In recent months the Biden administration has demonstrated that clawing back compensation from company executives is at the top of its list of white collar enforcement priorities. Last month the Department of Justice launched a new Pilot Program on Compensation Incentives and Clawbacks (the Pilot Program), effective March 15, which requires that resolutions with any company include compensation-related criteria and provides a fine reduction incentive for companies that claw back, or attempt to claw back, employee compensation. Several weeks earlier, the Securities and Exchange Commission adopted its long-awaited clawback rule—“Rule 10D-1,” effective Jan. 27, 2023—implementing changes to Section 10D of the Securities Exchange Act passed as Section 954 of the Dodd-Frank Wall Street Reform Consumer Protection Act of 2010.
These new programs represent a major broadening in the scope of clawback policies, but at least for publicly held companies, clawback mandates are not new. Since 2002, Section 304 of the Sarbanes-Oxley Act (SOX Section 304) has directed the SEC to enforce the clawback of any bonus, incentive-based pay, or stock sale profits received by a public company’s CEO or CFO that has restated its financials. The new DOJ and SEC policies mirror certain elements of this existing clawback regime, while also reflecting some significant differences. Most important, however, is the absence of express statutory authority for these new clawback policies, thereby forcing...
Published on: Washington: India’s Operation Sindoor, launched following the April 22 terror attack in Pahalgam in Jammu and Kashmir in which 26 civilians were killed by Pakistan-backed terrorists,...