensure that a company
will be able to recoup executive compensation in the event of
reputational harm to the company or adverse publicity. Recently,
the U.S. Securities and Exchange Commission (SEC)
announced that it will issue revised rules to implement
the clawback provisions of the Dodd-Frank Wall Street Reform and
Consumer Protection Act in 2021. The
existing proposed SEC clawback rules generally require a
public company to adopt a clawback policy to recover excess
incentive
