Davis Polk led the submission of a multi-law-firm comment letter to the SEC on proposed listing standards of the New York Stock Exchange and Nasdaq Stock Market to implement the SEC’s compensation clawback rule mandated by the Dodd-Frank Act. The listing standards will require listed companies to adopt and comply with a written policy to recover excess incentive compensation from executive officers if amounts were based on the company’s material noncompliance with any financial reporting requirement.

Under the SEC’s rule, the new listing standards must be effective no later than November 28, 2023. In the comment letter, we requested that the SEC not approve the adoption and effectiveness of those standards any earlier than that date “in order to give issuers adequate time to develop and adopt a compensation recovery policy, along with the necessary controls and procedures to administer the policy.” We noted that the significant burdens associated with adopting and implementing compliant compensation recovery policies substantially outweigh the limited practical benefits that would be obtained by providing listed companies with any time less than the maximum allowable schedule.

We obtained the support of over 35 firms to join us in the comment letter.

Read the letter  

Read our client updates on the clawback rule and proposed listing standards:

Final clawback rule adopted by SEC (October 31, 2022)

NYSE and Nasdaq release clawback rule proposal (February 27, 2023)

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