U.S. companies whose financial statements contain errors may soon have to “claw back” some of their top executives’ compensation as a result, the Wall Street Journal reported today. The Securities and Exchange Commission will soon propose long-awaited rules forcing companies to claw back, or revoke, some of their top officials’ incentive pay if they have to restate the financial results that led to it. Unlike existing rules, in which clawbacks are triggered only in a narrow set of circumstances involving misconduct at companies that restate earnings, the SEC’s proposal would apply to all manner of restatements — including those issued because of mistakes. The rules, if finalized, could force an executive who received stock options after the company met a performance target, such as a revenue figure, to return some or all of that compensation if a misstatement shows revenue fell below the executive’s performance target.
