Legal Alerts

Deadline to Adopt SEC-Compliant Clawback Policy is Fast Approaching

New York, N.Y. (November 14, 2023) - On October 26, 2022, the Securities and Exchange Commission (“SEC”) adopted Rule 10D-1 under the Securities Exchange Act of 1934 (“Exchange Act”) implementing section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), which required the SEC and the national securities exchanges to establish listing standards that require  publicly listed companies to adopt and comply with a “clawback policy” for the recovery of erroneously awarded incentive-based compensation paid to their executive officers. 

Rule 10D-1 went into effect in January 2023. The New York Stock Exchange (“NYSE”) and Nasdaq listing standards were subsequently approved by the SEC in June 2023 and became effective on October 2, 2023.

Publicly listed companies have until December 1, 2023 to adopt a compliant clawback policy.

Under the new rules, companies listed on a national stock exchange (e.g., NYSE or Nasdaq) will need to adopt standardized procedures for recovering incentive-based compensation erroneously awarded to executive officers due to a material misstatement in the company’s financial statements.

The clawback requirement applies to current and former executive officers who have received incentive-based compensation in the three fiscal years preceding an accounting restatement. This includes incentive-based compensation received on or after October 2, 2023.

Publicly listed companies face potential delisting if they fail to adopt a compliant policy by December 1, 2023.  Companies planning an IPO after December 1, 2023 will need to adopt a compliant clawback policy prior to listing their securities. Issuers may also be subject to delisting if they fail to comply with their clawback policy once adopted.

The new rules also require listed companies to include disclosures in their annual reports related to the clawback policy and its application.

If your company is in need of assistance in adopting a compliant clawback policy or related disclosures, please do not hesitate to contact the authors of this alert.


Andrew Zuckerman, Associate

Daniel Feldman, Partner

John P. Yung, Partner

David Kern, Managing Partner - Akron Office

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