Securities and Exchange Commission (SEC) officials said the agency has reopened the comment period regarding proposed rules addressing listing standards for erroneously awarded compensation recovery.
According to the SEC, interested parties will be able to submit additional comments and data related to rule amendments the SEC initially proposed in 2015, in addition to comments surrounding questions raised by the panel in its reopening release.
“I support action to reopen comment on the Dodd-Frank Act rule regarding clawbacks of incentive-based executive compensation,” SEC Chair Gary Gensler said. “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.”
Additionally, officials indicated participants are able to comment on developments since the proposing release was issued, including accounting practices trends, economic and other proposals derived from varied developments.
“Over the last couple of decades, Congress has decided that executives should pay back that incentive-based compensation,” Gensler said. “Congress first mandated these clawbacks under the Sarbanes-Oxley Act of 2002, requiring chief executives and chief financial officers to return incentive-based pay in cases of misconduct from the previous 12 months.”
Gensler said if a company has to revise its financial statements, executives should have to return compensation paid in the three years leading up to the restatement based on the misstated financials — regardless of whether the misstatement was due to fraud, errors or any other factor.
Authorities noted the public comment period will remain open for 30 days after the release’s publication in the Federal Register.