Don’t Delay! Clawback Policies Required by December 1

Companies listed on the New York Stock Exchange (NYSE) and Nasdaq Stock Market (Nasdaq) have until December 1 to adopt compliant clawback policies for erroneously awarded rewards, now that the SEC has approved listing standards. The SEC adopted clawback rules last year instructing securities exchanges to propose the standards for listed companies to have clawback policies. Those listing standards have been approved, affected companies having a December 1, 2023, deadline to adopt compliant policies for incentive-based compensation. Failure will require the company to issue a press release with details regarding the noncompliance, including the reason for it and, if known, the anticipated date of cure.

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Related Content

• Clawback Policy Design and Tax Issues
  Reference this practice note, addressing clawbacks and forfeitures of incentive compensation. Clawback provisions require employees to pay back money to employers that they already received whereas forfeiture provisions provide that employees forfeit the right to receive money when specified conditions occur. They are a common feature in private and public company incentive compensation arrangements and often appear as clauses within an employment agreement or incentive compensation award or agreement or (for listed companies particularly) as a stand-alone policy.
• Clawbacks of Bonuses and Commissions: Wage and Hour Considerations
  Check-out this practice note discussing the wage and hour implications of clawback and forfeiture provisions and providing drafting considerations for incentive compensation agreements.

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