Small Errors Hold Big Stakes in Executive Pay Clawback Rule (1)

New SEC requirements for recovering erroneous executive bonuses are bringing compliance jitters, as companies prepare for more scrutiny over accounting mistakes both large and small.

The long-delayed Securities and Exchange Commission rule, approved on Wednesday, covers not only formal financial restatements, but smaller revisions that companies quietly tuck into their filings. It calls on companies to develop pay clawback policies for errors so they can hold their executives accountable and stay listed on public exchanges.

“It’s certainly not good news for them,” said Martha Steinman, a co-chair of the Hogan Lovells employee benefits and executive compensation practice. ...