On June 9, 2022, the SEC reopened a new 30-day comment period along with a memorandum prepared by the SEC's Department of Economic and Risk Analysis (DERA). DERA's memorandum provided detailed information on (1) the increase in voluntary adoption of compensation recovery policies by companies and (2) estimates of the number of additional restatements that would be subject to the clawback rules if the proposed rules were to include restatements due to material noncompliance ("Big R" restatements) and corrections of errors ("little r" restatements).

On June 23, 2021, Chairman Gary Gensler of the SEC gave a formal speech in which he discussed three key areas of the reform agenda at the SEC.

During a recent compensation committee meeting, the CEO expressed some level of frustration with the public discourse on including EESG (Employee, Environment, Social, and Governance) goals " specifically, DEI (Diversity, Equity, and Inclusion) " into executive incentive plans. "Our culture is all about equity, diversity, and inclusion," she exclaimed. "Why should we be bonusing our culture?"

Last year, the Securities and Exchange Commission ("SEC") issued new regulations applicable to proxy advisory firms, including Institutional Shareholder Services ("ISS") and Glass Lewis, that codified earlier guidance that proxy advisory firms should be deemed proxy solicitors.

Our research confirmed that UK and EU companies are well ahead of the US in the inclusion of ESG metrics in incentive plans, and their approach to measuring and rewarding ESG achievements could be a harbinger of strategies used by US companies over the next several years.

Section 162(m) of the Internal Revenue Code (IRC) became effective in 1994. The intent of Section 162(m) was to limit the tax deductibility of compensation paid to the "covered employees" of publicly traded companies that was in excess of $1 million per year.

Environmental, Social, and Governance (ESG) issues are some of the most prominent facing Corporate America

The COVID-19 global pandemic has had a profound impact on the economy and forced many companies to make dramatic changes in staffing, operations, supply chains, and short- and long-term business plans. At the time this article is being written, close to 10 million fewer people are employed in the U.S. than at this time last year.

CEO pay continues to be discussed extensively in the media, in the boardroom, and among investors and proxy advisors.

We have written several Viewpoints on COVID-19's effect on executive compensation programs at severely harmed companies and the potential actions that could be considered to mitigate some of its impact. In this Viewpoint, we review companies that have exceeded initial expectations during the pandemic and the unique executive compensation challenges they may face.