The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

October 24, 2023

Dodd-Frank Clawback Policies: For Initial Listings, the Time is Now

Now that the effective date of October 2nd has passed for the listing standards that implement Exchange Act Rule 10D-1, listed companies that have not already adopted a Dodd-Frank clawback policy have only a few weeks to do so before the compliance deadline of December 1st. But as suggested by the NYSE letter that we blogged about last month, companies applying for initial listing may have less leeway. In our “Q&A Forum” (#1487), a member recently asked about this:

In the NYSE issuer notification that went out a few weeks ago re clawbacks, it provided that “In addition, issuers submitting initial applications for securities to be listed on or after October 2, 2023 will be required to confirm the adoption of a compensation recovery policy as part of its listing application in Listing Manager.” So far, we have not seen an earlier deadline than December 1, 2023 being applied to Nasdaq initial listing applications. Is anyone aware of Nasdaq’s position?

Here’s what John said:

I have not seen any notice from Nasdaq, but the form of Corporate Governance Certification that’s required to be submitted for a new listing application that appears on Nasdaq’s website does include a new Section 5C, which requires a company to certify that it has adopted a clawback policy conforming to Rule 5608. That suggests to me that Nasdaq is requiring companies that are applying for listing after the October 2, 2023, effective date of the rule to have a policy in place.

As Meredith noted back in June, both NYSE 303A.14 and Nasdaq Rule 5608 are subject to cure periods for non-compliance. The NYSE covers that in 302.01F, and for Nasdaq, check out the 5800 series, particularly Rule 5810.

We are continuing to post memos, sample policies, and other practical resources in our “Clawbacks” Practice Area – I have also been finding the May-June issue of The Corporate Executive newsletter extremely helpful as I put the finishing touches on policies and help clients understand the ins & outs.

Since this is such a hot topic and we’re getting in to the 11th hour, make sure to also mark your calendars for the webcast that we’ve just scheduled for Thursday, November 16th at 2pm Eastern – “More on Clawbacks: Action Items and Implementation Considerations.” This is a follow-up to the excellent conversation that occurred at our “20th Annual Executive Compensation Conference,” because it was clear from that session that there are many questions bubbling up about these policies and how they’ll be implemented. If you missed the essential conversation at the Conference, you can still get access to the video archives & transcripts by emailing or calling 800-737-1271.

Liz Dunshee