On April 24, 2023, the Securities and Exchange Commission (SEC) announced that it would approve clawback policy-related listing standards from the New York Stock Exchange and the Nasdaq Stock Market no later than June 11, 2023. Because the exchanges’ standards require listed companies to adopt a clawback policy to recover erroneously awarded incentive compensation within 60 days of when the listing standards are effective, this means that August 10, 2023 would be the deadline for a listed company to have a compliant clawback policy if the listing standards become effective June 11, 2023. The SEC could further extend the effective date, which would extend the deadline, but that remains uncertain at this time.
While an August deadline may seem far off to companies preparing and reporting first quarter results, it is time to devote resources to (i) drafting a policy or analyzing your company’s current policy to determine whether it would comply with the proposed listing standards and new clawback rules and (ii) ensuring the appropriate committee and board of directors has sufficient time to review and approve the policy.
If you have any questions about preparing a clawback policy, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets or Employee Benefits and Executive Compensation groups.