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US SEC Adopts Compensation Clawback Rules

US SEC Adopts Compensation Clawback Rules

by Starling Insights

Starling Insights Editorial Board

Nov 01, 2022


Last week, the US Securities and Exchange Commission (SEC) voted to adopt rules requiring companies to recoup bonuses from executives when compliance lapses result in the need to restate their financials. The so-called "clawback rules” — mandated by Congress following the Global Financial Crisis but left unfinished since 2015 — were finalized with a 3-2 vote among SEC Commissioners.

In stark contrast to the original clawback rules, created in 2002, all executive officers that receive equity compensation and who make policy decisions at public companies (of any size) fall under the scope of these requirements. US stock exchanges are also required to establish listing standards mandating each issuer to develop, implement, and comply with such a policy, or risk being delisted.

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