The Advisors' Blog

Liz recently blogged about the SEC reopening the clawback policy comment period (on Day 3 of our recent conferences no less!) — as a reminder, the 2015 SEC clawback proposal would direct the stock exchanges to require listed companies to implement clawback policies. This Keith Bishop blog raises an interesting issue: can these stock exchange listing rules preempt state and employment labor laws? He notes in his original post that:

California law, for example, may prohibit incentive compensation pursuant to Section 221 of the Labor Code (“It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.”).

We’ll need to see how this plays out in the courts. In the meantime, as companies review their clawback policies in anticipation of the new SEC rules, they should look to see whether there are any state law recoupment limitations that might make their policies moot. Given all of the different obstacles a company faces in defining and enforcing clawback policies, we may slowly see a rise in adoption of pay deferral policies.

Liz Gartland at Fenwick touched upon wage and hour law limitations and other clawback policy drafting tips during our Executive Compensation Conference too, and you can still access all of her great clawback policy talking points by accessing the video archive & transcript of that session. Register now for access if you missed the Conference – here’s an agenda of all the sessions you can learn from.

– Emily Sacks-Wilner