Proposed Clawback Rules Released

The SEC recently released proposed rules to adopt the incentive-based compensation clawback provisions under Section 954 of The Dodd-Frank Wall Street Reform and Consumer Protection Act, nearly five years after the Dodd-Frank Act became law.

Under the proposed rules, securities exchanges would have to adopt rules that require public companies to develop and implement clawback policies in order to be listed on such exchange. Such listing requirements would apply to all issuers with publicly traded securities, including foreign private issuers and issuers of listed debt or preferred stock, whose common stock is not otherwise listed (subject to very limited and narrow exceptions). The clawback policies must, at a minimum, require the recovery from any current or former executive officer of the issuer who received "incentive-based compensation" during the three-year period preceding the date on which the company is required to prepare a restatement of its accounting