Is The New SEC Clawback Rule A Mistake?
Join us November 11 for a discussion of SEC policy.
On July 1, 2015, the Securities and Exchange Commission voted 3-2 to propose new rules requiring that public companies “clawback” the incentive pay of executives if a company’s financial statements are later found to contain errors, expanding existing clawback scenarios to apply more broadly to restatements, including those issued because of mistakes.
SEC Chair Mary Jo White, voting in the majority, explained the rule thusly:
“Executive officers should not be permitted to retain incentive-based compensation that they should not have received in the first instance.”
Meanwhile, dissenting Commissioner Daniel Gallagher argued that the rule hamstrings corporate boards and creates an unwarranted air of distrust in corporate governance, while dissenter Michael Piwowar argued that the rule would only drive up already high executive compensation to offset potential clawbacks.
On November 11 at 6:30 p.m., Above the Law and Wolters Kluwer will host a discussion probing this very issue with distinguished guests including a former SEC general counsel Ralph C. Ferrara of Proskauer and leader of securities litigation Marc D. Powers of BakerHostetler.
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