NYSE, Nasdaq Amend Proposed Listing Standards Related to Clawbacks

The New York Stock Exchange (NYSE) on June 5, 2023, filed an amendment to its incentive compensation clawback listing standard originally proposed in February 2023. The Nasdaq Stock Market followed suit and filed an analogous amendment to its proposed clawback listing standard the following day. In both cases, the proposed amendments would push the effective date of the new listing standards to Oct. 2, 2023. Assuming no further delays with the rollout of the clawback listing standards and expected U.S. Securities and Exchange Commission (SEC) approval, affected companies will likely be required to adopt and file compliant clawback policies by Dec. 1, 2023.

Beyond delaying the effective date of the new NYSE and Nasdaq listing standards, the proposed amendments include new notice and cure provisions, which may be triggered in the event of noncompliance with the clawback requirements. The amended listing standards remain unchanged from the originally proposed standards in all other respects.

Holland & Knight has closely tracked the developments of the SEC Rule since its release and provided a discussion of the proposed listing standards earlier this year. In order to avoid a fourth quarter crunch with boards and compensation committees, public companies should consider ramping up efforts to have updated clawback policies ready for adoption by Dec. 1, 2023.

If you would like assistance with preparing a clawback policy that is compliant with the Listing Standards, evaluating your company's incentive-compensation arrangements or mitigating the risk of future required disclosures, contact the authors, another member of Holland & Knight's Executive Compensation and Benefits Team or your primary Holland & Knight attorney.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.