SEC Proposes Dodd-Frank Act Clawback Rules

On July 1, 2015, the Securities and Exchange Commission issued proposed rules to implement the mandatory recovery of erroneously awarded compensation (or clawback) provisions of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Public companies and their advisers have been waiting since 2010 for answers to key questions about how the Dodd-Frank Act clawback requirements will operate. The SEC's initial answers are finally here, but they're not exactly in line with what much of corporate America thought would suffice as clawback arrangements. The proposed rules are convoluted in some cases. In addition, it will be costly and time-consuming for public companies and their advisers to implement a conforming policy if the proposed rules are adopted in anything like their current form.