The Securities and Exchange Commission announced that it has reopened the comment period on a proposal it issued previously for implementing provisions of Section 954 of the Dodd-Frank Act.
The rules, first proposed by the SEC in 2015, would require national securities exchanges and associations to establish standards by which listed companies would have a policy for recovering incentive-based compensation that was erroneously awarded.
SEC Chairman Gary Gensler issued a statement in support of the comment period reopening, citing instances in which so-called “clawbacks” of excess compensation become necessary. He noted that occasionally the numbers companies report as the basis for compensation of corporate executives are not accurate.
“In these cases, companies may have to go back and revise or restate prior financial reporting,” said Gensler. “As a result, an executive may have been paid for meeting certain milestones that the company didn’t, in fact, hit.”
Interested parties will now be able to submit further comments and data on the SEC’s proposed amendments, and can comment on questions raised by the SEC in its reopening release. Comments can also be submitted on developments that have occurred since the proposal was issued in 2015.
“I believe we have an opportunity to strengthen the transparency and quality of corporate financial statements, as well as the accountability of corporate executives to their investors,” said Gensler.
Public comments will be due 30 days after publication of the SEC’s release in the Federal Register.
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