The Advisors' Blog

Here are the results from our recent survey on clawback policies:

1. Did your company have a clawback policy in place prior to the final Dodd-Frank mandate?

– Yes, a standalone policy – 61%
– No standalone policy, but equity award and/or contractual provisions allow forfeitures and/or clawbacks – 26%
– No standalone policy or contractual provisions – 13%

2. If your company has a pre-Dodd Frank clawback policy and/or provisions, what do they cover?

– Restatements resulting from misconduct – 63%
– Misconduct (e.g., harassment) or gross negligence that may cause reputational harm – 34%
– Allows the board/compensation committee to determine triggers in their discretion – 21%
– Restatements regardless of misconduct – 18%
– A policy violation or breach of a noncompetition obligation or similar agreement – 17%
– Inadequate oversight of behavior by subordinates that may impact financial results or cause reputational harm – 9%
– Not applicable: We don’t currently have a clawback policy or provisions – 18%

3. When the stock exchange clawback listing rules are final, do you intend to adopt and/or maintain the clawback and forfeiture triggers that go beyond the proposed rules?

– No, we will just comply with the listing standards – 46%
– Yes – 43%
– We haven’t decided – 11%

4. When the stock exchange clawback listing rules are final, do you plan to have one policy or multiple?

– A standalone Dodd-Frank policy, plus maintain existing policies and/or provisions – 42%
– A single policy that will satisfy the listing exchange standards – 41%
– One combined policy that will cover restatements and other triggering events – 17%

5. How will you ensure you have the ability to enforce your clawback policy?

– We will have each executive sign a standalone document, such as an acknowledgment of the clawback policy or amendment to an existing agreement – 46%
– We will rely on provisions in equity award agreements and contracts – 39%
– We’ll cross that bridge when we come to it – 25%
– We will adopt a mandatory deferral program – 0%
– Something else – 5%

5. Do you intend to make any changes to your compensation program as a result of the new listing standards?

– No, we are not considering any changes to our compensation program – 86%
– Yes, we are considering shifting compensation more toward types not covered by the clawback rules (such as time vesting, non-financial/stock price measures or discretionary awards) – 5%
– Yes, we may move away from metrics that would complicate the recovery process, like stock price or TSR – 2%
– Yes, we are considering other changes – 8%

Reminder to tune into our webcast “More on Clawbacks: Action Items and Implementation Considerations” this Thursday, November 16, at 2:00 pm Eastern.

– Meredith Ervine