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United States: SEC Releases Final Rule on Clawback of Incentive Compensation

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In brief

On 26 October 2022, the SEC adopted final incentive compensation clawback rules requiring US-listed issuers to:

  • Develop and implement a policy for the recovery of incentive-based compensation that is erroneously “received” by current and former executive officers during the three completed fiscal years immediately preceding the date that the issuer is required to prepare an accounting restatement.
  • File that policy as an annual report exhibit and satisfy related disclosure obligations in accordance with SEC rules.

The rule, known as Rule 10D-1, directs national securities exchanges to establish listing standards in line with the final rule. Companies that fail to comply with the rule may be delisted.

Click here to access the full alert.

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Sinead Kelly is a partner in the Firm's Compensation practice. She advises on US executive compensation and global equity and has practiced in the compensation field since 2005. She regularly speaks and publishes on compensation-related topics and is a contributing author to Lexis Practice Advisor and Wolters Kluwer’s “Practical Guide to SEC Proxy and Compensation Rules,” as well as a founder of the Firm's Compensation Connection blog. She is on the Advisory Board of the Certified Equity Professionals Institute (CEPI) of Santa Clara University and is a member of the Firm's Artificial Intelligence and Blockchain working groups. Sinead has been recognized by Chambers USA for Employee Benefits and Executive Compensation, most recently in 2024, where Chambers states that she is “extremely intelligent, responsive and solution-oriented.” She is a Thomson Reuters Stand-out Lawyer for 2024, and is ranked by Legal 500 as a "Leading Lawyer" for Employee Benefits, Executive Compensation and Retirement Plan Design.

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Roger Bivans is a seasoned lawyer focused on strategic transactions, including domestic and multinational mergers and acquisitions, carve-out and joint venture transactions, capital markets transactions, securities regulation and corporate governance matters and general commercial transactions. He is recognized by Chambers USA for Corporate/M&A. A frequent speaker on securities regulation, he is the current Dallas chapter president of the Society for Corporate Governance and moderator of the DFW Securities Law Discussion Group. Mr. Bivans previously served as a surface warfare officer in the United States Navy.

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Victor Flores is a partner in Baker McKenzie’s Employment & Compensation Practice, with a focus on Executive Compensation and Employee Benefits.

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Thomas Asmar has almost two decades of experience advising public and private companies, as well as private equity funds, on all employee benefits and compensation issues arising out of mergers, acquisitions, IPOs, financings and other corporate transactions.

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