SEC Adopts Compensation Clawbacks Rules
By Alan J. Wilson, WilmerHale
On October 26, the Securities and Exchange Commission adopted the long-anticipated rules regarding recovery of erroneously awarded incentive-based compensation. The new rules follow a prescriptive approach, expanding significantly beyond the scope of the initial clawback proposal from 2015 in a few important respects.
As adopted, the new rules require national securities exchanges to establish listing standards requiring listed companies to develop, implement, and disclose clawback policies. The required clawback policies will, with extremely limited exceptions, require a listed company to recover from its executive officers incentive-based compensation received as a result of erroneous financial results during a three-year look-back period when the listed company is required to prepare an “accounting restatement,” including a “Big R” or “little r” restatement. Failure to comply with these new requirements will subject listed companies to delisting.
For a more expansive discussion of these new rules, see WilmerHale’s client alert.
SEC Reopens Comment Period Due to Technological Glitch
By Jason Hyatt, Latham & Watkins
On October 7, the SEC reopened the public comment periods for eleven Commission rulemaking releases and one request for comment due to a technological error that resulted in certain public comments submitted via the internet comment form not being received by the SEC. The comment period was reopened until November 1, 2022, allowing interested persons, whether or not they had previously submitted a comment impacted by this error, to comment or resubmit a comment.
The SEC advised all commenters who submitted a public comment through the internet comment form between June 2021 and August 2022 to check the relevant comment file on SEC.gov to determine whether their comment was received and posted, and, to the extent it has not been posted, commenters should resubmit that comment.