During the last week of April, the U.S. Securities and Exchange Commission (SEC) extended the deadline by which it must approve or disapprove of the proposed New York Stock Exchange (NYSE) and Nasdaq Stock Market compensation recovery listing standards (Listing Standards) mandated by the Dodd-Frank Act to June 11, 2023. Assuming that the SEC will approve the Listing Standards on June 9, 2023 (the final business day in the approval window), companies will need to adopt compliant clawback policies within 60 days, or by Aug. 8, 2023. While it is possible that the SEC may again extend its deadline or disapprove of the Listing Standards, both Listing Standards track closely to the requirements of the SEC rule (SEC Rule) and are thus expected to be approved.
Holland & Knight has closely tracked the developments of the SEC Rule since its release and provided an updated discussion of the proposed listing standards earlier this year. In order to avoid a late summer scramble with boards and compensation committees, public companies should consider ramping up efforts to have updated clawback policies ready for adoption by Aug. 8, 2023.
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