As described in Part 4 of our 2022 end of year plan sponsor “to do” list, on October 26, 2022, the Securities and Exchange Commission published the final clawback rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).  The clawback rules were published in the Federal Register on November 28, 2022 and become effective January 27, 2023. Under the final rules, the national securities exchanges are required to adopt listing standards requiring public company issuers to adopt a compliant clawback policy and provide disclosure about such policy no later than February 27, 2023, and the listing standards must take effect no later than November 28, 2023. Issuers will be required to adopt a compliant clawback policy within 60 days of the date on which the listing standards become effective. Issuers that fail to satisfy the new listing requirements risk delisting. 

Both the New York Stock Exchange (“NYSE”) and Nasdaq have filed amendments to their proposed clawback-related listing standards (the NYSE Amendment can be found here; the Nasdaq Amendment here). For both the NYSE and Nasdaq, the effective date of the proposed rules will be October 2, 2023. If the Securities and Exchange Commission approves the amendments, this means issuers on the NYSE and Nasdaq will be required to adopt compliant clawback policies by no later than December 1, 2023.   A December 1, 2023 effective date gives issuers additional time to review their existing policies with their compensation consultants and legal advisors and to consider the changes, if any, that should be made to make their policies compliant with the NYSE and Nasdaq listing standards.