Leadership
Understanding the SEC's "Final Rule"
The Securities and Exchange Commission's (SEC) long-awaited “Final Rule” on compensation clawback policies is now in effect. We reflect on its key takeaways.
On October 26, 2022, the Securities and Exchange Commission (SEC) issued its long-awaited “Final Rule” on compensation clawback policies. It followed on the heels of the Pay-Versus-Performance (PVP) rule, which we reported on back in summer of last year.
Fast forward to today, and the “race” is on for almost all U.S. publicly traded companies to begin amending their clawback policies. Under the rule, issuers must comply with the new listing standards implemented by their applicable listing exchange, within 60 days of them becoming effective.
The process of drafting and administering a compliant clawback policy will likely be seen and felt as a material burden for U.S. boards, especially as their shareholders push for more reliance on performance-based compensation.
In our latest briefing, we review and provide commentary on the following:
- Who the Final Rule applies to
- What triggers the clawback policy
- The official clawback period and process
- Clawback disclosures
Our experts: Todd McGovern, Senior Client Partner and Harrison Taylor, Principal, Los Angeles.
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