Last October, the SEC adopted final rules directing the NYSE and Nasdaq to adopt listing standards requiring companies to have clawback policies that provide for the recovery, in the event of a required accounting restatement, of certain incentive-based compensation received by current or former executive officers based on erroneously reported financial information.  

Last week, the NYSE and Nasdaq each proposed such listing standards for approval by the SEC that closely hue to the requirements set forth in the SEC rules. Here’s the NYSE’s Section 303A.14 proposal – and here’s Nasdaq’s Rule 5608 proposal.

The listing standards will become effective on the date of SEC approval (the Effective Date), which can be no later than November 28, 2023 but may occur much sooner since the SEC is expected to act quickly after a 21-day comment period commencing after publication of these proposed listing standards in the Federal Register. 

Under each of the stock exchanges’ proposals, listed companies would need to:

– Adopt a clawback policy in the form required by the listing standards no later than 60 days after the Effective Date; 

– Implement the clawback policy; and

– Make the required disclosures about the clawback policy in their SEC filings.

For further information, see our earlier blog and Client Update discussing the SEC’s final clawback rules and steps companies should take to comply with the new rules – and our blog about the SEC Staff’s recent Compliance and Disclosure Interpretations (CDIs) providing some guidance relating to the new clawback rules.

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Photo of Sue Morgan Sue Morgan

Sue Morgan, a partner in the firm’s Employee Benefits & Executive Compensation practice, has more than 30 years of experience in counseling clients on executive and equity compensation, corporate finance and securities, and insider trading compliance. Sue frequently speaks on such issues as…

Sue Morgan, a partner in the firm’s Employee Benefits & Executive Compensation practice, has more than 30 years of experience in counseling clients on executive and equity compensation, corporate finance and securities, and insider trading compliance. Sue frequently speaks on such issues as executive compensation, option exchanges, insider trading compliance and 10b5-1 plans, and SEC reporting and disclosure at national and regional conferences of the Society of Corporate Secretaries and Governance Professionals, and the ABA Business Law Section.

Photo of Susan J. Daley Susan J. Daley

Susan has more than 25 years of experience in the areas of executive compensation, securities and employee benefits. She is president of the Chicago Chapter of the National Association of Stock Plan Professionals, and chair of the Employee Benefits and Executive Compensation Committee…

Susan has more than 25 years of experience in the areas of executive compensation, securities and employee benefits. She is president of the Chicago Chapter of the National Association of Stock Plan Professionals, and chair of the Employee Benefits and Executive Compensation Committee of the American Bar Association Business Law Section. She is also a former co-chair of the BNA Pension & Benefits Advisory Board as well as a former chair of the Federal Securities Law Subcommittee of the Employee Benefits Committee of the American Bar Association Section of Taxation, the Illinois State Bar Association Employee Benefits Section Counsel, the Chicago Bar Association Employee Benefits Committee and the Chicago Bar Association Federal Taxation Committee.

Susan is a frequent author and speaker on employee benefits, executive compensation and securities issues. She has been ranked one of America’s Leading Employment Lawyers in Chambers USA since 2011, listed in Best Lawyers in America in Employee Benefits (ERISA) Law since 1995 and listed as one of the “Top 50 Women in Illinois Super Lawyers,” as published by Law & Politics, 2006 – 2014 and 2016.

Susan is a co-author of The Executive Compensation and Disclosure Handbook: A Practical Guide to the SEC’s Executive Compensation Disclosure Rules (RR Donnelley, Revised 2010), a co-author of the BNA Tax Management Portfolio “Security Law Aspects of Employee Benefit Plans” and a contributing author to The Public Company Handbook: A Corporate Governance and Disclosure Guide for Directors and Executives (RR Donnelley, Revised 2021).