Divided SEC Proposes Clawback Rule, Looks Back 3 Years, Defines Officer Broadly

A divided Securities and Exchange Commission July 1 proposed a rule requiring public companies to claw back executives’ incentive-based compensation that was improperly awarded.

The proposal would require companies to make policies for recovering compensation paid out that exceeds what should have been paid under an accounting restatement, if the restatement is required because of “material noncompliance” with securities laws.

“Executive officers should not be permitted to retain incentive-based compensation that they should not have received in the first instance but did receive because of material errors in their companies’ publicly reported financial statements,” Chairman Mary Jo White said. ...