Compensation Clawback Final Rules on SEC Agenda

Compensation Clawback Final Rules on SEC Agenda

July 16, 2020

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Attorney Mike Melbinger, author of the Executive Compensation Blog, says he is officially putting away his crystal ball when it comes to predicting (or second guessing) the timing of actions by the Securities and Exchange Commission. Nevertheless, he does point out that select issues are on the SEC’s radar, including specific executive compensation issues, such as the recovery of erroneously awarded compensation.

Mike Melbinger: Final Rules on Compensation Clawback Are High on the SEC’s Regulatory Agenda

As required by federal law, the Office of Information and Regulatory Affairs published the new Spring Regulatory Flexibility Act Agenda on June 30, including a short- and long-term agenda submitted by nearly every federal agency, including the SEC.

The second item on the SEC’s Short-Term Agenda – Spring 2020 for the current fiscal year is Listing Standards for Recovery of Erroneously Awarded Compensation. I have posted more than 100 blogs on compensation clawback issues, occasionally speculating that the SEC soon would release proposed or final regulations on Exchange Act Section 10D, as added by Section 954 of the Dodd-Frank Act. Readers will recall that the SEC issued proposed rules on Section 10D and compensation clawbacks way back in July 2015.

It is difficult to predict agency actions in an election year. Some believe that agencies are more likely to issue final rules in an election year, out of fear they might be replaced after the election, while others believe the opposite. In short, nobody knows. Although many of us would welcome the clarity of final rules, I am making no more predictions.

Also on the short-term agenda and potentially relevant to executive compensation professionals are:

  • Amendments to Rule 701/Form S-8;
  • Amendments to Exemptions From the Proxy Rules for Proxy Voting Advice; and
  • Modernization and Simplification of Disclosures of Regulation S-K Items 101, 103, and 105.

Relegated to the Long-Term Agenda are the final rules on Pay Versus Performance (proposed back in April 2015).

#clawback #compensation #SEC

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