By this time next year public companies will face more stringent requirements for recouping executive compensation following a financial restatement—that is, if the Securities and Exchange Commission sticks to its agenda.
The SEC is currently working on a Dodd-Frank Act rule that would require companies to put policies in place to recoup ill-gotten gains by executives. Known as “clawback” policies, the plans cover when executives must give back all or a portion of their bonuses and other compensation if it later surfaces that the executives met the goals using improper means or that the performance shown to meet the incentives is later found to be false, such as in a financial restatement.
