As discussed here and here, on October 26, 2022, the Securities and Exchange Commission (SEC) adopted final rules to implement Section 10D of the Securities Exchange Act. The final rules direct the New York Stock Exchange (NYSE) and Nasdaq to adopt listing standards requiring each listed issuer to implement a clawback policy. The clawback policy must mandate the recovery of incentive compensation that was awarded erroneously to executive officers, based on misstated financials.
Recently, the SEC notified NYSE and Nasdaq that it intends to approve, disapprove, or institute proceedings related to the exchanges’ proposed clawback listing standards by Sunday, June 11. The current expectation is that this approval will occur on the last business day before the deadline, Friday June 9. Once the SEC approves the listing standards, public companies will have 60 days to adopt policies that comply with the clawback rules or else they will be subject to delisting.
To learn more about the new clawback requirements, we invite you to watch a recording of our May 30 CLE on “Clawback Policies: What to Do Now,” available here.