Publicly traded companies, including financial services corporations, are facing a new requirement to implement clawback policies that mandate the recoupment of erroneously awarded incentive compensation. As Troutman Pepper Partners Chris Willis and Sheri Adler have explained in their recent Consumer Finance Podcast, these companies must have such policies in place by December 1, 2023. Legal professionals and corporate executives should be aware of this regulator-prescribed deadline.
Faced with the complexity and potential ambiguity of the new rules, multiple questions arise. The podcast tackled various aspects of the regulation and proposed steps to ensure compliance. For instance, one of the main queries is: Which companies are subject to these new rules?
Another important question is: Who should be covered by the policy? It seems that these new rules are encompassing, affecting not only higher management but potentially other staff, so understanding the extent of its enforcement could present itself as a challenge for legal teams and HR professionals.
Finally, the nuances about what types of compensation are to be considered for clawback under the policy should also be discussed. This not only covers who is accountable but also sheds light on the nature and extent of the awards that may fall within the regulatory purview.
To listen to the full discussion about the upcoming changes and ensure your firm or corporation is fully prepared, refer to Chris Willis and Sheri Adler’s Consumer Finance Podcast. Implementing changes ahead of the deadline can help prevent any non-compliance penalties and enable a smoother adjustment with the new rules.