Contributing Author, Aaron Mackay, Summer Associate
On June 9, 2023, the Securities and Exchange Commission approved both the New York Stock Exchange (the “NYSE”) and the Nasdaq Stock Market (the “Nasdaq”) proposed listing standards regarding the recovery of erroneously awarded compensation, each as amended earlier that week. The approved listing standards become effective October 2, 2023 and require listed companies to adopt a clawback policy in compliance with the approved listing standards by December 1, 2023. The amended NYSE listing standards also include delisting procedures with a cure period in the event that a listed company fails to timely adopt a policy or does not promptly recover erroneously awarded compensation.
Beyond establishing a clawback policy by the December 1, 2023 deadline, the SEC rules created additional disclosure requirements regarding the clawback policy, accounting restatements and the amounts of erroneously awarded compensation to be recovered in annual reports and proxy statements filed on or after October 2, 2023.
A copy of the SEC’s approval of the NYSE listing standards can be found here and a copy of the SEC’s approval of the Nasdaq listing standards can be found here.
Additional information on the new clawback rules can be found in our LEGALcurrents, Clawback Policies are Coming: Exchanges Propose Listing Standards and Final SEC Rules on Executive Compensation Clawbacks.
If you have any questions about preparing a compliant clawback policy or the new disclosure requirements, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets or Employee Benefits and Executive Compensation groups.