SEC Proposes Executive Compensation Claw-Back Rules

Summary

The US Securities and Exchange Commission has proposed rules that would require issuers listed on US stock exchanges to adopt and disclose a policy to recover, or "claw back", certain incentive-based compensation. Recovery would be required in the event of an accounting restatement to correct a material error. The SEC is soliciting comments on the proposed rules, and requests that comments be submitted on or before September 14, 2015.

Background

The SEC is mandated, pursuant to the Dodd-Frank Act, to adopt rules that would require companies listed in the United States to recover incentive compensation from current or former executives following a restatement of financials for material non-compliance. The proposed rules would direct US national securities exchanges and national securities associations to adopt listing standards to this end.