I previously blogged about the New York Stock Exchange and Nasdaq listing standards that require issuers to adopt compliant clawback policies by December 1, 2023. While many issuers may have already adopted clawback policies that satisfy the minimum legal requirements to comply with the law, recent guidance from Glass Lewis may prompt these issuers to expand their policies in the future to satisfy Glass Lewis’ 2024 Benchmark Policy Guidelines.

In their 2024 Policy Guidelines Glass Lewis says that in addition to satisfying legal requirements, effective clawback policies should provide for clawback when there is “evidence of problematic decisions or actions, such as material misconduct, a material reputational failure, a material risk management failure, or a material operational failure…” The guidance also indicates that the clawback rights of an issuer should extend to both time-based and performance-based incentive compensation.

It is still too early to tell exactly how Glass Lewis will evaluate clawback policies that only satisfy the minimum legal requirements of the listing standards, but this new guidance seems to suggest that Glass Lewis may raise concerns with such policies.