Following up on
Chairman Gensler’s announced directive to complete the unfinished Dodd-Frank clawback rules, the SEC has
announced a hearing on October 13, 2021 to consider re-opening the proposed rule for public comment. The SEC originally proposed rules in July 2015 that mandated the following:
- Boards must claw back incentive payments from the previous three years if those incentives were paid based on subsequently restated financial results.
- Clawbacks would not be conditioned on fraud or misconduct.
- Boards would have some discretion into how the funds are recouped.
Since then, public calls for stricter rules on clawbacks, including for any financial restatement and for reputational harm, have increased. Following the hearing, the Center will seek input from Subscribers and be prepared to submit additional comments building on what we presented to the SEC in 2015.
In other SEC news, Commissioner Elad Roisman
gave a speech to the National Association of Corporate Directors and provided his assessment of anticipated rulemaking efforts.
- Boards should pay close attention to what Chairman Gensler has highlighted in speeches and statements on climate change, particularly Scope 1 and 2 emissions, and should make sure they are clear on what emissions data the company already collects.
- While Commissioner Roisman has not seen a proposed rule, he believes it is likely to arrive before the end of the year.
- Roisman does not believe the SEC rule will displace existing ESG disclosure frameworks such as SASB or the Task Force on Climate-Related Financial Disclosures.
Chairman Gensler continues to push forward with his active agenda and companies should be prepared for several proposed rules over the next six to twelve months.
