The Advisors' Blog

We’re continuing to post memos about the final Dodd-Frank clawback rules in our “Clawbacks” Practice Area. Here’s an excerpt from Farient Advisors’ analysis:

Companies that have existing elements that go above and beyond the SEC rules will likely maintain those. Shareholders will not want to see existing policies weakened to meet the minimums of the SEC rules. Additionally, institutional investors and proxy advisors increasingly expect to see “enhanced clawbacks” that extend beyond the rule; those expectations are unlikely to go away.

Since the 2015 SEC proposal, many companies have adopted clawback policies reflective of the original proposed SEC rules—for these companies, adhering to the rule will be a simpler matter of reviewing existing clauses and making minor modifications to reflect the final requirements. For instance, many companies that had maintained wide board discretion to determine whether and how to proceed with a clawback when a restatement occurred will need to eliminate board discretion except for narrow cases defined by the rules.

Check out the full memo for a chart that compares common practices for voluntary clawbacks to the final rule. In addition, join us next Thursday, December 15th at 2pm Eastern for our webcast, “SEC Clawback Rules: What To Do Now” – to hear practical guidance from Cooley’s Ariane Andrade, Hunton Andrews Kurth’s Tony Eppert, Orrick’s JT Ho, Pay Governance’s Mike Kesner, and Kirkland’s Abigail Lane about what you need to do in light of the final rules and the current enforcement environment.

– Liz Dunshee