Clawback Policy
A clawback policy lets (or forces) a company to recoup incentive compensation — required for executives after accounting restatements under SEC Rule 10D-1.
From voluntary to mandatory
Since 2023, listing rules implementing SEC Rule 10D-1 require issuers to claw back erroneously awarded incentive compensation from current and former executive officers after an accounting restatement — no misconduct needed. Recovery is 'reasonably promptly' and covers up to three years of incentives.
Many companies also adopt discretionary, misconduct-based clawbacks (fraud, harassment, reputational harm) that go beyond the mandatory minimum; these are disclosed in the proxy.
Frequently asked
Does a clawback mean the executive did something wrong?
Not under Rule 10D-1 — recovery is triggered by a restatement, not misconduct: the awards were 'erroneously awarded' because the metrics they paid on turned out to be wrong.
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