SEC Once Again Reopens Comment Period for Clawback Proposal

The SEC announced that it is reopening the comment period for the second time for the compensation clawback rules it initially proposed in 2015 to implement Section 954 of Dodd-Frank. The Commission had previously reopened the comment period for this proposed rule in October 2021. 

According to the announcement the SEC has decided to once again reopen the comment period to allow further public comment in light of a new, just released DERA staff memorandum containing “additional analysis and  data on compensation recovery policies and accounting restatements.” 

More specifically, the new memo discusses the increase in voluntary adoption of compensation recovery policies by issuers and provides estimates of the number of additional restatements that would trigger a compensation recovery analysis if the rules were extended to include all required restatements. Further, the memo discusses some potential implications for the costs and benefits of the 2021 proposed rules.

The Center, with input from members, submitted comments to the SEC last year including information on the best practice of companies voluntarily establishing clawback policies as well as when and how clawbacks are enforced. Considering this new memorandum, we will review and submit relevant comments in response. The new comment period will be open until 30 days after publication of the reopening notice in the Federal Register.