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SEC Issues Final Rules Requiring Clawbacks of Erroneously Awarded Incentive-Based Compensation

The SEC adopted final rules on October 26, 2022, implementing a provision of the Dodd-Frank Act that will require publicly listed companies to establish clawback policies of incentive-based compensation received by current or former executive officers if that compensation is based on erroneously reported financial information (the “Final Rules”). The Final Rules apply to all listed issuers, including smaller reporting companies, foreign private issuers, and emerging growth companies. The clawback policy must apply to any incentive-based compensation that is granted, earned, or vested based wholly or in part upon the attainment of any financial reporting measure. Under the Final Rules, an issuer would be subject to delisting if it does not adopt a written compensation recovery policy and comply with such policy. This policy is triggered in the event the issuer is required to prepare an accounting restatement that corrects an error in a previously issued financial statement that is… Continue Reading

November 2022
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