The Advisors' Blog

The SEC’s adoption of the Dodd-Frank clawback rules triggered a process that will ultimately result in the adoption of new clawback listing standards by the NYSE & Nasdaq. That process may take up to a year, but this Bryan Cave blog provides some key dates that companies should keep in mind as they work to implement clawback policies that comply with the listing standards ultimately adopted by the exchanges:

The new Clawback Rules apply broadly to most companies with securities listed on a national securities exchange, including smaller reporting companies, emerging growth companies, foreign private issuers, controlled companies and debt‑only issuers. Issuers should consider the below dates when considering modification of existing clawback policies to conform to the rules, or in adopting initial clawback policies.

– January 27, 2023 (i.e., 60 days following Federal Register publication): Effective date of SEC’s Clawback Rules.

– February 24, 2023 (i.e., the last business day before the 90th day post-Federal Register publication): Deadline for NYSE, Nasdaq and other national securities exchanges (the “Exchanges”) to file with the SEC proposed listing standards that will require their listed companies to develop and implement compensation recovery policies that comply with the Clawback Rules.

– November 28, 2023 (i.e., one year following the Federal Register publication): Latest date by which the listing standards of an Exchange must become effective. Any incentive-based compensation that is granted, earned, or vested wholly or in part on or after such effective date must be subject to a compliant clawback policy. Moreover, the disclosure requirements under the Clawback Rules must appear in all of a company’s proxy statements, information statements, and annual reports filed on or after the effective date.

– January 27, 2024 (i.e., 60 days following the latest date on which the Exchanges’ listing standards may become effective): Latest possible date for a listed company to adopt a compliant clawback policy if the listing standards of the applicable Exchange were to become effective on the latest possible date (i.e., November 28, 2023); note that the deadline could be significantly earlier depending on exactly when the applicable listing standards become effective.

The blog recommends that companies without clawback policies begin preparing policies that conform the requirements laid out in the SEC’s rules and that those with clawback policies review them with a view to identifying necessary changes. In addition, employment agreements and compensation arrangements should be evaluated in order to determine whether adjustments are necessary, and the impact of clawback rules on the structure of existing compensation programs should be assessed.

– John Jenkins