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Executive Compensation Clawback Policies: Employment Law Compliance While Navigating SEC Rules and DOJ Guidance

Wage and Hour Issues; Multijurisdictional Concerns; Former v. Current Employees; Paid Compensation v. Future Payment

Recording of a 90-minute CLE video webinar with Q&A

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Conducted on Wednesday, November 8, 2023

Recorded event now available

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This CLE webinar will discuss the SEC's rules and DOJ's guidance and pilot program related to compensation clawback and how these intersect with multijurisdictional employment obligations. The panel will address employment considerations for companies and counsel when developing compensation clawback policies. The panel will also describe best practices for drafting clawback policies and for subsequent enforcement.

Description

Two federal agencies have recently propounded rules and/or programs related to executive compensation clawback in order to prevent executives from profiting from wrongdoing. When drafting clawback policies, counsel should be aware of how policies intersect with federal, state, and non-U.S. employment law obligations to ensure compliance.

The SEC recently adopted final rules requiring listed companies to adopt compensation clawback policies pursuant to Section 954 of the Dodd-Frank Act. Companies are required to recover incentive-based compensation received by any current or former executive officer if such compensation was based on erroneously reported financial information. The SEC also recently approved the NYSE's and Nasdaq's proposed clawback listing standards that are effective Oct. 2, 2023, which give NYSE- and Nasdaq-listed issuers until Dec. 1, 2023, to adopt compliant clawback policies.

Mirroring the SEC's increased activity, the DOJ's criminal division recently updated its guidance which allows prosecutors to factor in compensation clawback policies in corporate criminal resolutions. The DOJ also launched a clawback pilot program that incentivizes companies--public and private, large and small--to have clawback policies in place.

Creating compensation clawback policies that also comply with employment obligations is challenging. Factors to be considered include federal, state, and non-U.S. wage and hour considerations; clawing back compensation from a former employee versus a current employee; and whether the compensation has already been paid or is to be paid out at a future date.

Listen as our expert panel addresses the latest federal regulations and guidance related to executive compensation clawback and the multijurisdictional employment law considerations to be taken into account when creating clawback policies. The panel will also describe best practices for drafting and enforcement.

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Outline

  1. Purpose of executive compensation clawback
  2. SEC's executive compensation clawback rules and stock-exchange listing standards
    1. Companies and employees affected
    2. Effect on employment obligations
  3. DOJ's new corporate compliance guidance and pilot program incentivizing clawback policies
    1. Companies and employees affected
    2. Effect on employment obligations
  4. Employment law considerations and best practices for policy drafting and enforcement
    1. Federal
    2. State
    3. International
    4. Public vs. private companies
    5. Current vs. former employees
    6. Paid vs. future compensation
    7. Other considerations

Benefits

The panel will review these and other important considerations:

  • What companies are affected by the SEC's clawback rules?
  • What companies are affected by the DOJ's clawback guidance and pilot program?
  • Who is required to draft compensation clawback policies?
  • What are the multijurisdictional employment considerations to be taken into account by counsel and clients when drafting compensation clawback policies?
  • What are the risks of enforcing compensation clawback policies under federal, state, and international law?
  • What are best practices for minimizing risk?

Faculty

Alloy, Joshua
Joshua F. Alloy

Counsel
Arnold & Porter Kaye Scholer

Mr. Alloy handles all aspects of labor and employment matters involving day-to-day counseling, transactions, and...  |  Read More

McDaniels, Laura
Laura L. McDaniels

Partner
Pillsbury Winthrop Shaw Pittman

Ms. McDaniels has over two decades of experience advising clients on compensation and benefits matters. She counsels...  |  Read More

Rhee, Soo-Mi
Soo-Mi Rhee

Partner
Arnold & Porter Kaye Scholer

A trusted adviser to major corporations facing high-stakes criminal and regulatory investigations, Ms. Rhee, who...  |  Read More

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