The United States Dodd–Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as implemented by Section 10D of the US Securities and Exchange Act of 1934, Rule 10D-1 thereunder, and applicable stock exchange listing standards, requires US listed companies, by December 1, 2023, to adopt a clawback policy applicable to executive officers in the event of an accounting restatement due to material noncompliance with financial reporting requirements.

The policy must provide for the recovery of erroneously awarded incentive-based compensation in excess of what would have been received under the restated financial statements from any current or former executive officer who received such incentive-based compensation during the three completed fiscal years preceding the date the restatement was required, effective for incentive-based compensation received on or after October 2, 2023. “Incentive-based compensation” means any compensation that was granted, earned or vested, wholly or in part, based on a financial reporting measure (including a stock price or total shareholder return measure). Incentive-based compensation is deemed “received” in the fiscal period during which the relevant financial reporting measure is attained. Misconduct by the executive is not required.

International enforceability of clawback compliance with Dodd-Frank in key countries
The listed company may be subject to delisting if it fails to enforce the clawback when required, unless it can rely on an “impracticability” exception. In the context of enforcement of the clawback against an executive officer in a non-US jurisdiction, an impracticability exception may apply if the direct costs of recovery paid to a third party would exceed the amount of recovery. In the context of enforcement of the clawback by a US listed company incorporated outside the United States, an impracticability exception may apply if recovery would violate the issuer’s home country law, as adopted prior to November 28, 2022.

In view of these potential impracticability exceptions, we encourage you to review our high-level overview, designed to provide a snapshot of the international enforceability of a clawback adopted to comply with the Dodd-Frank Act in key countries.

For more information on how to effectively implement a Dodd-Frank Clawback policy, see our recent blog post here.


Sinead Kelly is a partner in Baker McKenzie’s Compensation practice in San Francisco. She advises on U.S. executive compensation and global equity and has practiced in the compensation field since 2005. In her practice, Sinead counsels U.S. and non-U.S. public and private companies on all aspects of equity and executive compensation plans and arrangements, including plan design, drafting, administration and governance. In this regard, Sinead advises on and assists companies with compliance with U.S. federal and state securities and tax laws relating to compensation arrangements, as well as with preparing SEC disclosures, complying with stock exchange rules and addressing non-U.S. tax and regulatory requirements. She has been repeatedly recognized by Legal 500 as a leading lawyer for Executive Compensation and Employee Benefits.