Resource Library Clawbacks

Good relationships between committee members and the executive team matter, and they take work to maintain. When their connection is strong, it is easier to align the board and management on long-term talent strategies, pay philosophies, and solutions to difficult decisions.

In a recent Workspan Daily article, Sam Askenas discusses what companies can do if they trigger a clawback.

A study of S&P 1500 companies found that organizations generally experienced share price increases after implementing mandatory SEC clawback provisions – particularly among firms that previously lacked such policies – underscoring the important of regular governance reviews by boards.

Wachtell, Lipton, Rosen & Katz LLP offer their thoughts on upcoming trends that are likely to shape executive compensation in 2024, with highlights including the continued prevalence of non-compete clauses, new Pay vs. Performance guidance, updated clawback filings, and proxy advisor updates, among others.

Glass Lewis recently updated their 2024 benchmark policy guidelines, which provide updated voting recommendations including requiring clear disclosure from companies on issues related to cybersecurity and strong clawback policies in accordance with new SEC regulations.

Faegre Drinker Biddle & Reath LLP provides preparation considerations for companies seeking to implement SEC-compliant clawback policies by the December 1st compliance deadline, which include approving the go-forward policy, requiring cover officers to sign an acknowledgement of the updated policy, reviewing disclosure requirements for policy changes which must be filed in the 10-K, and more.

Equity Methods outlines key steps for companies looking to adopt SEC-compliant or broader clawback policies by the NYSE and Nasdaq mandated December 1st, 2023 deadline which include drafting policy updates, educating stakeholders and outlining enforcement steps.

The NYSE and Nasdaq recently proposed new standards that would require companies to recover erroneously awarded incentive-based compensation consistent with the SEC’s recently adopted clawback policy.

What does finalizing these last significant compensation-related portions of Dodd-Frank mean in light of the dramatic changes to the compensation and governance landscape experienced since the legislation was initially adopted?

A scan of recent headlines is a reminder that CEO succession is not always a well-orchestrated victory lap for the departing CEO.

Does your company's total shareholder return align with its business goals? The "Checklist for Incentive Plans Total Shareholder Return," by Mark Emanuel, offers a list of common critiques of relative TSR plans. Download the full report now!

Compensation committees sometimes feel challenged by the task of setting targets for annual goals. Not only do they have to address the upside potential and downside risk in the company's business plan, but also other factors that include external headwinds and tailwinds associated with macroeconomic factors, competitive opportunities and threats, technological disruptions, and regulatory changes. That said, the task of setting annual targets can become quite complex.