The New York Stock Exchange (NYSE) and Nasdaq amended their previously proposed clawback listing standards on June 5 and June 6 respectively to give listed companies until December 1 to adopt required clawback policies. On June 9, the Securities and Exchange Commission (SEC) approved the NYSE and Nasdaq– amended clawback listing standards.

The clawback listing standards will become effective on October 2. Companies must adopt clawback policies that comply with specified requirements no later than 60 days following that date, or December 1, or be subject to delisting. The clawback policies must apply to compensation “received” (within the meaning of the rules) on or after October 2. The December 1 deadline is a welcome reprieve for companies that, up until last week, expected the implementation deadline to occur in early August (see previous post discussing background and expected timing here).

Clawback Policy Requirements in 50 Words or Less

Policies must:

  • Cover Section 16 officers.
  • Provide for recoupment of incentive-based compensation erroneously “received” in the three completed fiscal years prior to a required accounting restatement.
  • Apply on a no-fault basis (whether or not there was executive misconduct).
  • Be publicly filed as an exhibit to the company’s annual report.

Clawback Policy Requirements in 50 Words or More

For more information, we invite you to watch a recording of our May 30 CLE on “Clawback Policies: What to Do Now,” available here. You can also view our prior alerts on the topic here and here.