Last Wednesday, the Securities and Exchange Commission (SEC)
proposed new Rule 10D-1 to require public companies to adopt and
enforce clawback policies to recoup incentive-based compensation
paid to current and former executive officers during the three
years preceding the date the issuer is required to restate its
financials due to a material noncompliance with financial reporting
requirements. Rule 10D-1 was adopted pursuant to Section 954
of the Dodd-Frank Wall Street Reform and Consumer Protection
Act. The NYSE and NASDAQ will oversee compliance, with any
company violating the rule subject to delistment. Rule 10D-1,
along with corresponding amendments to other SEC regulations, is
currently subject to a 60-day comment period. Once finalized,
the NYSE and NASDAQ must propose corresponding listing rules within
90 days, with such rules becoming effective within one year of
publication. Once the exchange rules are in place, issuers
will have 60 days to comply.
