As we previously noted, the Securities and Exchange Commission (SEC) adopted long-delayed rules on October 26, 2022, which will require companies to implement mandatory "clawback" policies with respect to incentive-based compensation if the company's financial statements tied to achieving the relevant incentive payments are later required to be restated.

Since our initial alert, the New York Stock Exchange (NYSE) and Nasdaq Stock Market (Nasdaq) proposed listing standards that the SEC approved on June 9, 2023. Each exchange's applicable listing standards became effective on October 2, 2023. Issuers must adopt a clawback policy compliant with such listing standards no later than December 1, 2023.

We have prepared the following model clawback policy that is designed to comply with both the NYSE's and Nasdaq's listing requirements and assist in preparing a new or revised clawback policy.

Please note this model clawback policy is intended to be a guide, and issuers should construct their clawback policy by considering existing and future incentive-based compensation arrangements for their covered executive officers. Accordingly, clawback policies should be customized to fit the particular facts and circumstances while concurrently satisfying the relevant listing requirements. In tandem with adopting a compliant policy, issuers should consider whether they must make any requisite amendments or modifications to existing plan and/or award documentation (e.g., the governing incentive equity plan and the forms of award agreements, employment agreements, annual bonus plans, etc.) to give effect to such a policy.

Click to view and print the model policy.